Great Power(SZ:300438) Donghai Securities·2024-09-09 10:00Investment Rating - The report assigns a "Buy" rating for the company, marking its first coverage [2]. Core Insights - The company has experienced significant short-term pressure on its performance due to industry supply-demand imbalances and intensified competition. However, there are signs of recovery in quarterly data, particularly in Q2 2024, where revenue increased by 15.8% year-on-year and 36.3% quarter-on-quarter [6][13][15]. - The company is focusing on innovation in solid-state battery technology, with plans for mass production by 2026. It has established a comprehensive production capacity of approximately 70 GWh, with ongoing expansions in various locations [6][18][26]. - The energy storage segment is a key focus area, with the company ranking among the top eight globally in energy storage market shipments. It has established strong partnerships with leading downstream clients, which is expected to drive further demand growth [6][26][30]. Summary by Sections Performance Overview - In the first half of 2024, the company reported revenue of 3.773 billion yuan, a year-on-year decrease of 13.8%, and a net profit of 42 million yuan, down 83.4% year-on-year. The gross margin was 14.2%, a decline of 4.6 percentage points [6][13]. - Q2 2024 showed a recovery with revenue of 2.176 billion yuan, a year-on-year increase of 15.8% and a quarter-on-quarter increase of 36.3%. The net profit for Q2 was 25 million yuan, down 63.2% year-on-year but up 54.8% quarter-on-quarter [6][15]. Focus on Energy Storage - The company has a well-rounded product matrix in the energy storage sector and has been recognized as a top player in the global market. It has successfully completed several large-scale projects, enhancing its market position [6][26][27]. - The energy storage business accounted for a significant portion of the company's revenue, with a compound annual growth rate (CAGR) of approximately 136% from 2020 to 2022 [29]. Technological Advancements - The company has made strides in solid-state battery technology, with the first generation of solid-state batteries set to be mass-produced by 2026. The energy density of these batteries is expected to reach 280 Wh/kg, with a production cost only 15% higher than conventional lithium batteries [6][18][22]. - The company has also invested heavily in research and development, with R&D expenses reaching 370 million yuan in the past year and a workforce of 1,366 dedicated to innovation [24]. Future Projections - Revenue projections for 2024, 2025, and 2026 are estimated at 8.848 billion yuan, 10.152 billion yuan, and 12.595 billion yuan, respectively, with expected year-on-year growth rates of 27.6%, 14.7%, and 24.1% [7]. - The net profit forecasts for the same years are 192 million yuan, 468 million yuan, and 644 million yuan, indicating substantial growth potential [7]. Strategic Partnerships - The company has established deep ties with leading clients in the energy storage sector, which is expected to enhance demand and sales efficiency. Its marketing and channel management have kept sales expenses at a low level compared to industry standards [26][30].