Flash | 15 Oct 2025 02:07:14 ET │ 13 pages Ginlong Technologies (300763.SZ) 3Q25 Profit Cut Miss; Prefer Sungrow and Deye for Higher Sales Mix from ESS CITI'S TAKE Ginlong reported net profit of +29.4% yoy to Rmb865m in 9M25, including -16.8% yoy and -35.4% qoq to Rmb263m in 3Q25. Its quarterly profit cut was a miss vs. consensus (Bloomberg) forecasting its profit of up 68% yoy to Rmb1,158m in 2025E. We attribute Ginlong's earning miss likely to (i) low revenue growth of +3.4% yoy to Rmb1,869m in 3Q25 with ...

Summary of Sungrow Power Supply Conference Call Company Overview - **Company**: Sungrow Power Supply - **Ticker**: 300274.SZ - **Sector**: Technology - **Main Products**: PV inverters, energy storage equipment, solar EPC [15][16] Key Industry Insights - **Earnings Pressure**: Expected earnings pressure in the second half of 2025 due to softening demand in China and emerging markets [1][2] - **China Demand**: Anticipated lackluster demand in China post-531 grid-connection deadline, leading to a slowdown in energy storage system (ESS) demand in 2H25 [2][3] - **Emerging Markets Competition**: Intensified competition in emerging markets, particularly in the Middle East, may cap shipments and earnings [3][4] Financial Performance and Projections - **Earnings Estimates**: - 2Q25F earnings raised due to strong front-loaded US shipments - 2H25F earnings lowered due to tariff impacts and demand softening [1][4] - **Revised EPS**: - 2025F EPS revised to CNY5.83 from CNY5.12 - 2026F EPS revised to CNY5.98 from CNY5.88 [4][5] - **Revenue Projections**: - FY25F revenue estimated at CNY88,142 million, down from previous estimates [5] - **Profit Margins**: Expected margin pressure in ESS and solar inverter businesses due to competition and tariffs [4][16] Tariff and Regulatory Environment - **Tariff Impact**: - US tariffs on ESS shipments have been a significant concern, with a recent reduction to 30% on May 12, 2025, but still resulting in a 40.9% tariff for 90 days [1][3] - **Policy Changes**: The 531 mandatory storage policy in China is expected to trigger a surge in installations in 1H25, but demand is likely to slow thereafter [3] Valuation and Target Price - **Target Price**: Increased to CNY60 from CNY58, reflecting better 2Q25 earnings expectations [4][7] - **P/E Ratio**: Current trading at 11.2x 2025F P/E, with a target based on 10.3x 2025F P/E [4][7] - **Market Capitalization**: Approximately USD 18.8 billion [7][11] Risks and Opportunities - **Upside Risks**: - Potential for reduced tariffs on ESS batteries made in China - Better volume growth in certain regions [16][28] - **Downside Risks**: - Continued tariff headwinds for ESS business - Failure to secure large ESS projects in emerging markets [16][28] Additional Insights - **ESG Alignment**: Sungrow is positioned well within the ESG framework as a leading solar inverter company contributing to renewable energy generation [17] - **Market Performance**: The stock has shown a mixed performance with a 12-month absolute return of -13.7% [11] This summary encapsulates the critical points from the conference call, highlighting the company's current position, financial outlook, and the broader industry context.

Summary of Sungrow Power Supply (300274.SZ) Conference Call Company Overview - **Company**: Sungrow Power Supply - **Ticker**: 300274.SZ - **Market Cap**: Rmb121,946 million (approximately US$16,733 million) [11] Key Financial Highlights - **2024 Net Profit**: Rmb11,036 million, up 16.9% year-over-year, aligning with consensus estimates [2] - **1Q25 Net Profit**: Rmb3,826 million, a significant increase of 82.5% year-over-year, driven by: - Inverter shipment volumes increased by 19% year-over-year to 34GW - Energy-storage system (ESS) shipments surged to 12GWh, a 4.7x increase year-over-year [2] - **Gross Profit Margin**: Increased by 2.8 percentage points year-over-year to 29.9% in 2024 [2] Shipment and Revenue Projections - **Inverter Shipment Target for 2025**: Expected to rise by 10-20% year-over-year, with an assumption of 162GW [3] - **ESS Shipment Target for 2025**: Initially projected at 40-50GWh, now revised down to 35GWh (+25% year-over-year) due to anticipated tariff increases [3] Market and Tariff Impact - **US Market Importance**: Accounts for 10-20% of revenue, but is crucial for higher margins [1] - **Tariff Impact**: ESS shipments to the US have been suspended due to tariffs exceeding 100%, while inverter shipments remain unaffected as they are produced in Thailand [4] - **Mitigation Strategies**: The company is focusing on cost control and exploring sales in non-US markets to offset tariff impacts [4] Regulatory Environment - **PRC Government Policy No.136**: Introduced on February 9, 2025, adds uncertainty to ESS demand, with a rush in renewable capacity installations expected before June 1, followed by a sharp decline [5] Valuation and Recommendations - **Target Price**: Increased by 10.4% to Rmb53/share [1] - **Current Valuation Metrics**: - Price-to-Earnings Ratio (PER): 12.4x for 2025E - Price-to-Book Ratio (PB): 2.7x - Dividend Yield: 1.7% [1][7] - **Analyst Rating**: Cautious outlook with a "Sell" rating due to uncertainties despite the earnings beat [1] Additional Insights - **Future Earnings Projections**: Net profits are expected to increase by 12% for 2025E and 9% for 2026E [1] - **Overall Market Sentiment**: Despite strong performance in 1Q25, the company faces significant uncertainties that could impact future profitability and growth [1][14]

Investment Rating - The report downgrades the investment rating of Sungrow Power Supply from Buy to Neutral, with a target price reduced from CNY 100 to CNY 58 [3][5][21]. Core Insights - The earnings for 1Q25 exceeded expectations due to strong growth in the energy storage system (ESS) segment, with revenue growth of 50.9% year-on-year [1]. - Despite strong shipment forecasts for 2025, the report expresses caution regarding potential earnings due to tariff headwinds and increased competition in emerging markets [2][3]. - The company has suspended ESS shipments to the US market, which typically offers better gross margins, impacting future earnings [2][3]. Summary by Sections Financial Performance - Sungrow reported 4Q24 revenue of CNY 27.9 billion, an 8.0% year-on-year increase, and 1Q25 revenue of CNY 19.0 billion, a 50.9% year-on-year increase [1]. - The net profit for 4Q24 was CNY 3,437 million, up 55% year-on-year, and for 1Q25, it was CNY 3,826 million, up 83% year-on-year [1]. Shipment Forecasts - For 2025, solar and ESS shipments are estimated at 160GW (up 9% year-on-year) and over 40GWh (up 43% year-on-year), respectively [2]. - The company reported solar inverter and ESS shipments of 147GW and 28GWh in 2024, aligning with previous estimates [1]. Valuation Metrics - The new target price of CNY 58 is based on a P/E ratio of 11.3x for 2025F, reflecting a decrease from the previous 16x due to anticipated margin pressures [3][13]. - The report indicates a projected normalized EPS decline from CNY 5.67 to CNY 5.12 for 2025F [3][4]. Market Context - The report highlights intensified competition in the Middle East market, which may further limit Sungrow's shipment and earnings growth in 2H25 [2]. - The company is facing challenges from increased anti-dumping and countervailing duties affecting solar module shipments to the US [2].