The picture comes from the official website of Sungrow
On the evening of April 22, the photovoltaic storage faucet Sungrow Power Supply (300274. SZ) released its 2023 annual and first quarter 2024 financial reports, judging from the overall indicators of last year, the company's revenue and net profit still maintained rapid growth, which is eye-catching in the photovoltaic manufacturing sector, but the year-on-year growth rate of revenue and net profit in the first quarter of this year has dropped significantly, which also shows the hidden worries of the industry during the turbulent period.
The year-on-year growth rate of revenue and net profit hit a new high in ten years
According to the financial report, in 2023, Sungrow will achieve operating income of 72.251 billion yuan, a year-on-year increase of 79.47%, and net profit attributable to the parent company of 9.44 billion yuan, a year-on-year increase of 162.69%. From the perspective of these two key indicators, the company's year-on-year performance is better than that in 2022 (2022 revenue increased by 66.79% year-on-year, and net profit attributable to the parent increased by 127.04% year-on-year), of which the revenue growth rate hit a new high since 2013, and the growth rate of net profit attributable to the parent company was the best performance since 2010.
The data comes from Straight Flush iFinD, charted by Titanium Media APP
According to the data released by the China Photovoltaic Industry Association (CPIA), 2023 will add 216.88GW of new photovoltaic capacity in mainland China, with a year-on-year growth rate of 148.12%, and the installed capacity in December alone is equivalent to the installed capacity in the whole year of 2021. One of the main components of the photovoltaic power generation system, photovoltaic inverter and photovoltaic investment and development as the main business of Sungrow (in the company's revenue composition, the photovoltaic industry accounted for 69.97%), its sales are also "hot", according to the annual report, the company's revenue growth is mainly due to the continuous development of the market, the expansion of sales scale. In 2023, Sungrow's global shipments of PV inverters will reach 130GW, a year-on-year increase of 68.8%. It is worth noting that in the field of photovoltaic inverters, Sungrow and Huawei have been the top two in the global shipment list since 2015, with a combined market share of more than 50% in 2022.
In terms of profitability, according to the financial report, under the influence of brand premium, product innovation, scale effect, decline in freight costs, and foreign exchange gains, Sunshine Film's gross profit margin in 2023 will increase by 5.81% year-on-year, reaching 30.36%, supporting the growth rate of net profit attributable to the parent company to hit a new high in 13 years.
However, it should be noted that in the performance forecast announced by Sungrow on the evening of January 22, the revenue was between 71 billion yuan and 76 billion yuan, and the year-on-year growth rate of revenue was between 76% and 89%, and the net profit attributable to the parent company was between 9.3 billion yuan and 10.3 billion yuan, with a year-on-year growth rate of 159% to 187%.
In the photovoltaic manufacturing sector, Sungrow's performance is outstanding, compared with companies in the field of main materials with greater price pressure, the company's performance growth rate is in the first echelon, for example, JinkoSolar (688223. SH) is already the "leader" in the sector, but its 43.55% year-on-year revenue growth rate and 153.20% year-on-year growth rate of net profit attributable to the parent company are still slightly inferior to Sungrow.
However, in 2024, the industry situation will change again. The China Photovoltaic Industry Association has predicted that the conservative estimate of new PV capacity in mainland China in 2024 will be 190GW, lower than in 2023, and the optimistic forecast is expected to be 220GW, which is only basically the same level as in 2023. Titanium Media APP also learned from some industry insiders and experts that it is the general trend that the growth rate of installed capacity will decline sharply in 2024. In the national power industry statistics released by the National Energy Administration from January to March on April 22, although the installed photovoltaic capacity in the first quarter still increased by 36% year-on-year, but looking at March alone, the new installed capacity of photovoltaic was 9.02GW, a year-on-year decrease of 32%, which is also the first decline in the monthly growth rate of installed capacity in many years. The weakening of the demand side will directly affect the sales and decentralization of manufacturing products, and it is also easy to intensify the competition between enterprises, leading to problems such as "price wars". Sungrow had previously predicted in investor exchanges that the growth rate of inverter demand would slow down in 2024, and in the annual report, the company also specifically reminded that "the competition in the inverter market is still very fierce, and if the company cannot maintain its leading edge in technological innovation, new product development and cost control, the product will face the risk of declining product gross profit margin." In the first quarter of 2024, Sungrow achieved operating income of 12.614 billion yuan, a slight increase of only 0.26% year-on-year, a decrease of 51.58% month-on-month, and a net profit attributable to the parent company of 2.096 billion yuan, a year-on-year increase from 266.9% in Q1 last year to 39.05% this year, a decrease of 5.43% from the previous quarter, and considering that the company's net profit attributable to the parent company in the fourth quarter of last year has been 22.74% quarter-on-quarter, this is the second consecutive quarter of decline in its profit. Judging from the past situation, whether it is downstream installation or upstream sales, the first quarter is the off-season, and it remains to be seen whether Sungrow can quickly recover in the second quarter and thereafter.
The new installed capacity and forecast of PV in mainland China, the picture comes from CPIA
In addition, in terms of dividends, according to the annual profit distribution and capital reserve conversion plan disclosed by Sungrow, it plans to distribute cash dividends of 9.65 yuan (tax included) to all shareholders for every 10 shares, with a total cash dividend of about 1.417 billion yuan (tax included), accounting for 15.01% of the net profit attributable to the parent company, and at the same time, the company also plans to use capital reserve to increase 4 shares for every 10 shares to all shareholders.
A month after the stock price counterattacked the "photovoltaic Mao", it gave back the "top spot" in the market value of the sector
Compared with the performance, Sungrow's recent stock price may be more concerned.
On March 22 this year, Sungrow's share price rose, surpassing LONGi Green Energy (601012. SH）。 By the close of the day, the market value of Sungrow Power Supply was 152.926 billion, still higher than LONGi Green Energy's 152.243 billion.
Since then, Sungrow has been sitting on the "top spot" in the market value of the sector, but just a full month later, on the trading day (April 22) before the release of the financial report, the share price of LONGi Green Energy was affected by factors such as HHLR, a subsidiary of Hillhouse, being ordered to buy back the shares of LONGi that it had illegally reduced, and the market value once again surpassed Sungrow, whose stock price was down, and regained the top spot. As of the close of trading on April 22, LONGi Green Energy closed up 4.34%, with a share price of 19.25 yuan per share and a total market value of 145.877 billion yuan, while Sungrow closed down 1.23% with a share price of 93.99 yuan per share and a total market value of 139.589 billion yuan. However, compared with the market capitalization high at the end of 2021, LONGi Green Energy has shrunk by as much as 73%, and the relatively strong Sungrow Power Supply has also shrunk by 45%.
The data comes from Straight Flush iFinD, and the Titanium Media APP is mapping
In terms of net profit, the prices of silicon wafers, cells and modules, which are the main photovoltaic materials of LONGi Green Energy, will plummet in 2023, and the pressure on its profitability is much greater than that of Sungrow, which focuses on inverters, new energy investment and development and energy storage systems.
In addition, in the community exchange, Titanium Media APP saw that many investors held similar views, believing that in addition to the different profits of photovoltaic inverters and the different business models of enterprises, Sungrow's deeper cultivation in the "new outlet" of energy storage is also one of the reasons why it is more sought after than the old photovoltaic leaders. In fact, in 2023, Sungrow's energy storage business revenue has reached 17.802 billion yuan, a year-on-year increase of 75.79%, accounting for 24.64% of the company's total revenue, which is one of the core businesses. In the business review of the annual report, Sungrow said that the company will ship 10.5GWh of energy storage systems globally in 2023, ranking first among Chinese enterprises in terms of shipment volume for eight consecutive years, in addition, it has also launched the world's first 10MWh fully liquid-cooled energy storage system, and for overseas large-scale ground application scenarios, it has also launched the PowerTitan2.0 liquid-cooled energy storage system with "three-electric integration". It is worth noting that on the eve of surpassing LONGi Green Energy in terms of market capitalization, Sungrow was also on the "hot list" of industry discussions because of energy storage. In March, Zhongguancun Energy Storage Industry Technology Alliance announced the global energy storage system shipments in 2023, and Sungrow ranked first among Chinese enterprises, but in the domestic energy storage system shipment ranking, Sungrow did not enter the top ten, which caused controversy, Gu Yilei, senior vice president of Sungrow Power Supply and president of Optical Storage Group, clarified on March 20 that the company did not participate in the selection of domestic rankings, and said that "domestic companies, especially non-listed companies, provide a lot of relevant data, which is difficult to be objective and fair, so the company is unwilling to participate" , which aroused a fierce discussion in the industry about the authenticity and gold content of the list and selection.
However, from the current point of view, the energy storage industry is also caught in the "involution" and "price war", titanium media APP has mentioned in previous reports that as of the end of 2023, the average capacity utilization rate of the new energy storage industry is only about 50%, and by February this year, the average bid price of domestic energy storage systems has decreased by 37% year-on-year, and some companies have bid for future related businesses at a loss price.
In addition to new energy storage, hot concepts such as hydrogen energy and AI are also frequently mentioned
Sungrow, which has always expressed its expectations for the future of energy, is obviously not satisfied with staying at the current trend of new energy storage, and the more cutting-edge, yet large-scale and commercial hydrogen energy has become the company's key layout direction in recent years.
In the annual report, Sungrow introduced hydrogen energy as its main business, disclosing that its subsidiary Sungrow Hydrogen Energy ranked second in the country in terms of domestic project bids and contract market share in 2023, and took the lead in proposing the concept of flexible hydrogen production in China, and released a flexible hydrogen production system solution, and its flexible hydrogen production system has been applied in many large-scale demonstration projects in China. The company said that Sunshine Hydrogen Energy will focus on innovation, adhere to the value proposition of "making electric hydrogen conversion more efficient", continue to lead product and technological progress, and promote the high-quality development of the hydrogen energy industry. Titanium media APP also noted that in the fourth quarter of last year, Sungrow disclosed that the company has invested heavily in hydrogen energy in the past two years, and the project landing and implementation cycle in this field is generally long, and it is expected that it will gradually enter the large-scale application stage after about 5 years. The company will win more bids in 2023, and it is expected that the revenue of hydrogen energy business will gradually improve from 2024. According to previous market news, Sunshine Hydrogen Energy completed a round of financing of 660 million yuan at the end of 2023, and according to the latest disclosed annual report, after the capital increase and share expansion of Sunshine Hydrogen Energy, the shareholding ratio of Sungrow Power Supply as the parent company decreased from 100% at the beginning of the period to 74.29%.
In addition, AI has also become a hot word in Sungrow's financial report, in response to competitive risks, the company said that it will accelerate the upgrade and iteration of new products, accelerate the research and application of AI technology, continue to provide customers with value-added services, pursue better customer experience, and always maintain product leadership in the market. According to the introduction of related products, AI has indeed been applied to mainstream products such as Sungrow's SG320HX series string inverters and PowerStack 200CS industrial and commercial energy storage systems. In the future outlook, Sungrow also mentioned that it will continue to increase innovation, make in-depth breakthroughs in power electronics, power grid support and AI technology, create integrated solutions, improve the interoperability of product software and hardware, deepen the in-depth integration and application of AI technology in key links such as R&D, products and solutions, and continue to provide competitive products.
In the boom of AI development, how to apply it to the new energy manufacturing industry, improve product quality, and operate energy efficiency has sparked a lot of discussions in the industry. (This article was first published on Titanium Media APP, author|Hu Jiameng, editor|Liu Yangxue)
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