The overseas utility ESS market continues to thrive, and leading PV inverter producer Deye Co., Ltd. (605117.SH) plans to advance its capacity layout.
Deye announced in the evening that its wholly-owned subsidiary, Ningbo Deye Energy Storage Technology Co., Ltd. (hereinafter referred to as "Deye Energy Storage"), has signed an investment agreement with the Cixi Binhai Economic Development Zone Management Committee to invest in the construction of an annual 16GWh industrial and commercial ESS production line project in the Cixi Binhai Economic Development Zone.
The announcement shows that the aforementioned 16GWh industrial and commercial ESS production line project will be implemented in two phases. The first phase is expected to have an annual capacity of 7GWh, with fixed asset investment estimated at no less than 895 million yuan. The second phase is expected to have an annual capacity of 9GWh, with fixed asset investment estimated at no less than 1.232 billion yuan. Based on this calculation, the total investment in the project is expected to be no less than 2.127 billion yuan.
According to the announcement, the funding for this project will come from Deye Energy Storage's own funds or self-raised funds. Deye Energy Storage will promptly commence the project construction after signing the "State-owned Land Use Right Transfer Contract" and complete the construction and start production within 36 months after land acquisition, with full production verification within 60 months.
Deye stated that multiple factors such as geopolitics, high electricity prices, and policy support have further released the demand for overseas industrial and commercial ESS. This investment project is based on the company's strategic development needs and its judgment on the market prospects of industrial and commercial energy storage systems, aiming to meet the future growth in sales scale of industrial and commercial ESS. The successful implementation of the project will have a positive impact on future operating performance.
A research report released by Huaxi Securities on March 30 stated that the overseas PV ESS market is currently entering a period of high prosperity. "The destocking of European household ESS is nearing its end, and with the arrival of the peak demand season in Q2, traditional markets such as Europe are expected to continue to recover. Meanwhile, in emerging markets, high electricity prices and the need for power stability are further driving the demand for household and industrial and commercial ESS."
Deye owns a comprehensive product line of PV inverters, ESS battery packs, and environmental appliances represented by dehumidifiers and HVAC products, forming three core industry chains. According to the performance forecast, the company expects to achieve a net profit attributable to the parent company of 2.9 billion to 3.1 billion yuan in 2024, up 61.92% to 73.09% YoY. Against the backdrop of a generally sluggish PV industry, Deye is undoubtedly a "dark horse" in the industry.
One of the key reasons for Deye's counter-trend performance growth is its focus on the overseas market. Deye stated in its performance forecast that the demand growth in the overseas PV ESS market in 2024 has more regional characteristics. In the Asia-Africa-Latin America markets, due to outdated State Grid infrastructure, the demand for household ESS products with grid-connected and off-grid switching capabilities continues to grow rapidly. In European markets such as Germany, high electricity prices emphasize the economic demand for ESS products, while in Ukraine, geopolitical influences emphasize the rigid demand for electricity, leading to sustained market demand growth.
It is worth noting that Deye's global expansion is accelerating. Following the announcement in December last year of an investment of no more than $150 million to build a production site in Malaysia, Deye announced on March 4 that it has completed the registration of its Malaysian subsidiary and plans to purchase a plot of approximately 133,200 m² for nearly 200 million yuan.
