Ningbo Deye Technology Co.Ltd(605117) (605117)
Ningbo Deye Technology Co.Ltd(605117) : from traditional home appliance suppliers to overseas household energy storage inverter leaders
At present, the company has three main businesses: heat exchanger, dehumidifier and inverter. From 2016 to 2020, the revenue is CAGR = 34% and the net profit is CAGR = 43%.
Inverter business becomes the mainstay. The company’s brand was founded in 1990. After 2000, it started from injection molding parts, molds, sheet metal parts and other products, and gradually built two core technology platforms: heat exchanger and frequency conversion control software. In recent years, the sales revenue of dehumidifier in e-commerce platform ranks first, and the household energy storage inverter has reached the industry-leading level. In the first half of 2021, the company’s inverter business realized a revenue of RMB 380 million. Calculated according to the data of Deye frequency conversion subsidiary, the net interest rate is expected to be 25%. The inverter business revenue and profit account for 20% and 43% respectively in the company as a whole.
Where does inverter technology come from? The technical team is from Ningbo University, but the original business can provide strong support. The initial investment comes from the home appliance business. The channel playing method is similar to the original home appliance business, and the control technology can learn from the frequency conversion chip business. The company employs the inverter leader as the deputy general manager, which reflects the importance it attaches to the inverter business.
How about inverter products? Rich categories to better meet customer needs. The company’s products include 1.5-110kw series inverter, 0.3-2kw micro inverter and 3-12kw energy storage inverter. Rich product types can better meet the needs of different types of customers, and reduce the docking difficulty of cooperation with dealers and installers.
What is the future growth point of inverter? Focus on distributed grid connected inverters, which began in emerging markets and are stronger than energy storage inverters.
Grid connected inverter: the company’s products are sold to emerging markets such as Brazil, South Africa and Poland, and are expected to develop in traditional markets such as Europe, America, Australia and China.
Energy storage inverter: from the perspective of market and profit, the global off balance sheet energy storage develops rapidly, the technical barrier of energy storage inverter is higher than that of grid connection, and the profit level of relevant enterprises is generally higher than that of grid connection 10PCT +; From the perspective of products, the company’s unique AC coupled energy storage inverter of low voltage + parallelable + fast switching off the grid is convenient for downstream application on the one hand, and has more advantages in performance than its peers on the other hand; From the perspective of channel, the company’s main customers are in the United States, South Africa, Pakistan, etc. among them, the installed capacity of household energy storage in the U.S. market has a high growth rate, with a year-on-year increase of 200% + in the first half of 2021. The company can share the industry dividend with the development of the market.
Profit forecast and valuation
With the high growth of energy storage market, the rapid growth of photovoltaic installed capacity and the steady growth of traditional business and small household appliance business, the net profits of the company’s four types of business in 22 years are expected to be RMB 330 million, RMB 220 million, RMB 220 million and RMB 120 million respectively. With reference to comparable companies, the company will be given 100, 50, 12 and 26 times PE for energy storage inverter, grid connected inverter, traditional business and small household appliance business respectively in 2022, with a target price of RMB 288, Maintain the “buy” rating.
Risk tips: the installed capacity of the industry is less than expected, the epidemic prevention and control risk, the overseas market development is less than expected, the inverter business development is less than expected, and the development risk of OEM mode
