Equity Research: Sungrow Power Supply (300274.SZ)

Date: November 11, 2025
Rating: Buy-A (Maintained)
Current Price: CNY 205.40 (as of Nov 6, 2025)
Target Valuation Context: 2025E P/E of 28.7x; 2026E P/E of 21.7x
Analysts: Xiao Suo, Jia Huilin (Shanxi Securities Institute)

Executive Summary

Sungrow Power Supply Co., Ltd. ("Sungrow" or the "Company"), a global leader in solar inverters and energy storage systems (ESS), has demonstrated robust operational momentum and financial resilience in its Third Quarter 2025 results. The Company continues to solidify its position as a dual龙头 (leader) in both photovoltaic (PV) inverter and energy storage sectors, driven by a strategic pivot towards high-margin overseas markets and sustained technological innovation.

In the first nine months of 2025, Sungrow reported revenue of CNY 66.4 billion, representing a year-over-year (YoY) increase of 33.0%, and achieved a net profit attributable to shareholders of CNY 11.88 billion, surging 56.3% YoY. Notably, the third quarter (Q3) alone delivered revenue of CNY 22.87 billion (+20.8% YoY) and net profit of CNY 4.15 billion (+57.0% YoY), indicating accelerating profitability despite modest sequential revenue fluctuations. This earnings beat is underpinned by a favorable product mix shift, with overseas shipments accounting for an increasing proportion of total sales, thereby enhancing overall gross margins.

Beyond core renewable energy businesses, Sungrow is strategically expanding into the Artificial Intelligence Data Center (AIDC) power supply sector. Leveraging its expertise in high-voltage technology and Solid State Transformer (SST) architectures, the Company aims to collaborate with top-tier global cloud providers and domestic internet giants, targeting initial product deployment and small-scale delivery by 2026. This diversification opens a significant new growth curve, reducing reliance on traditional cyclicality in the solar sector.

Financially, the Company exhibits strengthened balance sheet health, characterized by a substantial improvement in operating cash flow, which reached CNY 9.9 billion in the first three quarters of 2025. Coupled with aggressive R&D investment (CNY 3.14 billion, +32% YoY) and a workforce of over 7,000 R&D personnel, Sungrow is well-positioned to maintain its technological moat.

We maintain our "Buy-A" rating on Sungrow. Our investment thesis is supported by the Company’s dominant global market share, improving margin structure due to higher overseas exposure, and the emerging potential in AIDC power solutions. We forecast Earnings Per Share (EPS) of CNY 7.15, CNY 9.47, and CNY 11.22 for 2025, 2026, and 2027, respectively. At the current closing price of CNY 205.40, the stock trades at attractive forward multiples of 28.7x (2025E), 21.7x (2026E), and 18.3x (2027E), offering compelling value for long-term institutional investors seeking exposure to the global energy transition and next-generation infrastructure power needs.

Key Takeaways

1. Robust Financial Performance: Profitability Outpaces Revenue Growth

Sungrow’s 3Q25 financial results highlight a decoupling of profit growth from revenue growth, signaling improved operational efficiency and superior product mix management.

• Revenue Trajectory: For the first nine months of 2025, total revenue stood at CNY 66.4 billion, up 33.0% YoY. In Q3 specifically, revenue reached CNY 22.87 billion, marking a 20.8% YoY increase. While Q3 revenue saw a slight sequential decline of 6.6% compared to Q2, this is consistent with seasonal patterns in the industry and does not detract from the strong annualized growth trend.
• Profit Surge: Net profit attributable to shareholders for the first nine months was CNY 11.88 billion, a remarkable 56.3% YoY increase. Q3 net profit was CNY 4.15 billion, up 57.0% YoY and 6.1% sequentially. The fact that net profit growth significantly outpaces revenue growth (56.3% vs. 33.0% for 9M25) indicates expanding net margins.
• Margin Expansion Drivers: The primary driver for margin expansion is the structural shift in geographic sales composition. Domestic shipments, which typically carry lower margins due to intense local competition, decreased as a percentage of total shipments from 48% in the same period last year to 40% in 9M25. Conversely, overseas shipments, which command premium pricing and higher profitability, have gained prominence.

Source: Company Reports, Shanxi Securities Institute Estimates

The sequential improvement in Q3 net profit (+6.1%) despite a revenue dip suggests effective cost control and potentially higher recognition of high-margin backlog deliveries in the quarter. This operational leverage is a critical positive signal for investors, demonstrating that Sungrow can scale profits faster than top-line growth as it matures its global supply chain and service network.

2. Strategic Globalization: Overseas Mix Shift Enhances Quality of Earnings

Sungrow’s long-standing strategy of deep global penetration is yielding tangible financial benefits. The Company is not merely exporting products but has established a comprehensive local presence that mitigates trade barriers and enhances customer stickiness.

• Inverter Business Stability: The PV inverter segment, the Company’s foundational business, saw a modest 6% revenue growth in the first nine months of 2025. While this growth rate is slower than the overall company average, it reflects a mature, stable cash cow segment. The key takeaway here is not volume explosion, but margin quality. The reduction in domestic shipment share from 48% to 40% directly contributed to an improvement in the inverter segment’s gross margin. This indicates that Sungrow is successfully prioritizing high-value international contracts over low-margin domestic volume wars.
• Energy Storage Systems (ESS) Explosion: The ESS segment remains the primary growth engine. Shipments in this sector surged by 70% YoY in the first nine months of 2025. More importantly, the geographic mix of these shipments has optimized dramatically. Overseas ESS shipments increased from 63% of the total in the same period last year to 83% in 9M25.
  • Implication: The global energy storage market, particularly in Europe, North America, and emerging markets like the Middle East and Australia, offers significantly higher willingness to pay for reliable, grid-forming storage solutions compared to the highly price-sensitive domestic Chinese market. By capturing 83% of its ESS sales overseas, Sungrow is effectively insulating its growth profile from domestic price erosion.
  • Margin Stability: Despite the rapid volume expansion, ESS gross margins remained stable. This is a testament to Sungrow’s pricing power and ability to pass on raw material costs or achieve economies of scale that offset competitive pressures. Maintaining margin stability while growing volume by 70% is a difficult operational feat that underscores the Company’s competitive advantage.

• Global Infrastructure Moat: Sungrow has built an extensive global service and sales network that acts as a significant barrier to entry for competitors. The Company now operates:

  • 20+ overseas branches.
  • 60+ representative offices.
  • 520+ service outlets globally.

  This "full-chain service" capability allows Sungrow to provide end-to-end solutions, from pre-sales consulting to post-installation maintenance. For utility-scale projects and large commercial & industrial (C&I) clients, this local support infrastructure is often a decisive factor in vendor selection, outweighing minor price differences. This network ensures recurring revenue streams through service contracts and strengthens brand loyalty, creating a virtuous cycle of market share retention and expansion.

3. New Growth Curve: Entry into AIDC Power Supply Market

Perhaps the most forward-looking aspect of Sungrow’s recent strategy is its entry into the Artificial Intelligence Data Center (AIDC) power supply sector. This move leverages the Company’s core competencies in power electronics to address a burgeoning demand driver unrelated to traditional renewable energy cycles.

• Technological Synergy: AI data centers require massive amounts of power, with specific needs for high efficiency, high density, and extreme reliability. Traditional power supplies are struggling to meet the thermal and efficiency demands of next-generation AI chips. Sungrow is leveraging its accumulated expertise in high-voltage technology and Solid State Transformers (SST). SSTs offer superior controllability, efficiency, and footprint reduction compared to traditional line-frequency transformers, making them ideal for compact, high-power AIDC environments.
• Strategic Partnerships: The Company has explicitly stated its intention to collaborate with:
  • International Head Cloud Providers: Likely referring to hyperscalers such as Microsoft, Amazon AWS, Google Cloud, or Meta, who are aggressively expanding AI infrastructure globally.
  • Domestic Leading Internet Enterprises: Including giants like Alibaba, Tencent, Baidu, and Huawei, who are driving China’s AI compute capacity.

• Timeline and Milestones:

  • Current Phase: Product initiation and development.
  • Target: Achieve product landing and small-scale delivery by 2026.

  This timeline is realistic for industrial power equipment, which requires rigorous qualification processes by data center operators. Successfully entering this supply chain would validate Sungrow’s technology at the highest tier of industrial application.
  * Market Potential: The AIDC power market is expected to grow exponentially as AI model training and inference demands skyrocket. Unlike the solar inverter market, which is subject to policy subsidies and installation rates, AIDC power demand is driven by the fundamental economic utility of AI computation. This provides Sungrow with a diversified revenue stream that is less correlated with solar policy cycles, potentially commanding higher valuation multiples akin to semiconductor or high-end industrial equipment peers.
  * Competitive Advantage: Few traditional inverter manufacturers have the high-voltage SST technology ready for data center applications. By bridging the gap between renewable energy integration and data center power distribution, Sungrow positions itself as a holistic "energy-to-compute" power solution provider. This narrative enhances the Company’s long-term Total Addressable Market (TAM) and justifies a re-rating of its growth potential beyond 2027.

4. Financial Health: Cash Flow Improvement and R&D Intensity

Sungrow’s balance sheet and cash flow statements reflect a maturing enterprise that is generating substantial free cash flow while continuing to invest heavily in future competitiveness.

• Operating Cash Flow Surge: In the first nine months of 2025, net operating cash flow reached CNY 9.9 billion, a significant year-over-year improvement.
  • Analysis: Strong operating cash flow is a critical indicator of earnings quality. It suggests that the reported profits are backed by actual cash inflows, reducing the risk of accounts receivable bloat or inventory write-downs. This improvement likely stems from better working capital management, stronger bargaining power with suppliers (extended payables), and more efficient collection from overseas customers who may have different payment terms than domestic state-owned enterprises.
  • Implication for Investors: Robust cash flow enables Sungrow to fund its R&D initiatives, expand its global service network, and potentially return capital to shareholders via dividends or buybacks, without relying heavily on external debt financing. It also provides a buffer against macroeconomic volatility or supply chain disruptions.
• R&D Commitment: The Company invested CNY 3.14 billion in R&D during the first three quarters of 2025, a 32% YoY increase.
  • Human Capital: Sungrow employs over 7,000 R&D personnel, representing a significant portion of its total workforce. This high R&D intensity is crucial in the power electronics industry, where efficiency gains of even 0.1% can translate into significant competitive advantages and cost savings for customers.
  • Focus Areas: While specific breakdowns are not detailed in the summary, the R&D spend supports both core inverter/ESS efficiency improvements and the new AIDC product development. This dual-track R&D strategy ensures that the core business remains technologically leading while nurturing future growth engines.
• Balance Sheet Strength: As of September 30, 2025, the Company’s basic EPS was CNY 5.73, and Book Value Per Share (BVPS) was CNY 23.25, yielding a Return on Equity (ROE) of 24.80%. An ROE nearing 25% is exceptional for a manufacturing firm, indicating highly efficient use of shareholder equity. This high profitability metric supports the Company’s ability to self-fund growth and reinforces its status as a high-quality compounder.

Risks / Headwinds

While Sungrow’s outlook is predominantly positive, institutional investors must consider several key risks that could impact financial performance and stock valuation.

1. Geopolitical and Policy Volatility (High Impact)

• Trade Barriers: As Sungrow increases its overseas revenue share (now dominant in ESS), it becomes more exposed to geopolitical tensions. Tariffs, import restrictions, or local content requirements in key markets such as the United States (Inflation Reduction Act nuances), Europe (Carbon Border Adjustment Mechanism or anti-subsidy investigations), and India could adversely affect margins or market access.
• Subsidy Changes: The global solar and storage markets are still partially driven by government subsidies and mandates. Any unexpected reduction in incentives in major markets (e.g., changes in US ITC, European REPowerEU delays, or Chinese domestic subsidy shifts) could dampen short-term demand.
• Regulatory Compliance: Operating in over 150 countries requires navigating complex and evolving regulatory landscapes regarding grid codes, safety standards, and data security (particularly relevant for the new AIDC business).

2. Raw Material Price Fluctuations (Medium Impact)

• Component Costs: The cost structure of inverters and ESS units is sensitive to prices of semiconductors (IGBTs, MOSFETs), copper, aluminum, and lithium carbonate (for batteries). While Sungrow has demonstrated ability to pass on costs, sudden spikes in raw material prices could compress gross margins if hedging strategies or pricing adjustments lag.
• Supply Chain Disruptions: Geopolitical conflicts or logistical bottlenecks could disrupt the supply of critical components, leading to production delays and inability to fulfill orders, thereby impacting revenue recognition.

3. Demand Uncertainty and Macro Economic Factors (Medium Impact)

• Interest Rate Sensitivity: Solar and storage projects are capital-intensive. High interest rates increase the cost of financing for project developers, potentially delaying or canceling projects. While rates are expected to stabilize or decline in many regions, any resurgence of inflationary pressure could keep financing costs elevated, suppressing demand.
• Grid Congestion: In many mature markets, grid connection queues are long. Delays in grid interconnection approvals can push back project commissioning dates, deferring revenue for Sungrow and its customers.

4. Intensifying Competition (Medium to High Impact)

• Price Wars: The solar inverter and ESS markets are attracting new entrants and seeing aggressive expansion from existing players (e.g., Huawei, SMA, Tesla, BYD, and numerous Chinese competitors). While Sungrow competes on quality and service, persistent price competition, especially in the domestic Chinese market and emerging economies, could exert downward pressure on average selling prices (ASPs) and margins.
• Technological Disruption: The rapid pace of innovation in battery chemistry (e.g., solid-state batteries) and power electronics (e.g., wide-bandgap semiconductors like SiC and GaN) requires continuous high R&D spending. Failure to keep pace with technological shifts could erode Sungrow’s competitive edge.

5. Exchange Rate Fluctuations (Medium Impact)

• Currency Exposure: With a significant portion of revenue generated in foreign currencies (USD, EUR, etc.) and costs incurred in CNY, Sungrow is exposed to foreign exchange risk. Appreciation of the CNY against major trading partners' currencies could reduce the reported value of overseas earnings and make Chinese exports less price-competitive. Conversely, sharp depreciation could increase the cost of imported components. The Company’s hedging strategies will be critical in managing this volatility.

6. Execution Risk in AIDC Business (Low Short-Term, High Long-Term Impact)

• Market Entry Barriers: The AIDC power supply market is dominated by established players with deep relationships with hyperscalers. Sungrow’s goal of small-scale delivery by 2026 is ambitious. Failure to secure key pilot projects or meet the stringent reliability standards of cloud providers could delay revenue contribution from this segment, disappointing investors who are pricing in this growth optionality.

Rating / Sector Outlook

Sector Outlook: Renewable Energy & Energy Storage

The global energy transition remains a secular megatrend, supported by climate commitments (Paris Agreement), energy security concerns, and the economic competitiveness of renewables.
* Solar PV: Expected to maintain steady growth, driven by declining LCOE (Levelized Cost of Energy) and corporate ESG mandates. Growth is shifting from pure volume to value-added services and grid-integration capabilities.
* Energy Storage: This segment is poised for hyper-growth as renewable penetration increases, necessitating grid stabilization and arbitrage opportunities. The shift towards longer-duration storage and hybrid solar-plus-storage projects favors integrated solution providers like Sungrow.
* AIDC Infrastructure: A nascent but explosive sector. The power demands of AI are creating a new niche for high-efficiency, high-density power conversion equipment. Companies that can bridge renewable generation with data center consumption will enjoy premium valuations.

Company Rating: Buy-A (Maintained)

We maintain our Buy-A rating on Sungrow Power Supply. This rating reflects our confidence in the Company’s ability to deliver sustained earnings growth, superior returns on equity, and successful diversification into high-growth adjacent markets.

• Valuation Justification: At a current price of CNY 205.40, the stock trades at a 2025E P/E of 28.7x. Given the projected earnings growth rate of 34.4% in 2025 and 32.3% in 2026, the PEG ratio (Price/Earnings-to-Growth) is approximately 0.8-0.9, which is attractive for a high-quality market leader. The market is appropriately valuing the core business while beginning to assign option value to the AIDC segment.
• Comparative Advantage: Compared to pure-play inverter manufacturers or battery integrators, Sungrow’s integrated model offers better margin stability and cross-selling opportunities. Its global service network is a moat that newer, cheaper competitors cannot easily replicate.
• Catalysts:
  1. Continued beat-and-raise in quarterly earnings due to overseas mix shift.
  2. Announcement of major AIDC partnerships or pilot deployments in 2026.
  3. Potential inclusion in additional global ESG indices, driving passive inflows.
  4. Stabilization or reduction in global interest rates, boosting project finance activity.

Investment View

Core Investment Logic

1. Structural Margin Expansion via Globalization:
Sungrow is undergoing a qualitative transformation from a volume-driven manufacturer to a value-driven global solutions provider. The shift in overseas ESS shipment share from 63% to 83% is not just a statistical change; it represents a fundamental improvement in the quality of earnings. Overseas markets offer higher barriers to entry, stickier customers, and better pricing power. As this mix continues to skew international, we expect gross margins to remain resilient or expand further, even if top-line growth moderates slightly. This structural margin improvement supports a higher valuation multiple relative to historical averages.

2. Dual-Engine Growth: Core Renewables + Emerging AIDC:
Investors often worry about the cyclicality of the solar industry. Sungrow mitigates this risk through two mechanisms:
* Energy Storage: The ESS business is growing faster than the inverter business and is less dependent on new solar installations (retrofitting existing grids, standalone storage). This diversifies the revenue base within the energy sector.
* AIDC Power Supply: This is the "call option" in our investment thesis. By leveraging its high-voltage technology for AI data centers, Sungrow taps into a non-cyclical, high-growth tech infrastructure market. Even if this business contributes minimally to earnings in 2025-2026, its strategic importance lies in expanding the Total Addressable Market (TAM) and associating Sungrow with the AI megatrend, which commands higher investor interest and valuation premiums.

3. Financial Fortitude and Shareholder Returns:
The dramatic improvement in operating cash flow (CNY 9.9 billion in 9M25) signals that Sungrow is generating real cash, not just accounting profits. This financial strength allows the Company to:
* Self-fund R&D (CNY 3.14 billion invested), ensuring technological leadership.
* Weather macroeconomic downturns or supply chain shocks better than leveraged competitors.
* Potentially increase dividend payouts or engage in share buybacks, enhancing total shareholder return.
* Pursue strategic M&A if opportunities arise to accelerate entry into new markets or technologies.

4. Technological Moat and Service Network:
Sungrow’s 7,000-strong R&D team and global service network (520+ outlets) create a formidable barrier to entry. In the B2B industrial sector, reliability and service are paramount. Customers are willing to pay a premium for a supplier that can guarantee uptime and provide rapid local support. This "service moat" protects Sungrow’s market share and margins against low-cost competitors who lack the global infrastructure to support large-scale deployments.

Financial Forecast and Valuation Analysis

We project Sungrow to deliver robust earnings growth over the next three years, driven by the factors outlined above.

Source: Shanxi Securities Institute Estimates

Key Observations from Forecast:
* Revenue Acceleration: We expect revenue growth to accelerate from 17.6% in 2025 to 24.0% in 2026, driven by the full-year contribution of higher overseas ESS volumes and the initial ramp-up of AIDC products.
* Margin Expansion: Gross margins are projected to expand from 29.9% in 2024 to 34.3% in 2027. This 440 basis point expansion is primarily driven by the higher mix of high-margin overseas sales and operational efficiencies. Net margins are expected to follow a similar trajectory, rising from 14.2% to 18.3%.
* Earnings Per Share (EPS): EPS is forecast to grow at a CAGR of approximately 28% from 2024 to 2027. This high growth rate justifies the current P/E multiple and suggests significant upside potential if the Company meets or exceeds these targets.
* Return on Equity (ROE): ROE remains exceptionally high, averaging above 25% through the forecast period. This indicates that the Company is highly efficient at generating profits from its equity base, a key criterion for quality growth stocks.
* Valuation Compression: As earnings grow, the P/E ratio compresses from 28.7x in 2025 to 18.3x in 2027. This makes the stock increasingly attractive on a forward-looking basis, providing a margin of safety for long-term investors.

Strategic Recommendations for Institutional Investors

1. Long-Term Accumulation: Given the secular tailwinds of energy transition and AI infrastructure, Sungrow represents a core holding for portfolios focused on sustainable energy and technology infrastructure. The current valuation offers a reasonable entry point for long-term accumulation, particularly on any market-wide dips.
2. Monitor Overseas Mix: Investors should closely track quarterly reports for updates on the geographic mix of shipments. A continued increase in overseas share, particularly in high-margin regions like Europe and North America, will be a key validator of the margin expansion thesis.
3. Track AIDC Progress: While AIDC revenue will be negligible in 2025, any announcements regarding partnerships with major cloud providers or successful pilot deployments in 2026 should be viewed as significant positive catalysts that could trigger a re-rating of the stock.
4. Risk Management: Hedging against currency fluctuations and monitoring geopolitical developments in key markets is essential. Investors should be prepared for short-term volatility driven by policy news or trade tensions, but these should not distract from the long-term fundamental story.
5. Comparative Valuation: Compare Sungrow’s valuation and growth profile with peers such as Huawei (unlisted), SMA Solar, and Tesla Energy. Sungrow’s combination of high growth, high ROE, and reasonable PEG ratio makes it competitively positioned within the global peer group.

Conclusion

Sungrow Power Supply stands at the intersection of two powerful global trends: the decarbonization of the energy system and the electrification/digitization of computing infrastructure. Its strong 3Q25 results confirm that the Company is executing flawlessly on its core business, driving profitable growth through strategic globalization. The nascent AIDC initiative adds a layer of optionality that could redefine the Company’s long-term growth trajectory.

With a robust balance sheet, improving cash flows, and a clear path to margin expansion, Sungrow is well-equipped to navigate near-term headwinds and capitalize on long-term opportunities. We believe the market is currently undervaluing the sustainability of its margin improvements and the potential of its new AIDC business. Therefore, we maintain our Buy-A rating, viewing Sungrow as a premier beneficiary of the global energy and digital infrastructure build-out.

Appendix: Detailed Financial Analysis

Balance Sheet Strength

Sungrow’s balance sheet reflects a conservative yet growth-oriented financial structure.

• Asset Growth: Total assets are projected to grow from CNY 115.1 billion in 2024 to CNY 171.0 billion in 2027. This growth is primarily driven by increases in current assets, particularly cash and inventory, supporting higher sales volumes.
• Liquidity: The current ratio is expected to improve from 1.6x in 2024 to 2.3x in 2027, indicating a strong ability to meet short-term obligations. The quick ratio also improves from 1.0x to 1.6x, suggesting that liquidity is not overly reliant on inventory liquidation.
• Debt Management: The asset-liability ratio is projected to decrease from 65.1% in 2024 to 44.5% in 2027. This deleveraging trend is healthy, reducing financial risk and interest expense burden. Long-term借款 (borrowings) are forecast to decline, indicating a shift towards internal funding of growth.
• Equity Build-up: Retained earnings are expected to surge from CNY 29.4 billion in 2024 to CNY 80.2 billion in 2027, reflecting the Company’s high profitability and reinvestment strategy. This organic growth in equity base supports the high ROE metrics.

Cash Flow Dynamics

• Operating Cash Flow (OCF): After a strong CNY 9.9 billion in 9M25, full-year 2025 OCF is estimated at CNY 7.5 billion (note: this seems lower than 9M actual, possibly due to seasonal working capital outflows in Q4, or a conservative estimate adjustment). However, 2026E OCF jumps to CNY 21.6 billion, aligning with higher net profits and improved working capital turnover.
• Investing Cash Flow: Significant outflows in 2023 and 2024 reflect capacity expansion and R&D infrastructure investment. From 2025 onwards, investing cash flow turns positive or stabilizes, suggesting that the major capex cycle is maturing and the Company is entering a phase of harvesting returns on prior investments.
• Financing Cash Flow: Negative financing cash flows in future years indicate debt repayment and potential dividend distributions, returning capital to shareholders and optimizing the capital structure.

Profitability Ratios Deep Dive

• Gross Margin Trend: The projected expansion from 29.9% (2024) to 34.3% (2027) is aggressive but achievable given the overseas mix shift. Each 1% increase in gross margin translates to approximately CNY 900 million in additional gross profit based on 2027 revenue estimates, highlighting the sensitivity of earnings to product mix.
• Net Margin Trend: Net margin expansion from 14.2% to 18.3% suggests that operating expenses (SG&A, R&D) are growing slower than revenue, demonstrating operating leverage. This is typical for scaling technology manufacturers where fixed costs are spread over a larger revenue base.
• ROIC (Return on Invested Capital): ROIC is forecast to remain robust, averaging around 23-24%. This exceeds the Company’s weighted average cost of capital (WACC), indicating that Sungrow is creating genuine economic value and not just accounting profit.

Valuation Methodology

Our valuation is primarily based on the Price-to-Earnings (P/E) multiple relative to growth (PEG) and comparative industry analysis.

• PEG Ratio: With a 2025E P/E of 28.7x and expected earnings growth of 34.4%, the PEG is ~0.83. A PEG below 1.0 is generally considered undervalued for a high-growth company.
• Peer Comparison: Compared to global peers in the inverter and storage space, Sungrow trades at a premium to some mature European players but at a discount to high-growth US tech-enabled energy firms. Given its superior growth rate and ROE, the current multiple is justified.
• DCF Sensitivity: A Discounted Cash Flow analysis, assuming a WACC of 8-9% and a terminal growth rate of 3-4%, supports a fair value range consistent with the current market price, providing a margin of safety.

Final Thoughts

Sungrow Power Supply is a rare example of a Chinese manufacturing company that has successfully transitioned from a low-cost producer to a global technology leader with strong branding and service capabilities. Its financial discipline, combined with strategic foresight in entering the AIDC market, positions it for sustained outperformance. For institutional investors, Sungrow offers a compelling blend of growth, quality, and reasonable valuation in the renewable energy sector. We recommend maintaining a positive stance and utilizing market volatility to accumulate positions for long-term holding.

Disclaimer: This report is based on information available as of November 11, 2025. It is intended for institutional investors and does not constitute individual investment advice. Please refer to the original source for complete disclosure and risk factors.