YUNENG TECHNOLOGY(688348)：MICROINVERTER SHIPMENTS GROW STEADILY AND ENERGY STORAGE SHIPMENTS WILL SOAR IN 2023

　　Investment Thesis
　　Yuneng’s revenue grows steadily and will soar in 2023. In 2022Q1-3, Yuneng’s
　　revenue rose by 120% YoY to Rmb928mn; the net profit rose by 338% YoY to Rmb253mn. In 2022Q3, the revenue rose by 185% YoY/33% QoQ to Rmb430mn; the net profit rose by 476% YoY/26% QoQ to Rmb124mn. We expect that the revenue will be Rmb1.4-1.5bn in 2022 and rise by 200-300% YoY to Rmb4.0-4.5bn in 2023 with a stronger growth. The gross profit margin increased by 2pct YoY to 39.5% in 2022Q1-3 and increased by 1.1pct YoY to 39% in 2022Q3; the net profit rate increased by 14pct YoY to 27.2% in 2022Q1-3 and increased by 14pct YoY to 28.8% in 2022Q3. The profitability fluctuates slightly, and we expect that it will remain stable in the future.
　　Micro-inverter shipments will increase by 200%-300% YoY in 2023. Yuneng’s
　　micro-inverter shipments （converted to the number of PV modules） was 1.74mn. in 2022Q1-Q3 and 0.79mn in 2022Q3 （increase by 30%+ QoQ）。 The micro-inverter matching 2 PV modules count for 50% of the total shipments. In 2022Q3, the micro-inverter shipped to the Europe, North America, and Latin America accounted for 34%, 33% and 22% of the total shipments, respectively. The proportion of the North America micro-inverter shipment out of the total increased. We expect that the micro-inverter shipment （converted to the number of PV modules） will increase by more than 200% YoY to 280-300mn in 2022 and 200-300% YoY to 800mn. in 2023, while the micro-inverter revenue will count for about 80% of Yuneng’s total.
　　Energy storage business will grow rapidly in 2023 and become a second growth
　　engine for Yuneng. In 2022, Yuneng launched energy storage products, containing 3kw and 5kw AC-coupled on-grid and off-grid single-phase energy storage inverters, with two business model of integrated and split machine to meet the customers’ diversified demands. Yuneng shipped a small amount of energy storage products in 2022. We expect that Yuneng’s energy storage business will increase rapidly and contribute about Rmb400-600mn revenue in 2023, which will account for about 10-15% of the total revenue, becoming Yuneng’s second growth engine.
　　More than half of the employees received stock ownership incentive, beneficial for
　　company’s long-term development. On 26 September 2022, Yuneng launched the stock incentive plan and granted 850,000 shares （account for 1.03% of total share capital） to 133 employees （account for 57% of total head count） with share price at Rmb354.91.
　　The stock incentive plan has earning targets that Yuneng’s cumulative revenue and net profit in 2022/2022-2023/2022-2024 are no less than Rmb12/30/57bn and Rmb2.3/6.2/1.29bn. The plan will enhance employees’ motivation and be conducive to company’s long-term development.
　　Earnings Forecast & Rating: We maintain the rating of Buy and upgrade the earning forecast with TP at Rmb754 giving P/E ratio at 50x in 2023 considering the
　　rapid growth of the micro-inverter and energy storage businesses. We expect that Yuneng’s net profit will increase by 308%/187%/55% YoY to Rmb0.42bn （previous prediction 0.45）/Rmb1.21bn （previous prediction 1.06）/Rmb1.87bn （previous prediction 1.73） in 2022/2023/2024 respectively.
Risks: Milder-than-expected policy support, intensified market competition.
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   【免责声明】本文仅代表第三方观点，不代表和讯网立场。投资者据此操作，风险请自担。