Key takeaway

The company released its annual report. In 2025, it achieved revenue, net profit attributable to shareholders of the parent company, and net profit excluding non-recurring items of RMB89.184bn, RMB13.461bn, and RMB12.829bn, up 14.55%, 21.97%, and 19.98% YoY respectively. In 4Q alone, it achieved a profit of RMB1.58bn, down 54.0% YoY and 61.9% QoQ. The 4Q performance decline is expected to be caused by the advance price increase of upstream materials, coupled with the impact of delivery structure and concentrated impairment provision.

Subsequently, with the gradual transmission of order prices, the company's gross profit margin and profitability are expected to gradually recover this year. Meanwhile, under the background of global power shortage, energy storage demand will continue to be strong, and the company maintains its global leading competitiveness and market share. In addition, the AIDC power supply business heavily invested by the company is expected to make a breakthrough this year.

Event

The company released its 2025 annual report. In 2025, the company achieved revenue, net profit attributable to shareholders of the parent company, and net profit excluding non-recurring items of RMB89.184bn, RMB13.461bn, and RMB12.829bn, up 14.55%, 21.97%, and 19.98% YoY respectively. In 4Q25, it achieved revenue, net profit attributable to shareholders of the parent company, and net profit excluding non-recurring items of RMB22.782bn, RMB1.58bn, and RMB1.343bn, down 18.37%, 54.02%, and 59.45% YoY respectively, and down 0.38%, 61.90%, and 66.35% QoQ respectively.

Brief analysis

Profitability is under phased pressure, and 4Q performance is lower than expected

Affected by supply chain price increases, order delivery structure,and overseas tariff increases, the 4Q energy storage business is under pressure. In terms of volume, the company's annual energy storage delivery was 43GWh, up 54% YoY. In terms of profit, the gross profit margin in 4Q was 23%, down 13 pcts QoQ, which is expected to be mainly caused by order delivery structure, supply chain price increases such as lithium batteries, overseas competition, prudent provision, and rebates. It is expected that with the subsequent increase in industry demand, the company will still guarantee its share and competitiveness, and the company's profitability will gradually recover.

Energy storage business:

In 2025, the company's energy storage business revenue was RMB37.2bn, up 49% YoY, with a gross profit margin of 36.5%. The energy storage system shipment was 43GWh, up 54% YoY. The company released new products such as PowerTitan3.0 and PowerStack 255CS/510CS for large-scale energy storage and commercial and industrial energy storage, maintaining its industry leadership relying on technological iteration.

Photovoltaic inverters and other power electronic conversion equipment:

In 2025, the company's revenue from this business (including inverters and wind power converters) was RMB31.1bn, up 6.9% YoY, with a gross profit margin of 34.7%. Among them, the revenue of PV inverters was RMB26.6bn, with a gross margin of 37%. The development of new products and the increase in overseas shipments optimized profitability. The shipment of inverters was 143GW, slightly declining. This was mainly due to the decrease in domestic shipments, the optimization of regional structure, and the 12% YoY growth in overseas shipments.

New energy investment and development:

The revenue of this business of the company in 2025 was RMB16.6bn, -21.16% YoY. The gross margin was 14.5%, -4.9 pcts YoY. This was mainly caused by the decline of the residential PV business. Influenced by the comprehensive market entry of new energy promoted by Document No. 136, the industry entered a period of deep correction.

AIDC power supply business expansion accelerates:

The company is deploying AIDC power supply solutions, offering Solid-State Transformers (SST) and power systems. Future earnings contributions are anticipated following the phased launch of these products and schemes.

Investment recommendation & earnings forecast:

Considering that the shipment of PV inverters is flat or slightly down YoY, the profitability is flat YoY at about RMB0.04/W. Considering that the shipment of energy storage in 2026 is above 60GWh (recognized revenue is slightly lower), the profitability recovers to about RMB0.15/Wh. The performance of the company in 2026, 2027, and 2028 is expected to be RMB15.59bn, RMB18.6bn, and RMB21.21bn respectively. The valuations are 18.5, 15.6, and 13.6 times 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.