Inverter companies have launched a batch of IPOs

At present, unlisted inverter companies are accelerating their pace, and listed inverter companies are actively expanding production and increasing volume to increase market share.

Benefiting from the rapid growth of new energy and energy storage, inverters in its sub-industry have attracted much attention from investors, and inverter companies have lined up for IPOs. The Shanghai Stock Exchange recently disclosed that the prospectus submitted by Guangzhou Sanjing Electric Co., Ltd. (hereinafter referred to as "Sanjing Co., Ltd.") has been accepted and plans to be listed on the main board.

Inverters cover multiple application areas such as photovoltaics, energy storage, and charging piles. There is a vast space for growth in the domestic and foreign markets, making them the "darlings" of the capital market. At present, unlisted companies are accelerating their pace, and listed inverter companies are actively expanding production and increasing their market share.

Powerful

Under the goal of carbon neutrality, the development of the inverter industry has entered the fast lane. Orient Securities estimates that the global inverter market space will be 54.3 billion yuan in 2021 and is expected to reach 136.7 billion yuan in 2025.

The rapid development of inverters in my country has benefited from the great era opened by the three industries of photovoltaics, energy storage, and charging piles. In 2022, the newly installed capacity of wind power and photovoltaic power generation in my country exceeded 120 million kilowatts, setting a historical record; data from the Zhongguancun Energy Storage Industry Technology Alliance showed that in 2022, the installed capacity of new energy storage projects newly put into operation in my country reached 6.9GW/15.3GWh, and the power scale exceeded 6GW for the first time; last year, my country's new energy vehicles continued to grow explosively, producing 7.22 million units, an increase of 98%, driving the rapid growth of the charging pile market.

The high prosperity of the three industries of photovoltaic, energy storage and charging piles directly drives the rapid development of inverters. The direct materials required for inverters account for more than 85% of the cost, and my country is the only country in the world that has all industrial categories, with obvious advantages in raw material costs. In addition, my country's low labor costs, high R&D efficiency, and high gross profit margin of inverters in overseas markets have all contributed to the continuous increase in my country's global share of inverters.

With more and more technological innovation companies, photovoltaic companies and professional inverter manufacturers entering the market, my country's inverter industry is entering a stage of high-quality development.

Chu Pan, a well-known energy storage expert in the domestic power industry, believes that China's inverter industry is in a leading position in the world, has entered the European household storage market, and is growing rapidly in the United States and Australia. As leading domestic inverter companies such as Sineng Electric and Kehua Data accelerate their overseas expansion this year, China's inverter products are expected to further increase their global market share.

"While the inverter industry is developing rapidly, there is also the risk of being 'stuck'." Chu Pan pointed out, "There are more than 1,000 types of inverter parts, most of which have been domestically produced, but some core components such as IGBT still need to be imported, and the speed of domestic substitution is slow. IGBT is a universal power electronic device. It is not only used in photovoltaics, energy storage, and charging piles, but also in wind power, high-speed rail, electric vehicles and other fields. It is widely used, and the market demand is huge. With the promotion of re-electrification in my country, this rapidly growing demand and the requirement for domestic substitution can accelerate its independent research and development process. In fact, the proportion of domestic IGBTs has exceeded 30%, and the proportion of charging piles has exceeded 70%. The domestic substitution process of energy storage inverters with the highest technical content has accelerated, and is expected to exceed 30% in 2-3 years."

Expand production and improve quality

In order to cope with the growing market demand, listed inverter companies such as Jinlong Technology, GoodWe, and Deye Shares have begun to raise funds for expansion. Jinlong Technology announced on February 7 that it had raised 2.925 billion yuan in private placement. The funds raised will mainly be used for new projects with an annual output of 950,000 string inverters, distributed photovoltaic power station construction projects, and replenishment of working capital projects.

GoodWe plans to raise no more than 2.54 billion yuan through a private placement to be used for the construction of a production base for 20GW grid-connected inverters and 2.7GWh energy storage batteries per year; the construction of a production base for 20GW grid-connected and energy storage inverters and 1.8GWh energy storage batteries per year and to supplement working capital.

Deye Co., Ltd. issued an announcement on March 4th stating that the total amount of funds to be raised through the private placement will not exceed 3.55 billion yuan. The vast majority of the funds raised through the private placement will be used for production expansion. It plans to invest 1.998 billion yuan to build a 25.5GW annual output of string and energy storage inverter production line project, and plans to invest 542 million yuan to build an annual output of 3GW micro inverter production line project.

Song Qinghui, founder of Qinghui Think Tank and a famous economist, believes that the phenomenon of inverter companies increasing investment and expanding production deserves attention. On the one hand, it can continuously promote technological upgrades and business development through financing. On the other hand, this move is also good news for investors, because targeted share issuance generally has cash investment and project support, which will be conducive to improving the company's performance development level in the future.

In the view of industry insiders, inverter manufacturers are increasing the production of inverters and energy storage batteries in order to fully guarantee future shipment capacity and increase the market share of inverters. For example, GoodWe's grid-connected inverter investment projects include a variety of application scenarios such as household, industrial and commercial, and ground power stations. The power range covered by the products is more complete, filling the gaps in some power ranges of enterprises.

"Inverters are the core of the power electronics product system and the core of system integration." Chu Pan pointed out, "Enterprises entering the inverter field must have core competitiveness, especially R&D capabilities from 0 to 1, no matter what type of products they make based on inverters. It is a basic requirement to launch inverters of different specifications in combination with different application scenarios. It is definitely not good to have too single a product line, but it is also not conducive to competition to have too many product lines. There is a delicate balance in the middle, which tests both R&D capabilities and supply chain integration capabilities."

Bright prospects

The huge market prospects have stimulated inverter companies to flock to IPOs. In recent years, Sineng Electric, AP Energy Technology, and Homai have all been successfully listed. Taking Homai's listing on the Science and Technology Innovation Board as an example, the issue price was 557.8 yuan per share, making it the most expensive new stock in the A-share market, showing the capital's favor for the inverter field.

Sanjing shares IPO raised 1.20402 billion yuan, 677 million yuan will be used for Sanjing New Energy's annual production of about 470,000 digital energy products and system intelligent manufacturing construction projects. After the completion of the project, it can achieve an annual production capacity of 477,200 photovoltaic storage inverters and motor drive and control products, including 130,100 photovoltaic grid-connected inverters, 117,400 energy storage inverters and systems, and 229,700 motor drive and control products.

Currently, solar storage inverter manufacturers such as Growatt H-shares and Sofar New Energy are queuing up for IPOs. In addition to the IPOs, some companies have also started seed financing. For example, Tianmu Solar, a provider of household new energy products and system services, recently completed a seed round of financing of tens of millions of yuan. The financing funds will be mainly used for the research and development and production of photovoltaic micro inverters.

"At present, my country's inverter companies are competing for IPOs. On the one hand, this may be related to the implementation of the comprehensive registration system, which has greatly lowered the threshold for companies to go public compared to before." Song Qinghui told reporters that on the other hand, the global new energy installed capacity continues to grow rapidly, which has driven the inverter industry to ride the wave. Inverter companies can seize the opportunity to go public when the market is good and solve the company's subsequent financing and development problems.

Song Qinghui said that inverter companies planning IPOs need to pay attention to two major issues in their development after listing. First, with the hot capital, inverter companies should make technological innovation their top priority, which is the key to the long-term development of enterprises; second, listing is not the end but the starting point of new competition. Only companies with real core competitiveness can go further and more steadily.