Profit hits a new high, but the stock price drops 10%. The fourth quarter setback damages Sungrow Power Supply

On the evening of March 31, leading solar-plus-storage company Sunshine Power (300274.SZ) released a year-end report that is a mixed bag.

Overall, last year the company recorded operating revenue of RMB 89.18B, up 14.55% year over year; net profit attributable to shareholders of listed companies was RMB 13.46B, up 21.97% year over year, setting a record for its highest annual net profit in its history. However, the company’s stock price plunged at the open on April 1, falling 10.82%.

The issue lies with the fourth quarter of last year, which missed market expectations. The Paper (The Paper’s news) noted that after delivering the strongest three-quarter report in its history, Sunshine Power’s net profit in the fourth quarter of last year sharply shrank, down 54.02% year over year and down 61.90% quarter over quarter. In 2025, net profit for each quarter was RMB 3.83B, RMB 3.91B, RMB 4.15B, and RMB 1.58B respectively. This is its worst quarterly performance since April 2023.

After its stock price hit a new high of 209.88 yuan in November last year, Sunshine Power—one of the two dominant players in photovoltaic inverters and energy storage systems—saw its share price fluctuate and trend downward. In mid-March this year, buoyed by the green power concept, its rally was temporarily restarted, but over the most recent five trading days it has again been falling. Uncertainty in overseas market policy, “involution” in the domestic market, and intensifying competition in energy storage system integration have all remained persistent concerns. In particular, after upstream prices such as lithium carbonate kept climbing, worries about whether its high-profit-growth performance would be sustainable were further amplified.

At an investor conference call held on the 31st evening, company executives offered an explanation for the significant decline in gross margin in the fourth quarter of last year: “Fourth-quarter gross margin fell from around 36% to around 23%. On one hand, factors related to revenue mix played a role. Because new-project delivery was concentrated in the fourth quarter, the revenue share of the新能源投资开发业务 (new energy investment development business) with relatively lower gross margin increased by about 10%, dragging down overall gross margin. On the other hand, fourth-quarter energy storage business gross margin was around 24%, down about 17% quarter over quarter.”

The reasons for the decline in energy storage business gross margin include: “In the third quarter last year, some overseas high-margin projects such as those in the UK were recognized/settled, which caused the third-quarter gross margin itself to be relatively high. In addition, in the fourth quarter lithium carbonate had some price increases. Some of our existing project prices didn’t have time to be passed through, and the signed prices in the fourth quarter decreased somewhat compared with the third quarter. Also, regional mix changes affected gross margin—due to the increased share of low-gross-margin revenue from domestic and South America in the fourth quarter.”

The annual report shows that in 2025, Sunshine Power’s global shipments of photovoltaic inverters were 143GW, and its global shipments of energy storage systems were 43GWh. Revenue contribution from photovoltaic and energy storage was 49.95% and 41.81%, respectively, representing significant changes compared with 2024: at that time, their revenue shares were 61.53% and 32.06%, respectively.

In terms of gross margin, the energy storage system business is Sunshine Power’s most profitable line, with a gross margin of 36.49%. The gross margin of power electronic conversion equipment such as photovoltaic inverters was 34.66%. The gross margin of new energy investment development was 14.50%. By region, overseas market gross margins were far higher than those in mainland China, at 40.36% and 18.75%, respectively.

During the conference call, Sunshine Power disclosed that in the fourth quarter of last year, its overall energy storage shipments were about 14GWh, including about 2GWh from the domestic market; the rest were overseas.

Regarding investors’ concern that low-gross-margin domestic energy storage sales would be transmitted to overseas markets, the company said that on the supply side, it has signed long-term cooperation agreements with core cell suppliers. Relying on the advantages of large-scale procurement, it can lock in cell prices within a certain period, and prices are clearly more competitive than those in the market. On the technology side, the company also continuously reduces costs every year through multiple methods such as technological innovation and supply chain coordination. On the client side, negotiating prices with customers can be painful, but it will work to ensure price pass-through.

For its energy storage shipment target for 2026, Sunshine Power said it expects the global market to grow at a rate of 30% to 50%. Some projects are in a wait-and-see stage due to raw material price increases. These demands should still exist, but will be delayed. The company will work toward the upper limit of market growth and hopes to reach 60-plus GWh.

AIDC is the second growth curve that Sunshine Power is placing high hopes on. In the conference call, the company said that in AIDC, energy storage mainly has two application scenarios: power supply + backup power, and smoothing load fluctuations. The former is a traditional power-supply project for PV-storage; relevant orders have always existed. The latter is power quality management within data centers, which requires millisecond-level response. The company is currently working with customers on customized R&D, and there are no orders yet.

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