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According to the official Weibo account of Sungrow Power Supply, on July 15, Sungrow Power Supply and Saudi Arabia's ALGIHAZ successfully signed the world's largest energy storage project with a capacity of up to 7.8GWh.

The three sites of the project are located in Najran, Madaya and Khamis Mushait regions of Saudi Arabia. Delivery will begin in 2024 and full capacity grid connection will be achieved in 2025. It will effectively improve the stability and reliability of Saudi Arabia's power grid and help realize Saudi Arabia's "Vision 2030".

Boosted by the news, Sungrow Power Supply Co., Ltd., with a market value of over 140 billion yuan, opened in the afternoon and rose sharply, up more than 8% as of press time. Previously, Sungrow Power Supply Co., Ltd. had risen for three consecutive days. According to the margin trading data released by the Shenzhen Stock Exchange today, Sungrow Power Supply Co., Ltd. received a net purchase of 27.29 million yuan in financing yesterday.

In recent years, Sungrow's profitability has increased significantly.

In 2023, the company will achieve revenue of 72.2 billion yuan, a year-on-year increase of 79%; net profit of 9.44 billion yuan, a year-on-year increase of 163%; gross profit margin will increase from 24.5% in 2022 to 30.4%, and net profit margin will increase from 9.18% in 2022 to 13.3%.

In the first quarter of this year, Sungrow's profitability continued to improve, with revenue of 12.61 billion yuan, a year-on-year increase of 0.26%, basically the same as the same period last year; net profit increased by 39.05% year-on-year to 2.096 billion yuan, and the company's gross profit margin increased to 36.67%, an increase of 8.7 percentage points year-on-year.

Sungrow's ability to buck the industry cycle and move forward is mainly due to its investment in R&D and rapid growth in overseas markets.

Sungrow has established six R&D centers in Hefei, Shanghai, Nanjing, Shenzhen, Germany and the Netherlands.

The financial report shows that from 2021 to 2023, Sungrow's R&D investment was 1.161 billion yuan, 1.692 billion yuan and 2.447 billion yuan respectively, with a cumulative investment of 5.3 billion yuan in three years. By the end of 2023, Sungrow has obtained a total of 4,123 patents.

According to the 2023 annual report, Sungrow's domestic revenue accounts for about 54%, and its overseas revenue accounts for about 46%. The overseas gross profit margin reached 41.57%, about 20 percentage points higher than the domestic one, and increased by 14.24 percentage points year-on-year.

Energy storage business is also one of Sungrow's fastest growing businesses. In 2023, energy storage shipments will reach 10.5GWh, a year-on-year increase of 36%; energy storage system revenue will reach 17.8 billion yuan, a year-on-year increase of 78%. Sungrow said that this is mainly due to the strong demand in overseas markets, coupled with the company's deep cultivation of the energy storage market, long-term shipments to the United States, Europe and other regions, and has formed a good reputation and brand image.

In addition, on July 14, Sungrow announced the completion of the previous round of repurchase plan. From September 2023 to July 14 this year, Sungrow has repurchased a total of 11.5123 million shares, with a total repurchase amount of 997 million yuan, which will be used to implement employee stock ownership plans or equity incentive plans.

On the same day, Sungrow Power Supply announced that it plans to use its own funds to repurchase A-shares through centralized bidding transactions within 12 months. The repurchase price will not exceed 97 yuan per share, and the total repurchase amount will not be less than 500 million yuan and not more than 1 billion yuan, which will be used for the subsequent implementation of employee stock ownership plans or equity incentive plans.

Ping An Securities estimates that in 2024, 2025 and 2026, Sungrow Power Supply will achieve a net profit attributable to shareholders of RMB 11.14 billion, RMB 13.033 billion and RMB 14.958 billion, respectively, with EPS of RMB 7.50, RMB 8.78 and RMB 10.07, respectively. The corresponding PEs are 13.3 times, 11.4 times and 9.9 times, respectively, which are lower than the average expected PE ratios of comparable companies in the next three years.

As a leader in the solar energy storage industry, Sungrow has solid technology and channel accumulation. With the explosion of demand for large-scale overseas storage and industrial and commercial storage, its performance is expected to continue to grow steadily.

Editor: Peng Bo

Proofreading: Yang Shuxin