Ping An Securities released a research report saying that under seasonal factors, the Q3 performance of optical storage inverters was weak as a whole, but the growth of the main track was still sufficient, and the Q3 revenue of optical storage inverter companies improved year-on-year and the profit performance was differentiated. 11 representative domestic optical storage inverter companies were selected to comprehensively analyze the Q3 performance. In the first three quarters, the revenue and profit of inverter companies were under pressure year-on-year, with 6 of the 11 companies experiencing a year-on-year decline in revenue and 8 net profit declining year-on-year, on the one hand, due to the large revenue and profit base in 2023, and on the other hand, due to the decline in distributed PV demand and inventory backlog in Europe, the decrease in demand for residential PV storage in South Africa, and the continuous decline in module and domestic large storage prices.

The main views of Ping An Securities are as follows:

The third quarter is usually a low season due to the European summer holidays.

In terms of single-quarter revenue, among the 11 sample companies, 8 companies had positive Q3 revenue growth year-on-year, and only 3 Q3 revenue had positive quarter-on-quarter growth, with year-on-year improvement but declining quarter-on-quarter, which was consistent with seasonality. In terms of net profit in a single quarter, the net profit attributable to the parent company of 5 companies increased positively year-on-year, and the net profit attributable to the parent company of 5 companies increased positively quarter-on-quarter, and the profit performance was differentiated. According to the company's business layout, the bank divided the 11 sample companies into three groups: "large storage and photovoltaic power station inverter", "distributed photovoltaic storage" and "micro inverter", and conducted business review and performance review respectively.

Big machine: The overall performance of Q3 was weak, and the profitability of Shangneng and Sunshine increased.

The bank selected five companies from Sungrow, Sineng Electric, Canadian Solar, Kehua Data and Shenghong Co., Ltd. as representative enterprises in the field of photovoltaic storage machines (high-power photovoltaic inverters, energy storage inverters and large-scale storage systems). In terms of revenue, the overall performance of Q3 was weak, with the year-on-year revenue growth of Sungrow, Sineng Electric, and Shenghong Co., Ltd. slowing down, and the remaining two declining year-on-year; Except for Sungrow, which increased slightly month-on-month, the revenue of the remaining four companies in Q3 decreased month-on-month.

In addition to factors such as the summer off-season and typhoons affecting exports, the decline or slowdown in the revenue growth rate of participants in Q3 is also related to the company's own revenue recognition rhythm. In terms of profitability, Sungrow Power Supply and Sineng Electric's net profit attributable to the parent company in the first three quarters grew positively, with a year-on-year growth rate of 5%/45% respectively. Sungrow's profit growth is small, and there is a lag in project revenue recognition, and the profit is expected to be released after the subsequent gradual confirmation. Sineng Electric's Q3 profitability was outstanding, mainly due to the increase in the proportion of overseas business, and the reduction of R&D costs to help increase gross profit margin.

Distributed: Q3 revenue and profit were weak sequentially and improved year-on-year.

The bank selected four companies, Deye Co., Ltd., Jinlang Technology, GoodWe and SolaX Energy, as representative enterprises of distributed optical storage. In terms of business layout, Deye and SolaX Power focus more on energy storage, and the new energy business layout is mainly overseas; Jinlang and GoodWe focus more on photovoltaic string inverters, and their business layout takes into account both domestic and foreign markets.

In the first three quarters, the revenue of Deye and Jinlang Technology increased year-on-year, mainly benefiting from the growth of emerging markets in Asia, Africa and Latin America, while the remaining two were affected by weak demand in Europe to a certain extent. In the third quarter, the revenue of major players improved year-on-year and was weak sequentially, and the performance was greatly affected by seasonal factors in Europe and emerging markets. In the third quarter, the net profit attributable to the parent company of Deye Co., Ltd., Jinlang Technology and SolaX Energy increased year-on-year, with a growth rate of 230%/155%/34% respectively, and the profit improved year-on-year under the low base in the early stage.

Microinverter: Hoymiles has excellent profitability and outstanding performance in Q3.

The bank selected two companies with microinverters as their main business, Hoymiles and Yuneng Technology, as the representative enterprises in the micro-inverter link. From the perspective of business structure, in the first half of the year, the revenue of the two companies micro-inverter + switch accounted for more than 75%, and the most important regions of performance contribution were Europe. Yuneng Technology has laid out the domestic industrial and commercial storage business, and contributed a large revenue increment in the first three quarters.

In the first three quarters, the net profit attributable to the parent company of the two companies decreased year-on-year, mainly due to the year-on-year decline in European market demand. In the third quarter, Hoymiles achieved a net profit attributable to the parent company of 58 million yuan, a year-on-year decrease of 13%; Yuneng Technology achieved a net profit attributable to the parent company of 62 million yuan, an increase of 33% year-on-year, and under the influence of the European summer vacation in the third quarter, the net profit attributable to the parent of the two major participants decreased or slowed down in a single quarter. In addition to the micro-inverter business, Yuneng Technology actively expanded the industrial and commercial storage business, which to a certain extent made up for the sluggish demand in Europe, and the performance was relatively better than that of the previous quarter.

Investment suggestion: Preferential overseas large savings, emerging market household savings, micro-inverters and other outstanding performance enterprises.

Recommended: Sungrow Power Supply (300274.SZ), a leading enterprise in the overseas export of photovoltaic storage large machines, and excellent profitability; Deye shares (605117.SH) with strong strength and good earnings performance in emerging markets.

It is recommended to pay attention to: Sineng Electric (300827.SZ) with large storage going overseas smoothly and obvious improvement in profitability; The leader of domestic micro-inverters, Hoymiles shares (688032.SH) are expected to benefit from the recovery of the European market and the rise of the balcony scene.

Risk warning: 1. The risk that the market demand growth is less than expected. 2. The risk of intensifying competition in the global market. 3. The risk of tightening market restrictions.