Qiu Sheng | Net profit plummeted from 840 million yuan to 19.87 million yuan, a Shenzhen PV veteran is making another push for a Hong Kong listing relying on energy storage

This article is approximately 3,300 words long. It is recommended to take 7 minutes to read.

Author | Peng Xiaoqiu

Editor's note: Amid the AI explosion, more and more companies are entering the capital market. Every flip of a prospectus holds all that a company wants to say and what remains unsaid.

In view of this, Yingke has specially launched the "Autumn Sound" column. "Autumn Sound" is taken from Ouyang Xiu's "Ode to the Sound of Autumn". Borrowing the meaning of "listening to the sound of autumn", it aims to sense the industry's trends, assess the quality of companies, and record the truths written and hidden during enterprises' sprints towards IPO. This is our sixth issue, focusing on Growatt.

Last month, Growatt submitted its prospectus to the Hong Kong Stock Exchange for the third time. Growatt's IPO journey has been full of twists and turns. It first submitted its prospectus in June 2022. After passing the hearing, it did not launch the offering. It submitted again in March 2023 and postponed the listing once more. Until the recent third submission, the sponsors have changed from Credit Suisse and CICC to Huatai.

In fact, as early as 2017, Growatt's predecessor company planned to apply for listing on the Shenzhen Stock Exchange and completed the record - filing for listing guidance in November of that year. However, the prospectus specifically states that this record - filing for guidance does not constitute a listing application submitted to the China Securities Regulatory Commission. The relevant record - filing was eventually terminated in September 2021, and Growatt then chose to switch to the Hong Kong stock market.

According to third - party data, in 2025, Growatt was the world's third - largest provider of residential energy storage inverters, with a market share of 10.2%. It was also the largest provider of residential energy storage inverters in the Americas, with a market share of 14.7%. As of the end of 2025, its sales network covered approximately 190 countries and regions, and it connected approximately 4.2 million residential and commercial end - users through its AI - empowered energy management system.

Growatt mainly provides photovoltaic inverters and energy storage systems. Simply put, it converts solar energy into usable electricity and stores the excess electricity. After carefully analyzing the 384 - page prospectus, Yingke found that its net profit has experienced a "roller - coaster ride" in three years, dropping from 840 million to 20 million and then rising back to 410 million.

The traditional photovoltaic business takes a back seat, and the new energy storage engine takes over

From the financial reports, Growatt's annual profits in 2023, 2024, and 2025 were 843.3 million, 19.87 million, and 413 million respectively. The net profit margin shrank from 15.7% to 0.4% and then rebounded to 7.9%. Why did Growatt's profit experience a roller - coaster ride in three years? This is worth studying.

Let's first look at the abnormal year of 2024, which was a trough in Growatt's operations. In this year, in addition to the net profit margin dropping to only 0.4%, the adjusted net profit was only 48.96 million yuan. The operating profit margin dropped from 9.9% in 2023 to 1.2%. The reason is actually not complicated: the European energy crisis subsided, and demand returned to normal. On the one hand, Growatt's sales volume declined, and on the other hand, it carried out promotional price cuts to reduce inventory. As a result, the gross profit margin dropped from 26.3% to 20.3%.

In 2025, with the recovery of the energy storage market, the operating profit margin returned to 9.9%, and the adjusted net profit was 483 million yuan.

Secondly, among the annual profit of 840 million in 2023, there was a fair value change gain of 360 million yuan from financial instruments issued to investors. In 2022, Growatt issued Series A convertible preferred shares to Pre - IPO investors. According to accounting standards, these preferred shares should be measured as financial liabilities at fair value before listing, and any changes in valuation are included in the current period's profit and loss.

In 2023, a gain of 362 million yuan was recorded, precisely because the fair value of these preferred shares decreased that year. That is, in 2023, the capital market re - evaluated the photovoltaic sector, and the company's implied valuation declined, resulting in a profit on the books. Excluding this non - cash, non - operating item (and adding back share - based payments), its adjusted net profit in 2023 was only 500 million yuan, nearly 40% less than the reported 840 million yuan.

Generally speaking, when evaluating the real profitability of a hardware company, operating profit is often more relevant than net profit.

Growatt's net cash flows from operating activities in 2023, 2024, and 2025 were 193 million, 1.062 billion, and 1.381 billion yuan respectively, showing a year - on - year increase. Moreover, there was an obvious divergence from the net profit: in 2024, the net profit was only 19.87 million yuan, but the operating cash flow was as high as 1.062 billion yuan, because inventory reduction released a large amount of cash; in 2025, the operating cash flow was 1.381 billion yuan, far exceeding the net profit of 413 million yuan.

As of the end of 2025, the company had 2.284 billion yuan in cash and cash equivalents, and the asset - liability ratio was only 9.2%. In the past three years, the bank borrowing interest rate has been as low as 0.72% - 3.85%. As of April 30, 2026, there was still 958 million yuan in unused bank credit. The inventory turnover days decreased from 217 days to 136 days, and the accounts receivable turnover decreased from 87 days to 58 days. The collection of accounts receivable accelerated, and the inventory situation improved.

It is worth mentioning that Growatt is different from many growth stocks that go public at a loss. Growatt is truly making money, has sufficient cash, and operates with little leverage.

The reason for Growatt's roller - coaster performance is the sudden change in its revenue structure. The traditional photovoltaic business takes a back seat, and the new energy storage engine takes over. Growatt's revenue consists of four parts: energy storage system products, photovoltaic inverters, AI - empowered energy management systems, and other accessories. In three years, there was a complete shift between the first two parts:

Energy storage system products: The revenue increased from 2.083 billion yuan in 2023, accounting for 38.8%, to 1.666 billion yuan in 2024, accounting for 37.2%, and then soared by 99% to 3.315 billion yuan in 2025, accounting for 63.4%.

Photovoltaic inverters: The revenue decreased from 2.956 billion yuan in 2023, accounting for 55.1%, to 2.585 billion yuan in 2024, accounting for 57.7%, and then dropped to 1.557 billion yuan in 2025, with the proportion shrinking from over half to 29.8%.

With this rise and fall, Growatt has transformed from a company selling photovoltaic inverters to a company selling energy storage systems. Behind this is a clear industry trend. In mature markets with relatively high gross profit margins, demand is shifting from simple photovoltaic power generation to integrated photovoltaic + energy storage solutions.

Looking at the unit economics is even more interesting. In 2025, the gross profit margin of batteries in the energy storage system was 32.6%, and that of energy storage inverters was 24.2%, while the gross profit margin of residential photovoltaic inverters was only 14.5%. Although the gross profit margin of the AI energy management system was as high as 32.4%, its revenue accounted for only 1.2%, that is, 60.74 million yuan. So the AI narrative is still in the future, and the monetization is still limited. However, the 4.2 million end - users provide support.

Overall, the increasing proportion of energy storage has pulled the company's comprehensive gross profit margin back from 20.3% in 2024 to 22.5% in 2025. The new energy storage engine is indeed taking over.

In terms of regional revenue, the European market declined, while the US market soared to 15.8%. Europe was once its stronghold, contributing 44.7% of the revenue in 2023. However, after the energy crisis subsided, it declined all the way to 32.4% in 2025, although the absolute amount had rebounded to 1.697 billion yuan in 2025.

The real story lies in the Americas: The revenue proportion increased from 15.6% in 2023 to 25.6% in 2025. The US market increased from 65.4 million yuan in 2023, accounting for 1.2%, to 828 million yuan in 2025, accounting for 15.8%, a more than ten - fold increase in two years, and the gross profit margin in the US was as high as 29.7%.

This steep growth curve in the US is one of the main engines for the performance recovery in 2025, but it is also the biggest risk exposure. Growatt's prospectus repeatedly mentions in the risk factors: trade restrictions, tariffs, or geopolitical tensions that affect the global supply chain or cross - border trade of energy storage system products.

The company's hedging measure is diversification of production locations. In addition to its main base in Huizhou, Guangdong, it has built an overseas factory in Haiphong, Vietnam, mainly producing photovoltaic inverters, which was established in 2022. A significant portion of the raised funds will be used for the expansion of the Vietnam factory (scheduled to be completed in 2029) and semiconductor procurement and reserves. Moving part of the production to Vietnam is not only to reduce costs but also to hedge against tariff and geopolitical risks.

In addition, the proportion of revenue from its top five customers increased from 16.6% in 2023 to 23.6% in 2025, and the proportion of the largest single customer increased from 6.6% to 13.0%. While the orders from the US market are booming, it also brings the hidden danger of increased concentration.

Sequoia exits completely before listing, and IDG, the A - round investor, stays until the eve of IPO

Sixteen years ago, Growatt started with the Wenzhou business circle. Its predecessor company was established in May 2010. Among the initial shareholders, Ding Yongqiang held 39%, and the rest were all Wenzhou - based enterprises and individuals such as Wenzhou Gaoneng Electric, Wenzhou Haibo, and Zhejiang Kaspa New Energy. One year later, the Wenzhou - based shareholders gradually exited and transferred their equity to Yongqiang, increasing his shareholding to 72.8%.

The first major institutional investor was Sequoia. In February 2012, SCC Venture, an investment vehicle under Sequoia Capital, subscribed for the newly - added registered capital of the predecessor company with 31.71 million yuan. Subsequently, CM Science and Technology Investment, Sunac Growth, Lanqiao, etc. also entered the scene one after another. However, a dramatic event occurred on the eve of listing: In January 2021, Sequoia's SCC Venture transferred its 18.35% registered capital in the predecessor company to the company's employee shareholding platform at a consideration of approximately 275 million yuan, exiting completely. From 31.71 million to 275 million, Sequoia made approximately 8.7 times its investment in eight years. However, it chose to cash out before the listing, rather than waiting for the IPO.

Its only external institutional equity financing round was the Series A preferred shares. In June 2022, Bateson Group and Best Select subscribed for Series A convertible preferred shares with 400 million and 500 million yuan respectively, totaling 900 million yuan, with a cost per share of approximately 10.09 yuan, and the payment was settled at the end of June 2022.

Digging into the complex partnership structures of these two BVI companies, it is found that Bateson Group and Best Select ultimately point to Li Jianguang, Niu Kuiguang, Wang Jingbo, and the Shanghai - listed company Sichuan Harmony Shuangma they control, that is, the IDG Capital system. In November 2025, there was another transfer of old shares. Best Select and Champ from the IDG system acquired some old shares from several employee/family shareholding platforms, increasing the total shareholding of the IDG system to approximately 10.42%.

Therefore, in this IPO, Sequoia came the earliest and left the most straightforwardly; IDG bet 900 million yuan and is the only external institutional winner that stayed until the listing. As for how high the book return of IDG's A - round investment is - based on the cost of 10.09 yuan per share and the Series A preferred shares accounting for approximately 6.52% of the total share capital, the post - investment valuation in mid - 2022 was approximately 13.8 billion yuan.