The global household savings leader continues to be weak, why is the stock price of Paineng Technology falling endlessly?

On November 15, the closing price of Peneng Technology (SH.688063) was 117.13 yuan. On the 16th, it opened at 116.50 yuan, and after climbing to a high of 116.99 yuan, it returned to the downward channel, shocking investors in the stock comment area with a "wow" voice.

Peneng Technology, which has the crown of "Global Household Storage Pioneer", has also had a highlight moment. In August 2022, the company's share price once stood at 506.07 yuan. However, the good times did not last long, and after rising 4 times in more than four months, it fell back to its original position step by step.

The third quarter report of 2023 just released by Paineng Technology has really made countless "leeks" who are still hoping to turn over completely die down. The scale of the decline in key data is staggering. In the third quarter, the main revenue of Peneng Technology was 492 million yuan, a year-on-year decrease of 71.29%, the net profit attributable to the parent company in a single quarter was -38.3103 million yuan, a year-on-year decrease of 110.05%, and the non-net profit deducted in a single quarter was -51.0986 million yuan, a year-on-year decrease of 113.43%.

The worst report card in the history of Peneng

Founded in 2009, Peneng Technology is a wholly-owned subsidiary of ZTE. It started in the communication backup business, and gradually shifted its focus to household energy storage after 2013.

In 2020, the company landed on the Science and Technology Innovation Board and has always been an excellent student in A-shares. The revenue reached 1.12 billion yuan and the net profit was 274 million yuan. In 2022, the operating income was 6.013 billion yuan, a year-on-year increase of 191.55%, and the net profit attributable to the parent company was 1.273 billion yuan, a year-on-year increase of 302.53%. The excellent performance extended to the first quarter of this year, with a single-quarter operating income of 1.841 billion yuan, a year-on-year increase of 126%, and a net profit attributable to the parent company of 462 million yuan, a year-on-year increase of 355%.

No one thought that the happy time would be so short. The decline in the data of Peneng Technology in the second quarter of 2023 is staggering - the operating income in the second quarter fell to 716 million yuan, a year-on-year decrease of 31.9%, and the net profit was directly halved to 231 million yuan. However, this is not the worst time, and then it fell directly to the freezing point, and the net profit attributable to the parent company in the third quarter of 2023 was -38.3103 million yuan, a year-on-year decrease of 110.05%.

In just half a year, the company's net profit attributable to the parent company has fallen from 462 million yuan to -38.3103 million yuan, where did the nearly 500 million yuan go?

According to the company's semi-annual report in 2022, overseas sales revenue accounted for 97.26% of the main business income. It is understood that in terms of business development, Paineng Technology mainly cooperates with local energy storage system providers. For example, Segen, the largest photovoltaic system provider in the United Kingdom, Krannich, a German photovoltaic storage system provider, and Energy, an Italian energy storage system provider.

In 2022, due to the high natural gas prices and unstable electricity consumption in Europe due to the Russia-Ukraine conflict, the new installed capacity of European household storage will reach 9.3GWh, a year-on-year increase of 142%, accounting for 60% of the global total. Italy's household storage installed reached 2.0GWh, up 384.7% year-on-year, while Germany's installed household storage reached 1,839MWh, up 49.9% year-on-year. The surging market demand was also reflected in the 2022 annual report - the data showed that the operating income of the year was 6.013 billion yuan, a year-on-year increase of 191.55%, and the net profit attributable to the parent company was 1.273 billion yuan, a year-on-year increase of 302.53%.

There was a loss in net profit per Wh

Entering 2023, the European energy storage market has begun to shrink significantly. S&PGlobal data shows that in the second quarter of 2023, global residential energy storage shipments fell by 2% compared to the first quarter, which is the first time since the statistics of household storage are available. Belgium and Spain saw a year-on-year decline of 60 percent, and Italy saw a drop of more than 40 percent. Some industry analysts predict that with the completion of 16.5% of Italy's stock housing renovation ratio, close to the country's target of 19% in 2030, the follow-up market demand will continue to weaken, and it will be difficult to maintain the growth rate in 2022.

For the European market as a whole, due to the excessive number of stockpiles in 2022, a large part of which needs to be absorbed in 2023, the European residential energy storage market shipments reached about 9.8GWh in 2022, however, the actual installed capacity is only 4.6GWh. According to S&PGlobal's estimates, household storage stocks in key European markets remained at nearly 5GWh at the end of 2022, including products transshipped from Asia to warehouses and those waiting to be installed. The agency expects that the new installed capacity in the European residential market will reach 9.57GWh in 2023, which means that the annual energy storage shipments in the European market in 2023 will be less than 5GWh.

The fish are thin. The sluggish market demand has also led to a rapid decline in the export volume of Paineng Technology. According to a research report from Soochow Securities, Peneng Technology shipped 1,680GWh in the first three quarters, down 23% year-on-year. Among them, only 300MWh was shipped in the third quarter, down 70% year-on-year. According to data, the company's shipments in the first quarter have reached 1GWh, which means that the shipments in the second quarter are only 380MWh.

According to the 2022 annual report, the annual sales volume of energy storage system products was 3.5GWh. According to the above-mentioned institutions, the shipment volume of Paineng Technology in 2023 will only be 2.2 to 2.3GWh, a year-on-year decrease of about 35%.

The above situation is undoubtedly a huge blow to Peneng Technology, whose customers are mainly concentrated in Europe.

The demand is lower than expected, and the lithium carbonate continued to decline in the first half of 202, which continues to pull down the price of the single product of Peneng Technology. According to Soochow Securities' estimates, the average price of the company's Q3 battery is 1.85 yuan, down 7% month-on-month. According to this price, the gross profit of a single wh is 0.41 yuan/wh, and the loss is 0.014 yuan. If the 40 million exchange gains and losses and equity incentives are deducted, the unit WH profit is expected to be 0.01 yuan, down 97% year-on-year and 96% month-on-month.

The agency said that there is still downward pressure on the price of household storage batteries in the follow-up. In 2024, the capacity utilization rate in Q1 is expected to recover, and the subsequent profit per Wh is expected to recover to 0.1-0.2 yuan/Wh.

Where are the new growth points?

Fortunately, energy storage shipments in the European market are starting to pick up as expected.

The EESA expects inventory clearance to continue until the end of 2023, with European inventory levels returning to a reasonable size (around 4GWh) by the end of 2023. In the first half of this year, Germany and the United Kingdom have installed more household storage capacity than last year's total. For emerging markets in Southern and Eastern Europe, including Poland, Greece and the Czech Republic, there is also relatively good room for market growth due to strong government subsidies and a rising mature PV market.

Special mention should be made of the rise of the energy storage market in South Africa. Due to the chaotic power supply situation, South Africa's energy storage shipments in the second quarter of 2023 increased by more than 300% year-on-year, making it the fastest growing household storage market in the world this year.

The global energy storage market is warming. Some companies that have laid out emerging markets in advance have already tasted the sweetness. In July this year, Deye said that the company's inverter business benefited from the outbreak of household savings in South Africa, and its performance exceeded expectations, with high growth against the trend month-on-month. On November 10, Penghui Energy said on the interactive platform that the company has obtained energy storage-related orders in South Africa, Europe and Australia this year. In addition, there are also Jinlang Technology, Daqin Digital Energy, Honeycomb Energy and other enterprises have poured into South Africa.

For Paineng Technology, there is always an unavoidable fetter when expanding the global market: the lack of the right to speak. Sonnen is Europe's No. 1 energy storage system integrator and one of the top five customers of Pinetech. The two companies have been working together since 2017, and in 2018 and 2019, Sonnen was the largest customer of Peneng, with the main sales markets in Germany and the United States.

However, Sonnen has a lot of exclusivity terms with Penon. For example, if Sonnen purchases the agreed amount during the agreed period, whether the company can sell products to other companies that compete with it, and cannot sell customized products that are agreed in the contract. To a certain extent, this limits the further expansion of the sales share of Paineng Technology in markets such as Germany and the United States.

On September 8, when asked at an investor event "in addition to the European market, which markets the company will focus on this year", Peneng Technology said that the company's household energy storage products and marine batteries based on the same battery cells have passed the Japanese JET certification, laying a good foundation for future market expansion; In addition, in its 2023 semi-annual report, Peneng emphasized that it has participated in grid-level projects in the existing European markets in the Americas and Asia-Pacific regions.

It can be seen that in the first half of this year, Peneng Technology has begun to look for new markets and business expansion points. However, in the 2023 semi-annual report and the third quarter report, we have not yet seen significant progress on the company in some emerging markets.

At present, the domestic energy storage market is in full swing. On October 27, Peneng Technology said on the investor interactive platform that the company launched an integrated energy storage system based on long-life and large-capacity aluminum shell energy storage batteries. It is understood that its future use scenarios are domestic industrial and commercial energy storage, renewable energy supporting energy storage, microgrid energy storage, etc.

In 2023, the European energy storage market will suddenly change, which is both a challenge and an opportunity for Paineng Technology, and it may be the long-term way to expand emerging markets, seek the landing of large-capacity energy storage systems, and enjoy the dividends of the development of the domestic energy storage industry. (Zhiling Finance & Energy Storage Research Institute)