Deye(SH:605117) HTSC·2025-08-29 08:10Investment Rating - The report maintains a "Buy" rating for the company [7][9]. Core Views - The company reported Q2 2025 revenue of 2.969 billion RMB, with year-on-year and quarter-on-quarter growth of 3.7% and 15.7% respectively. The net profit attributable to shareholders was 817 million RMB, reflecting a year-on-year increase of 1.7% and a quarter-on-quarter increase of 15.7%. The adjusted net profit was 849 million RMB, with a year-on-year increase of 15.1% and a quarter-on-quarter increase of 38.6%. The lower net profit compared to previous expectations was attributed to the active removal of old inventory in Europe, which slowed down shipments in the European household storage market. The report expresses optimism about the company's forward-looking layout in emerging markets and the contribution of industrial and commercial storage to performance growth [3][4][5]. Financial Performance - In H1 2025, the company's inverter revenue reached 2.64 billion RMB, representing a year-on-year increase of 13.9%. The gross margin was 47.83%, an increase of 0.82 percentage points compared to the same period last year. The sales of energy storage inverters accounted for a higher proportion, with estimated gross margins of approximately 51% for energy storage inverters, 31% for string inverters, and 30% for micro-inverters. The total inverter shipments in H1 2025 were 763,800 units, with energy storage inverters accounting for 315,600 units, including 272,700 units for household storage and 42,900 units for industrial and commercial storage, which saw a year-on-year growth rate of 213% [4][5]. Market Outlook - The report highlights a recovery in the European market and growth in markets such as Indonesia and Australia, with the company's products demonstrating strong competitiveness. The completion of inventory reduction in European household storage and the increase in industrial and commercial storage demand are noted. The company has launched solutions tailored for the Indonesian market, which is characterized by complex installation environments, and has seen rapid growth in shipments following subsidy implementation in Australia. The company introduced a commercial energy storage system solution with a modular design that reduces costs by 30%, enhancing product competitiveness [5][6]. Employee Incentives - The company announced an employee stock ownership plan draft in August, allowing up to 800 employees to subscribe to 0.21% of the share capital at a price of 30.19 RMB per share. The assessment target for 2025 is a net profit of 3.1 billion RMB, which is considered achievable, and the equity incentive is expected to motivate core employees and enhance team cohesion [6][7]. Valuation - The report revises the company's net profit forecasts for 2025-2027 to 3.573 billion RMB, 4.436 billion RMB, and 5.287 billion RMB respectively, down by 10%, 12%, and 12% from previous estimates. The target price is set at 82.95 RMB, based on a price-to-earnings ratio of 21 times for 2025, maintaining the previous valuation [7][9].