Paineng Technology (688063): overseas shipment recovery, high price inventory reduction, gross margin repair

Event description

    Paineng Science and Technology released its first quarterly report in 2024. In 2024Q1, the revenue reached 386 million yuan, a year-on-year decrease of 79.05%, the net profit attributable to the parent company was 400 million yuan, a year-on-year decrease of 99.13%, and the non net profit deducted was - 0.08 billion yuan, a year-on-year decrease of 101.85%.

    Event comments

    In terms of sales, it is expected that the company's shipments will increase in 2024Q1. The household storage industry has experienced intense destocking since 2023Q2, leading to the decline or even stagnation of the industrial chain shipments. 2023Q4 is the most severe phase of the destocking cycle. At present, 2024Q1 has shown a recovery trend.

    In terms of profitability, the average price is expected to increase significantly month on month. It is judged that the order structure has improved significantly because the 2024Q1 month on month increment mainly comes from overseas; It is expected that the unit cost will decline significantly on a month on month basis, mainly due to the gradual completion of high priced inventory de conversion in the early stage, so the gross profit rate of 2024Q1 will reach 35.76%, which will exceed the level of 2023Q2 after three consecutive quarters of decline. However, due to the low sales volume and rigid expenses, the expense rate of 2024Q1 will be 31.52%, which will have a great impact on net profit.

    Looking forward to 2024, the European market economy is expected to further reflect and form a favorable situation with the decline of battery prices transmitted to the terminal.

    The business models and policies of Poland, Hungary and other emerging markets are also actively increasing, and the industry is expected to return to stable growth. The current low profitability of the company is mainly affected by the scale effect of low capacity utilization. We believe that with the industry repair, the company's shipments are expected to grow positively, driving significant improvement in unit depreciation and expenses. At the same time, the company has actively laid out incremental markets such as the United States, Japan, Southeast Asia and Africa. Energy storage in domestic industry and commerce has been shipped on a certain scale. It is also worth looking forward to developing off grid energy storage, platform area energy storage and other scenarios. It is estimated that the net profit attributable to the company in 2024 will be 600 million yuan, corresponding to PE of 18 times.

    Risk warning

    1. The progress of household storage is not as expected;

    2. Market competition risk.