On the evening of April 19, Sungrow Power disclosed its 2021 annual report. During the reporting period, the company achieved operating income of 24.137 billion yuan, a year-on-year increase of 25.15%;

chart / Wind

At the same time, as soon as the financial report was released, CICC and Citi also quickly lowered their profit expectations.

Sungrow Power is a heavily held stock of many institutions. As of the end of 2021, a total of 136 institutions were held by them, including 119 public funds. This decline in performance may dampen institutional confidence.

Chairman revealed three reasons for the decline in performance

At the performance exchange meeting on the evening of April 19, Cao Renxian talked to institutional investors about the reasons for the decline in performance:

"One is that the epidemic caused the Vietnam project to not be connected to the grid in October, and the implementation of the new electricity price caused to set aside ,

Second is that Myanmar project was cancelled due to the coup, incurring some fees,

Third is that overseas energy storage business is due to the overseas energy storage business. Because the epidemic was affected, fines were accepted, resulting in increased revenue but not increased profits. overall reduced performance by about 1 billion yuan. "

To sum up, Cao Renxian believes that has taken a big step in 2021, and there are insufficient estimates of chips and the epidemic, and the internal management is not fine enough. "There is a loss of exchange of 100 million yuan, and the growth of personnel and R&D has also increased the cost level."

"Waterloo" in the fourth quarter has long been shown in

In 2021, there are traces of growth pressure shown by Sungrow's performance.

As early as the first three quarters, the company's revenue and net profit growth showed signs of slowing down. But the real impact was the fourth quarter.

financial report shows that in the fourth quarter of 2021, Sungrow's net profit in the quarter fell sharply - achieving operating income of 8.763 billion yuan, a month-on-month increase of 22.34%; and achieving net profit attributable to shareholders of listed companies of 78 million yuan, a month-on-month decrease of 89.57%.

In fact, for the entire photovoltaic industry chain, the fourth quarter is usually the peak season of demand. takes 2021 as an example. In the first three quarters, the domestic photovoltaic new installed capacity was only 25.56GW, but with the emergence of nearly 30GW of new installed capacity in the fourth quarter, the expected annual installation target was successfully completed.

However, Sungrow's performance in the fourth quarter was in a sharp contrast. Why? Public information from

shows that Sungrow Power’s main business includes photovoltaic inverter , power station investment and development, energy storage systems, wind power converters, etc. Among them, the photovoltaic inverter and power station investment and development business achieved revenue of 9.051 billion yuan and 9.679 billion yuan in 2021, accounting for 37.50% and 40.10% of the main business revenue respectively. It is worth mentioning that the revenue of the energy storage system business doubled last year, resulting in its revenue share increased to 13.00%.

However, due to the decline in the proportion of revenue from photovoltaic inverters and power station investment and development businesses, the development of the two "fist" businesses of Sungrow Power have encountered different tests respectively.

In terms of photovoltaic inverters, the company's shipments in 2021 hit a record high, reaching 47GW, a year-on-year increase of 34.29%. According to the caliber announced by Sungrow Power, its inverter market share exceeded 30% last year.

combined with this business revenue, in 2021, the average shipment price of single GW of Sungrow Power Inverter was 193 million yuan, while in 2020 it was 215 million yuan/GW. This means that the overall average selling price of its inverter is declining. The change in the gross profit margin of

also reflects the slight decline in profitability of Yangguan power inverter - in 2021, the gross profit margin of this business was 33.80%, a decrease of 1.23 percentage points from 2020. The main reason why Sungrow Power's fourth-quarter performance suffered a "Waterloo" was its power station investment business.

"The performance in 2021 was lower than expected, and the core reason was that there were problems in the power station business." Cao Renxian said at the performance exchange meeting.

It is reported that some overseas power station projects in Sungrow Power were delayed in the grid connection or cancelled in the fourth quarter of last year, resulting in a provision. According to relevant information at the performance meeting, the epidemic caused the power station project of Sungrow Power in Vietnam to not be connected to the grid in October 2021, and the implementation of new electricity prices led to the provision; the Myanmar project was cancelled due to special reasons, incurring some expenses. Coupled with the fines for overseas energy storage business, caused Sungrow's performance losses of about 1 billion yuan.

The interweaving of various factors has led to the impact of the investment business of Sungrow's power stations, but Cao Renxian said, "EPC (power station investment) business will not become a stumbling block for the company."

's market value evaporated by more than 20 billion

's plunge? While disclosing the annual report, Sungrow Power also disclosed its first quarter report for 2022, with its net profit attributable to shareholders of 411 million yuan, a year-on-year increase of 6.26%. In the eyes of investors, is also a lower than expected number.

"Now, deployment of problems such as the epidemic, supply chain price increase, IGBTh shortage, the overall situation in 22Q1 has recovered well, and the power station business has turned losses into profits. The energy storage business has learned from last year. Last year, because people cannot go to the United States, some projects cannot do on-site debugging, resulting in delivery problems. It is expected that there will be significant improvements, and on-site adjustment tests can be collected, so the goal is still relatively high." Cao Renxian said at the performance exchange meeting on the evening of April 19 that the company's inverters were affected by the shortage of devices, and the channel layout has slowed down. "This year, it is expected to adopt a large number of domestic devices, and imported devices have been delayed in Q1, and it is expected that Q2 will be alleviated. We are still confident in the inverter business."

Cao Renxian said that in the fourth quarter of last year, he found that the operating conditions were not ideal, and he also made some adjustments, "First, it is the replacement of domestic devices, and the second is the improvement of channels and household use (Q1 household shipments exceed 10,000 units, inverter revenue + 46%, and energy storage revenue + 160%). What was not done in 22Q1 was the order delay caused by out-of-stock, and the US photovoltaics and European energy storage were delayed. These orders are still there, and those that were not confirmed in March are expected to be completed in April-May. is expected to continue the good situation in Q1 this year, and the target for the whole year remains unchanged, and I am confident to fight a turnaround. "

However, the secondary market does not seem to have "confidence", and on April 20, the gap in hits the limit .

chart / Wind

After-hours trading data of the Shenzhen Stock Exchange show that the largest seller on the day was the Shenzhen Stock Connect special seat, with an amount of about 9.06 yuan. The other four sellers are for three institutions and the Hefei Innovation Avenue Branch of Huatai Securities. Among the buying seats, the largest amount is the Shenzhen Stock Connect dedicated seat, with an amount of approximately 447 million yuan. The other four selling seats are the three institutions and Nanjing Securities Yinchuan Minzu North Street Branch.

It can be seen that the main capital behind that dominated the limit down of Sungrow Power is Shenzhen Stock Connect.

It is worth noting that after the performance was announced, the two institutions lowered the target price for Sungrow Power -

CICC believes that Sungrow Power's performance in 2021 and the first quarter of this year were lower than expected. Considering the impact of rising supply chain costs on the company's profitability, it lowered the company's profit forecast and lowered the target price by 45% to 105 yuan;

Citigroup pointed out that Sungrow's profit in 2021 was lower than expected, mainly due to higher component costs, etc., the company's target price was 23% to 123 yuan.

's revenue increased by 31 times in 10 years

started as unpopular parts. Sungrow power supply has been rooted in photovoltaic inverters for more than 20 years before it became the "Photovoltaic Mai" with a market value of 100 billion yuan.

In 2010, the company's revenue was only 600 million yuan. After its listing the following year, it was smooth sailing, and its revenue and profits grew basically steadily. By 2020, its revenue reached 19.286 billion yuan, an increase of 31 times in 10 years.

In September 2020, China officially clarified the "dual carbon target". The photovoltaic industry experienced a wave of big rises, and Sungrow Power Supply was like a rocket. The stock price rose from above 20 yuan, reaching a maximum of 18.016 yuan in July last year, with a market value of more than 260 billion yuan, turning into a super bull stock.

However, after the highlights, the cost game is getting worse. The performance report shows that the operating costs in 2021 were 18.77 billion, an increase of 26.5% year-on-year, higher than the growth rate of 25.2%.

"The dividends will not fade, competition will intensify." Industry researchers predicted to the reporter of "21CBR" that the concentration of the inverter industry will become higher and higher in the future, and the core competitiveness will be reflected in price, brand and channel.

Currently, Sungrow's main competitor is Huawei .

survey shows that in 2020, Huawei and Sungrow Power Supply's market share exceeded 60%. The shipments in 2021 are almost comparable. Is the stock price of the 4 trillion-dollar leader "not good" anymore?

It is undeniable that although the Yangguan power inverter and power station investment business encountered varying degrees of pressure last year, its energy storage business showed certain growth momentum.

In 2021, the company's energy storage system achieved operating income of 3.138 billion yuan, a year-on-year increase of 168.51%.

In fact, the increase in energy storage business is an important factor supporting the valuation of Sungrow Power Supply. In the past two years, the global photovoltaic industry has entered a relatively high prosperity, driving the company's photovoltaic business revenue to continue to grow. The high growth of energy storage business is expected to make greater contributions to its overall performance.

Under the comprehensive layout of "wind and solar hydrogen storage", this leading photovoltaic inverter company has opened up diversified growth space, which is the reason why the capital market gave Sungrow power a high valuation in the early stage.

In October 2021, Sungrow Power's market value reached its peak, exceeding 250 billion yuan.

However, high valuations require strong performance as the foundation. Therefore, when the performance is less than market expectations, the stock price of Sungrow Power will inevitably be tested.

In the eyes of some institutions, after the negative results are implemented, Sungrow Power may still be able to wait for the turning point. , and the company's management also expected to say at the performance meeting that the prosperity in the second quarter of this year was much better than the same period last year.

In fact, the current stock price of Sungrow Power is such a frustration that many investment institutions are unwilling to see.

On April 22, the private placement shares issued by Sungrow Power in October last year will be lifted from circulation. At that time, the share price of Sungrow Power's private placement was 128 yuan per share, the number of shares issued was 28.4186 million shares, and the total amount of funds raised was 3.638 billion yuan. Its issuance targets include many large private equity funds and investment banking institutions, such as Jinglin Asset , JP Morgan, Yunnan Energy Investment , UBS, etc.

Referring to the latest closing price, the above-mentioned private placement stock price of has a floating loss of 43.69%.

part source: 21st Century Business Review (Reporter: Qin Yi)

Editor of this issue Liu Xueying Intern Zhan Huinan