Key takeaway

The company maintained relatively fast revenue growth in 2025, but profits faced temporary pressure, mainly affected by relatively low gross margins in emerging markets and increased investment in market expansion and R&D. After entering 1Q26, the company’s revenue, profit, and net profit excluding nonrecurring items recovered simultaneously, and the overall gross margin increased to 32.97%, indicating that operational improvement has started to materialize. From the business structure perspective, overseas markets remain the core source of revenue and profit, residential energy storage and gridconnected inverters maintained growth, and C&I energy storage systems expanded rapidly from a low base and have become one of the most important incremental drivers.

Event

The company released its 2025 annual report, achieving revenue/net profit attributable to shareholders of the parent company/net profit attributable to shareholders of the parent company excluding non-recurring items of RMB4.082bn/RMB121mn/RMB70mn, representing YoY +32.84%/-40.61%/-50.73%. The company released its 1Q26 report, achieving revenue/net profit attributable to shareholders of the parent company/net profit attributable to shareholders of the parent company excluding non-recurring items of RMB1.453bn/RMB67mn/RMB60mn, representing YoY +81.97%/+45.05%/+264.43%.

Quick Take

Revenue continues to grow: Profit temporarily under pressure in 2025

In 2025, the company achieved revenue of RMB4.082bn, up 32.84% YoY, maintaining relatively fast growth mainly driven by gradually expanding sales in emerging markets such as Asia and Australia. From the profit perspective, net profit attributable to shareholders of the parent company for the year was RMB121mn, down 40.61% YoY; net profit attributable to shareholders of the parent company excluding non-recurring items was RMB70mn, down 50.73% YoY. The decline in profit was mainly due to relatively low overall gross margins in emerging markets such as Asia, Africa, and Australia, as well as increased expenses from greater investment in market expansion and R&D, together with higher asset impairment provisions.

Overall profitability remains stable: Gross margin improves slightly in Q1

In 2025, the company’s overall gross margin was 31.96%, slightly lower than in 2024; net margin attributable to shareholders of the parent company was 2.96%. By product, the gross margin of residential energy storage systems and products was 34.47%, the gross margin of grid-connected inverters was 20.08%, and the gross margin of C&I energy storage systems was 36.96%, currently a relatively high-margin business segment. In 1Q26, the company’s overall gross margin rebounded to 32.97%, up about 1.01pct compared with the full year of 2025; net margin attributable to shareholders of the parent company increased to 4.59%. The quarterly report shows that revenue growth drove profit growth in tandem, but financial expense increased significantly YoY, which still created some disturbance to profit performance.

C&I energy storage ramped up notably, while overseas markets remained the business core

From the main business structure, revenue from residential energy storage systems and products reached RMB2.481bn in 2025, YoY +11.76%; revenue from grid-tied inverters reached RMB795mn, YoY +34.07%; revenue from C&I energy storage systems reached RMB552mn, YoY +456.95%, achieving rapid growth on a low base. Production and sales data also show that sales of C&I energy storage systems reached 2,340 units in 2025, YoY +339.85%, becoming one of the most important new growth drivers. By region, the company’s business remained primarily concentrated in overseas markets. In 2025, overseas revenue reached RMB3.996bn, YoY +31.52%, with a gross margin of 32.47%; domestic revenue was RMB80mn, with a gross margin of only 5.03%. Overall, overseas markets remain the core source of the company’s revenue and profitability.

R&D investment supports future expansion

The company continued to increase R&D investment. In 2025, R&D expense reached RMB608mn, up 26.33% YoY, mainly used to improve the diversified product matrix and promote new product development; in 1Q26, based on rapid revenue growth, the R&D expense ratio declined to 8.78%, and the expense dilut ion effect began to emerge. Going forward, as the product structure continues to optimize, demand recovery in Europe continues, and the Australian market maintains growth, the company’s operating performance will remain supported.

Investment recommendation & earnings forecast:

Net profit attributable to shareholders of the parent company is expected to reach RMB696mn, RMB872mn, and RMB1.095bn in 2026–2028, respectively.

Risks:

1) Demand: Domestic ESS installation growth may not meet expectations, and the growth rate of new energy investments could slow down. Additionally, overseas ESS demand might fall short of expectations, and the progress of carbon neutrality abroad could decelerate.

2) Supply: The supply of power electronic components like IGBTs may be tight, and the localization process could be slower than expected. Additionally, prices and processing costs for metal raw materials such as copper, aluminum, and steel could rise.

3) Policies: Energy storage-related support policies may fall short of expectations; capacity tariff compensation standards may be lower than expected; the power spot market development may be slower than expected; The electricity peak-to-valley price difference might be lower than expected.

4) International situation: International trade barriers may deepen, obstructing exports. Requirements for localized production could increase, leading to higher costs. International conflicts might result in higher shipping costs and longer delivery times.

5) Market: Intensified competition could lead to lower-than-expected GPM and profitability for ESS battery manufacturers, integrators, and PCS suppliers. Companies might also face issues due to errors in their market competition strategies.