Reporter | Tao Zhixian
Editor | Chen Feixia
Model of growth stock Sunshine Power (300274.SZ) has burst.
The latest annual report released by the company shows that in 2021, Sungrow Power achieved revenue of 24.137 billion yuan, a year-on-year increase of 25.15%. The net profit attributable to shareholders of listed companies was 1.583 billion yuan, a year-on-year decrease of 19.01%. What is even more worrying is that the company's quarterly revenue in the fourth quarter was 8.763 billion yuan, a year-on-year increase of 18.79%; the attributable net profit was only 78 million yuan, a year-on-year decrease of 89.73%. At the same time, the company's revenue in the first quarter of this year was 4.568 billion yuan, a year-on-year increase of 36.48%; net profit was 411 million yuan, a year-on-year increase of 6.26%. In terms of
business, the two businesses with the highest revenue share in Sungrow Power Supply in 2021, photovoltaic inverter and power station investment and development achieved 9.051 billion yuan and 9.679 billion yuan respectively, a year-on-year increase of 20.44% and 17.65%, accounting for 37% and 40% of revenue respectively. The highly-watched energy storage system increased by 168.51% year-on-year, and its revenue share also increased from 6.06% to 13%.
This is a lower than expected "trace card". On April 20, the stock price of Sungrow Power opened sharply lower, and was eventually pressed to the limit of 20%. The market value evaporated by 27 billion yuan on that day, setting a new low since May 2021. The stock price has been cut in half since the high point in August 2021.
What happened to the sunlight power supply, known as the king of inverter ?
cost surge
gross profit decline is the core reason for the sharp decline in Sungrow's net profit. From the first half of 2021 to the whole year of 2021, the gross profit margin of power station system business fell by 13% to 11.91%; the photovoltaic inverter fell from 38.15% to 33.8%; and the energy storage inverter fell sharply from 21.23% to 14%. Compared with 2019, the gross profit margins of the company's businesses also declined to varying degrees, among which the energy storage inverter business fell from 36.51% to 14.11%.
The fundamental reason for the decline in gross profit margin of Sungrow Power is the rise in upstream raw materials prices. For power plant system business, its cost-end pressure comes from the conductive effect brought about by the soaring price of upstream silicon materials.
In recent years, the photovoltaic industry chain has experienced upstream and downstream supply and demand mismatch, the upstream capacity expansion cycle is long, and the downstream photovoltaic industry expects to have high installed capacity, which has led to a sharp rise in silicon material prices and has been transmitted to the entire photovoltaic industry chain. Among them, the prices of silicon wafer , battery , and components have risen to varying degrees.
According to China Photovoltaic Industry Association data, the initial investment cost of my country's photovoltaic system increased by 4% year-on-year in 2021, which is the first increase in many years. Affected by the price increase, the installation pace is delayed. According to National Energy Administration data, my country's photovoltaic capacity added 54.88GW in 2021, a year-on-year increase of 13.9%. According to data from the International Renewable Energy Agency (IRENA), global photovoltaic capacity increased by 133GW in 2021, a year-on-year increase of 5.5%, achieving only a slight increase. The price of silicon materials upstream of
has surged more significantly. As of April 18, the price of domestic polysilicon material (first grade material) has risen to US$39.52/kg, up 200% from US$13.15/kg at the beginning of 2021. The surge in silicon material prices directly leads to pressure on component costs, which not only suppresses the actual landing of terminal power plants, but also increases related costs.
For another business of Sungrow Power Supply, photovoltaic inverter, especially energy storage system business, the decline in gross profit margin is mainly due to the increase in price of IGBTh. On February 14, Infineon issued a price increase notice. Due to the market supply shortage and the increase in upstream costs, Infineon is unable to bear the overflow costs and has planned to raise prices. At the same time, other mainstream imported brands such as Fuji, , Mitsubishi, and Symikong have also raised prices one after another. Among them, Fuji issued a price increase letter to the agent on April 7. As the supply and demand of various raw materials has not been alleviated, the supply of raw materials is facing difficulties. In order to ensure stable supply, it has to accept the price increase of raw materials. In addition, in the energy storage system, the battery cells are restricted by the rising upstream lithium battery prices, and pressure on the cost side is also encountered. What makes
worse is that in addition to the cost side, the surge in Sungrow's expense side has also led to a sharp decline in net profit margin. In 2021, the company's net profit margin was only 7.06%, the second lowest since 2013 (7.01% in 2019). In 2020, affected by the epidemic, the company's net profit margin reached 10.24%.
Specifically, Sungrow's sales expenses in 2021 and the first quarter of 2022 were RMB 1.583 billion and RMB 374 million, respectively, a year-on-year increase of 62.58% and 99.01%, far exceeding the increase in operating income in the same period (25.15% and 36.48%); R&D expenses were RMB 1.161 billion and RMB 300 million, a year-on-year increase of 44.03% and 65.2% respectively. In 2021, the company increased its overseas channel construction, with the overall number of sales personnel increasing from 923 in 2020 to 1,334, and the number of technical personnel increasing from 1,824 to 2,734.
In addition to the expense side, the significant increase in asset impairment losses also directly affects Sungrow's net profit. In 2021, the company set a total of 481 million yuan of impairment provisions for , including , which were mainly accounts receivable bad debt losses, .197 billion yuan, inventory impairment losses and contract performance costs impairment losses of 237 million yuan. Due to the rapid growth of the costs of components and other components, the landing of the power station has been affected, resulting in the delay of related electricity bill revenue, which has led to an increase in the losses of bad debts of accounts receivable. In addition, energy storage projects are also affected by delivery time, which brings an increase in the cost of contracts and impairment losses.
is still expensive
For Sungrow Power Supply, the fundamental reason for the plunge is still expensive. The current market value of the company is 107.1 billion yuan. For an industry giant whose growth rate has slowed down significantly, the 66.6-fold price-to-earnings ratio (TTM) is obviously expensive. In terms of industry status, although Sungrow Power is in the industry leading the industry in terms of market share and other aspects, in the face of upstream cost pressure, it is still unable to get rid of cost constraints and cannot pass on costs, which itself proves the company's competitiveness.
Since the stock price peak in 2021, Sungrow Power's stock price has fallen by 60%, and its market value has evaporated by more than 160 billion yuan. On April 22 this year, the company will soon lift the ban of 28.42 million shares, accounting for 1.91% of the total share capital. The type of unblocking is the shares issued by the company to specific targets, mainly institutional investors raising funds by previous private placement, including Jinglin, JPMorgan Chase , Goldman Sachs and other famous domestic and foreign investment institutions. The cost price is 128 yuan per share, and it has currently lost 44%.
When growth stocks encounter obstacles in growth, revenue and net profit show signs of turning points, and Sungrow Power is facing a double kill of Davis. The good days of the photovoltaic inverter industry seem to be over.
