Summary of the Conference Call for 德业股份 Company Overview - **Company**: 德业股份 - **Current Valuation**: PE ratio approximately 12-13 times, dividend yield around 5% [2][3] - **2025 Performance Forecast**: Expected revenue growth of 15%-20% year-on-year [2][3] Key Industry Insights - **Core Growth Drivers**: The company's future growth is primarily driven by industrial and commercial storage (工商储) and household storage (户储) systems [2][5] - **Market Demand**: Rapid growth in demand for industrial storage, particularly in Europe and emerging markets in Asia, Africa, and Latin America [2][5][7] - **European Market Impact**: Significant growth in industrial storage installations in Europe, with a forecasted year-on-year increase of over 60% in 2025 [6][5] Financial Performance - **Historical Stock Performance**: The company has experienced three notable stock price increases, correlating with significant quarterly revenue and profit growth [4] - **2025 Revenue Projections**: Expected revenue of 3.5 billion yuan, with a net profit of 600 million yuan [17][25] - **2026 Revenue Projections**: Expected revenue of 4.2 billion yuan, with a net profit of over 700 million yuan [3][25] Product and Technology Advantages - **Product Offerings**: Introduction of modular industrial storage systems and integrated solar storage charging systems, which offer flexibility and high compatibility [2][10] - **Technical Performance**: Products exhibit strong expansion capabilities, excellent off-grid performance, and high protection ratings (IP67) [11][14] - **Cost Control**: The company maintains a gross margin higher than competitors due to large shipment volumes and strong supply chain management [16] Market Dynamics - **Emerging Market Demand**: Severe electricity shortages in emerging markets drive demand for industrial storage systems, with a focus on solar storage solutions over diesel generators [9][8] - **Competitive Landscape**: Concerns about increased competition potentially leading to margin pressure; however, historical trends suggest stability in gross margins within the inverter industry [22][24] Future Outlook - **Household Storage Growth**: Expected revenue growth in household storage from approximately 4.7 billion yuan in 2024 to 5.8 billion yuan in 2025 [18] - **Overall Profitability**: Anticipated total profit of 3.5 billion yuan in 2025, with a target of over 4 billion yuan in 2026 [21][25] - **Investment Recommendation**: The company is viewed as undervalued with attractive dividend yields, making it a recommended investment opportunity despite market concerns [25][24]

Company Update - The company has completed a share buyback, repurchasing 1.9072 million shares, which accounts for 0.21% of its total share capital, with a maximum price of 53.75 CNY/share, a minimum price of 49.9 CNY/share, and an average price of 52.44 CNY/share, utilizing approximately 100 million CNY in total funds (excluding transaction fees) [1] Commentary - The buyback reflects the company's confidence in future growth and emphasizes shareholder returns. The repurchased shares will be used for employee stock ownership plans or equity incentives, which may help align the interests of the company and its employees [2] - Short-term energy storage inverter shipments are expected to increase quarter-on-quarter in Q2 and Q3, with steady growth in household storage and a surge in industrial storage demand. The company anticipates a 20%-30% quarter-on-quarter increase in Q2 shipments, with industrial storage shipments projected at 25,000 to 30,000 units. Q3 shipments are also expected to maintain a quarter-on-quarter growth trend, with some markets like Ukraine experiencing a decline in demand [2] - The average power rating for the company's industrial storage products is currently 30KW, and new products with 100KW and 125KW ratings have been successfully delivered. A complete industrial storage solution (e.g., 125KW inverter + 215KWh battery pack) is valued at approximately 260,000 CNY, and the company is optimistic about increasing the proportion of industrial storage inverter shipments, which currently stands at about 12% [2] Long-term Outlook - The company maintains a strong leadership position in the user-side energy storage sector, with a comprehensive product series and rapid iteration speed. Its low-voltage solutions for household storage are competitive in emerging markets and Europe. The inverter industry is brand and channel-driven, making it difficult for other manufacturers to gain market share through price competition [3] - Market demand is driven by the urgent need for electricity in emerging markets, and as the prices of components and batteries decrease, the return on investment for household and industrial storage is improving. In Europe, the adoption of dynamic pricing is expected to significantly boost industrial storage demand, which currently has a low penetration rate [3] - The company has achieved a 20% price reduction for its newly launched energy storage inverters compared to the previous generation, with household storage inverters maintaining a gross margin of over 40% and industrial storage inverters currently at a gross margin of 60%. The company expects to maintain a gross margin level above 50% in the long term [3] Profit Forecast and Valuation - The company maintains an outperform rating, slightly lowering its profit forecasts for 2025 and 2026 by 8% and 6% to 3.4 billion CNY and 4.5 billion CNY, respectively, due to fluctuating demand in markets like Ukraine and Latin America. The target price has been reduced by 27% to 80 CNY, corresponding to 21x and 16x P/E for 2025 and 2026, indicating a 49% upside potential from the current stock price, which corresponds to 14x and 11x P/E for 2025 and 2026 [4]

Core Viewpoint - Company received inquiries from multiple institutions including Western Lide Fund and Tianfu Hedge Fund on March 25, 2025, indicating interest in the company's operations and future prospects [1] Group 1: Business Operations - Company focuses on overseas markets for LED driver power supply, specifically for local assembly needs of overseas lighting manufacturers, which does not conflict with domestic clients [2] - The company's subsidiary in energy storage, Songsheng Innovation, is expected to incur a loss of approximately 45 million yuan in 2024, with a significant focus on markets in Europe, America, and Asia-Pacific [3] Group 2: Financial Performance - For the first three quarters of 2024, the company's R&D expenses increased by 12.39 million yuan, primarily driven by the energy storage business [2] - The company's main revenue for 2024 reached 652 million yuan, a year-on-year increase of 16.54%, while the net profit attributable to shareholders decreased by 2.07% to 18.61 million yuan [8] - The gross profit margin for the company was reported at 27.69% [9] Group 3: Market Position - The global LED lighting driver power supply market is projected to reach 10.034 billion USD by 2029, with the company's focus on medium and high-power LED driver power supply expected to account for a market size of approximately 9.8 billion USD [5] - The company's market share in the global LED power supply manufacturers was recorded at 1.31% in 2022 [5] Group 4: Corporate Governance - The company decided not to adjust the conversion price of its convertible bonds during the board meeting held on December 26, 2024, and will not propose any downward adjustment until June 25, 2025 [6]

Investment Rating - The report does not explicitly state an investment rating for the industry or the specific company [1]. Core Insights - The company, 崧盛股份, operates in the power grid equipment industry and had a sales revenue of 1.02 billion yuan from foreign sales in the first three quarters of 2024, accounting for 15.64% of its total revenue [17]. - The company is currently facing a projected net loss for 2024 due to several factors, including losses from its energy storage subsidiary, high R&D expenditures, significant fixed asset depreciation, and increased financial costs from convertible bond interest [17]. - The company's R&D focus is on two main areas: medium and high-power LED driver power supplies and energy storage inverters, with plans for continuous innovation and product iteration [17][18]. Summary by Sections 1. Basic Research Information - The research was conducted on 崧盛股份 in the power grid equipment sector on March 17, 2025, with participation from various investment institutions [13]. 2. Detailed Research Institutions - The institutions involved in the research include 中肯私募基金, 亚太汇金基金, 华安证券, 民沣资本, and 丰坤资本 [14]. 3. Research Institutions Proportion - The report does not provide specific data on the proportion of research institutions involved [15]. 4. Main Content Information - The company’s North American sales are relatively low, and its inverter production is based in its Zhongshan smart manufacturing plant, utilizing a flexible production strategy [17]. - The company’s main revenue source remains its LED driver power supply business, despite the anticipated net loss for 2024 [17]. - The energy storage subsidiary is primarily using direct sales and selective agency agreements for market penetration [18].