Sungrow Power Supply(SZ:300274)2025-08-31 16:21Summary of Sungrow Power Supply Co., Ltd Conference Call Company Overview - Company: Sungrow Power Supply Co., Ltd - Ticker: 300274.CH - Industry: Energy Storage Systems (ESS) and Solar Inverters Key Financial Highlights - 2Q25 Net Earnings: RMB 3.91 billion, a 37% increase year-over-year but below consensus expectations of RMB 4.98 billion [2] - 1H25 Net Earnings: RMB 7.7 billion, representing 62% of FY consensus estimates of RMB 12.36 billion [2] - 2Q25 Revenue: RMB 24.5 billion, a 33% increase year-over-year, driven by strong ESS sales [3] - 1H25 Revenue: RMB 43.5 billion, representing 49% of FY estimates of RMB 89.4 billion [3] - Gross Profit Margin (GPM): 34% in 2Q25, up from 30% in 2Q24, exceeding consensus expectations of 30.7% [2][14] Segment Performance - ESS Segment: Revenue grew by 128% year-over-year to RMB 17.8 billion, with stable GPM of 40% [3][18] - Inverter Sales: Grew by 17% to RMB 15.3 billion, lagging behind industry solar growth of 60%, with margins declining to 36% [3][17] - New Energy Development: Revenue declined by 6% year-over-year to RMB 8.4 billion, with GPM of 18% [3] Strategic Developments - H-Share Listing: The board approved plans for a secondary H-share listing to enhance global competitiveness and diversify financing sources, expected within 24 months [4] - Cash Position: Strong cash position with net cash of RMB 9.7 billion and net gearing at -27% [5][20] Market Outlook and Risks - Market Sentiment: Despite strong performance, caution is advised due to anticipated solar slowdown in 2H and rising US ESS tariffs in 2026 [1] - Investment Risks: Include elevated inventory and margin pressure, potential market share loss, and policy shifts targeting Chinese suppliers [35] Valuation Metrics - Price Target: RMB 65.00, implying a 37% downside from the current price of RMB 102.60 [6][29] - Valuation Ratios: Projected 2025 P/E of 11.5x, EV/EBITDA of 8.7x, and P/S of 1.5x [22][28] Conclusion - Rating: Market-Perform with a cautious outlook on growth due to competitive pressures and market dynamics [29]