Perspective on Hiconics Eco-energy Technology (300048.SZ) first quarter earnings report: New energy business volume increased, profits more than 15 times, confirmed the turning point towards growth.

Midea Group Co., Ltd (000333.SZ) has a listed company, Hiconics Eco-energy Technology (300048.SZ), engaged in new energy and industrial control businesses. After adjusting its strategic layout and focusing on core businesses, it has achieved stage development results. Data shows that in the first quarter of 2024, Hiconics Eco-energy Technology achieved a revenue of 699 million yuan, a year-on-year increase of 111%; and achieved a net profit of 11.03 million yuan, a year-on-year increase of 1566%. While both revenue and profit have significantly increased, the net cash flow from operating activities of Hiconics Eco-energy Technology reached 42.96 million yuan, a significant improvement compared to -3.54 million yuan in the same period last year, indicating that the company's cash generation ability has been further optimized along with operational improvements. The surge in performance was largely due to the growth in the photovoltaic EPC business of Hiconics Eco-energy Technology in the first quarter, according to its quarterly report. The company is currently focusing on infrastructure construction to establish its competitive advantage in the field. By the end of 2023, the company had disclosed that the transaction amount of photovoltaic EPC projects under construction exceeded 600 million yuan. With the company's enhanced competitiveness, the scale effect in the photovoltaic EPC field is expected to gradually materialize. In the first quarter, Hiconics Eco-energy Technology's self-developed and self-produced residential energy storage business products began to be sold in bulk. The company has also developed two series of products, single-phase and three-phase integrated units, to meet the needs of overseas customers and is currently researching and developing photovoltaic inverters and component-level power electronics for different global markets. Based on the recently disclosed first-quarter performance report for 2024, Hiconics Eco-energy Technology, after undergoing strategic adjustments, has passed through the transitional period smoothly and its performance growth momentum is expected to be fully unleashed in 2024. Focus on strategy has achieved stage results. Hiconics Eco-energy Technology entered the high-voltage inverter market, and in the company's previous development, it had successively laid out various businesses including low-voltage inverters, new energy vehicles, energy conservation and environmental protection, and photovoltaic power generation. However, due to various internal and external factors, the company's previous business expansion was not ideal. The turning point came in 2020 when Midea took over and, under the promotion of Midea Group Co., Ltd, Hiconics Eco-energy Technology continued to streamline its business and divest, and in the latter half of 2023, the company clarified its strategic layout, focusing on its three main businesses: high and low voltage inverters, residential energy storage and photovoltaic inverters, and EPC in the photovoltaic field. Furthermore, in 2023, Hiconics Eco-energy Technology actively closed and converted non-core businesses such as SVG, and comprehensively reviewed and provisioned some asset impairment reserves, focusing on risk elimination. In addition, in the field of low-voltage inverters, the company continues to build differentiated competitive capabilities and seize market opportunities both domestically and internationally. In March, Hiconics Eco-energy Technology released new products, the CM690 series universal inverters and the EL10 versatile inverters, and Dayi Electric also unveiled a new brand image. As a company that values technology and innovation, in the context of the era focusing on "high-quality development" and nurturing "new productive forces," Hiconics Eco-energy Technology actively responds to the national call by focusing on the research and development of products through a "develop one generation, reserve one generation, and innovate one generation" model, investing heavily in resources for short, medium, and long-term product and technology research and development. In the first quarter, the company's R&D expenses increased by 134.8% to 60.17 million yuan compared to the same period last year. Meanwhile, based on the business needs for the medium and long term, Hiconics Eco-energy Technology is advancing the construction of a new manufacturing base in Anqing. It is expected that after the completion and operation of this new manufacturing base, the company's main business capacity will be further expanded. Looking at Hiconics Eco-energy Technology's quarterly report, the company has achieved outstanding stage results after proactively adjusting its strategic layout and focusing on core businesses. The turning point in performance trends has become clear. In the future, as the company's high-end manufacturing business orders rebound and the new energy business matures, Hiconics Eco-energy Technology's performance is expected to achieve long-term upward development.