Summary of Key Points
As a global leader in residential energy storage inverters (with a market value of over 100 billion yuan), Deye Co., Ltd. has recently announced a second-phase expansion plan for its 9GWh industrial and commercial energy storage production line, with a total investment of over 1.2 billion yuan, to meet the surge in overseas demand for such products. The company's stock price has risen by more than 60% this year, and its market value firmly ranks second in the photovoltaic equipment sector. Deye has transitioned from manufacturing plastic molds to the energy storage industry, where its energy storage business now accounts for over 70% of its revenue, demonstrating stable performance and a leading position in the industry. Global energy storage demand is growing rapidly, offering broad prospects for the industry.
I. Expansion: Keeping Pace with Overseas Demand to Secure Market Share
Deye's expansion was not an impulsive decision; it had already planned a 16GWh industrial and commercial energy storage production line last April, with the first phase (7GWh) in the process of obtaining land. The addition of the second phase brings the total capacity to completion. The main reason for this expansion is the explosive growth in overseas demand for industrial and commercial energy storage solutions—European companies are looking to reduce electricity costs, and American data centers need stable power supply, both of which rely on these devices. By building the production lines in advance, Deye aims to avoid potential capacity shortages and missed profit opportunities in the future.
The expansion will cost 1.232 billion yuan for equipment and factory construction. The government has provided incentives, requiring a minimum annual tax payment of 500,000 yuan per mu (a unit of land area) and ensuring that research and development expenditures account for no less than 3.8% of revenue. These measures not only ensure efficient land use but also encourage the company to continue investing in technology. Deye states that it will not be significantly affected by these requirements by 2026, and its performance is expected to improve as capacity increases.
II. Stock Price Surge: The Market's Confidence in Energy Storage’s Future Potential
Deye's stock price has been on the rise this year, reaching a market value of 126.4 billion yuan by June 25, an increase of 63% from the beginning of the year, ranking second in the photovoltaic equipment sector, only behind Sungrow Power (one of the two companies with a market value of over 100 billion yuan). The reasons for this strong performance are twofold: first, the energy storage industry is one of the hottest sectors in the new energy sector, with many expecting demand to explode; second, Deye's solid foundation as a global leader in residential energy storage inverters. Additionally, the expansion plan has boosted investor confidence, indicating the company's ability to handle more orders and secure future growth.
III. Transformation: From Manufacturing Air Conditioner Parts to Leading the Energy Storage Industry
Deye initially focused on manufacturing plastic molds and injection-molded components for air conditioning companies like Midea and Oaks, producing heat exchangers. In 2016, it entered the photovoltaic inverter market. An inverter converts the direct current generated by solar panels into alternating current suitable for household use. Its main products now include energy storage inverters and battery packs, which together account for 74% of its revenue, transforming its original contract manufacturing business into a high-value new energy product and seizing the opportunities in the energy storage sector.
IV. Performance: The Energy Storage Business Drives Stability
Deye's revenue for 2025 is expected to be 12.2 billion yuan, an increase of 9%, with profits at 3.17 billion yuan, a growth of 7%. While not extremely fast, the growth is stable, largely due to the energy storage business accounting for over 70% of its revenue, indicating a solid source of income. Industry data highlights Deye's dominance: it led global residential energy storage inverter sales in 2024 and has maintained the top position in shipments of 5-20 kW low-voltage inverters for three consecutive years, making it an undisputed leader in this niche market with unassailable technology and market share.
V. Industry Prospects: Rapid Growth in Global Energy Storage Demand
Guosen Securities predicts that global energy storage installation demand will reach 455GWh by 2026, a 40% increase from 2025. The reasons for this growth are:
- Domestic Markets: The increasing marketization of new energy technologies is driving more companies and households to adopt energy storage solutions.
- United States: Accelerated data center construction requires substantial energy storage capacity.
- Europe: Energy transition efforts rely on energy storage to store solar and wind power.
- Emerging Markets: Regions like Southeast Asia have policies supporting new energy development, boosting energy storage demand.
The entire industry is experiencing rapid growth, providing significant opportunities for Deye's expansion. Guosen Securities notes that Deye's expansion is aimed at capturing this growing market, offering substantial potential for future development.
In summary, Deye Co., Ltd. is a strong player in the energy storage sector. Its expansion is a strategic move to meet demand and strengthen its position, while the industry's rapid growth adds to its prospects. For investors, two key factors are crucial: whether the company possesses core technologies and market share, and whether industry demand is indeed on the rise. Deye meets both criteria, which explains why its stock price has performed so well.