Sungrow Power Supply(SZ:300274) Changjiang Securities·2024-05-30 10:31Investment Rating - The report maintains a "Buy" rating for Sungrow Power Supply (300274 SZ) [5] Core Views - Sungrow's profitability in both the short and long term is expected to outperform expectations, driven by its inverter and energy storage system integration businesses [5] - The company's 2023 performance exceeded expectations, with a 163% YoY increase in net profit attributable to shareholders, reaching 9 44 billion yuan [5] - The report forecasts net profits of 10 9 billion yuan and 13 billion yuan for 2024 and 2025, respectively, with corresponding P/E ratios of 14x and 12x [7] 2023 Performance Analysis - Sungrow's inverter business achieved a gross margin of 37 9% in 2023, up 4 7 percentage points YoY, while the energy storage system business saw a gross margin of 37 5%, up 14 2 percentage points [5] - Factors contributing to the profit increase included cost reductions, market and product structure optimization, as well as favorable exchange rates, freight costs, and raw material price declines [5] - Exchange rates and freight costs contributed 3-5 percentage points to the gross margin for both inverter and energy storage businesses, while lithium carbonate price declines added over 5 percentage points to the energy storage business [5] - Excluding these factors, the "real" gross margins for inverters and energy storage were estimated at 33%-35% and 27%-30%, respectively, showing stability or slight improvement compared to 2022 [5] 2024 Outlook - The inverter business is expected to maintain a gross margin of around 35% in 2024, with a net profit margin of approximately 20% [6] - The energy storage business is projected to achieve a gross margin of over 30% and a net profit margin of over 15% [6] - The company's profitability will be supported by product and market structure optimization, scale effects, and continued benefits from lithium carbonate price declines [6] Long-Term Profitability (2025 and Beyond) - The inverter business is expected to maintain a gross margin of 30%-35%, with a net profit per watt of 3-4 fen/W [7] - The energy storage business is projected to achieve a gross margin of 25%-30% and a net profit margin of over 12% [7] - Key competitive advantages include strong barriers in overseas markets for large inverters and energy storage systems, supported by global service capabilities, brand reputation, and product reliability [7] Market and Product Structure - The inverter business will benefit from increased channel product shipments, with overseas markets contributing higher gross margins (over 40%) compared to domestic markets (15%-20%) [6] - The energy storage business will focus on expanding in high-profit overseas markets such as the US, Europe, and Asia-Pacific, with scale effects helping to reduce costs and dilute expenses [6] Competitive Advantages - Sungrow's global service network, brand recognition, and product reliability create significant barriers to entry in overseas markets, particularly for large inverters and energy storage systems [7] - The company's early entry and comprehensive capabilities in the energy storage sector have established a strong competitive position, with a leading global market share and advanced technology [7]