Why did Sungrow Power Supply deliver its worst financial performance during what should have been its best era?

Cao Renxian, a native of Xiaoshan District in Hangzhou, graduated from Hefei University of Technology with a major in industrial automation and stayed on as a faculty member. In 1997, he resigned from his secure state-sector job and founded Sungrow Power Supply in a mere 20-square-meter apartment in Hefei—starting from scratch. In its early days, Sungrow sustained itself through its UPS (uninterruptible power supply) business. It wasn’t until 2003 that the company successfully developed and grid-connected its first photovoltaic inverter. Cao immediately decided to discontinue the profitable UPS business entirely and bet all its chips on inverters. History proved this decision spot-on. According to Frost & Sullivan, Sungrow’s global inverter shipment market share reached 25.2% in 2024—ranking first worldwide for multiple consecutive years. There is an intriguing contrast worth noting here. In 2016, Inovance Technology had already grown its inverter business to become China’s second-largest—but then strategically exited the sector. Since then, Inovance’s founder Zhu Xingming has repeatedly reflected on this decision, admitting his team misjudged the era and lacked sufficient resolve—while also praising Sungrow’s strategic discipline and execution capability. This further underscores Sungrow’s exceptional strategic clarity and operational rigor. In 2025, a policy document thrust the energy storage industry onto a pivotal crossroads. In February, Document No. 136 was issued, officially ending the era of mandatory energy storage deployment for new-energy projects. The announcement sent shockwaves through investor circles: many believed the energy storage sector’s sky had fallen—after all, storage requirements had long dragged down project returns across the new-energy landscape. Surprisingly, however, the energy storage industry flourished *after* mandatory deployment was scrapped. The core reason lies in the document’s explicit clarification that energy storage systems can operate as independent market participants in electricity trading—coupled with additional revenue streams from peak-to-valley price arbitrage and ancillary services such as frequency regulation and load balancing. High-quality storage projects now boast attractive internal rates of return, transforming storage from a cost center into a profit-generating asset. It was precisely in 2025 that Sungrow’s energy storage system revenue accounted for 41.81% of total revenue—surpassing inverter revenue (34.91%) for the first time. Buoyed by such expectations, Sungrow’s stock price surged—from a low of RMB 58 last year to over RMB 180—a more than threefold increase. Just as investors basked in the self-congratulatory glow of having “called it right,” a thunderclap struck out of a clear blue sky. In Q4 2025, Sungrow posted single-quarter revenue of RMB 22.782 billion—a sharp 18.37% year-on-year decline; net profit plummeted to RMB 1.58 billion, down a staggering 54.02% YoY. The downward spiral continued into Q1 2026: revenue stood at RMB 15.561 billion and net profit at RMB 2.291 billion—down 18.26% and 40.12% YoY respectively. Two consecutive quarters of double-digit declines in both top and bottom lines delivered a devastating “double whammy.” Even more intriguingly, just before this earnings “bomb” detonated, Sungrow’s executives executed a textbook-perfect round of share reductions. In October last year, four key executives—Vice Chairman Gu Yilei, Director Wu Jiamao, and Vice Presidents Deng Dejun and Wang Lei—jointly announced plans to sell up to 424,900 shares in aggregate. Such precise timing—cashing out immediately before an “unexpected” earnings collapse—raises questions: Was this prescient foresight—or something else entirely? Where, exactly, did this sudden thunderbolt striking Sungrow originate?

What is Sungrow Power Supply’s growth outlook?

From a growth perspective, the performance of inverter-sector listed companies in the first three quarters of 2025 shows marked divergence. Among ten sampled firms, six achieved simultaneous growth in both revenue and profit: Sungrow Power Supply, DEYE Co., Ltd., Jinlang Technology, GoodWe, SUNTECH Power (Shangneng Electric), and CHINT Power Systems. The remaining four experienced either revenue or profit declines—and firms such as Hoymiles and Yutong Technology even suffered dual contraction in both metrics—further reinforcing the industry’s “strong get stronger” dynamic. Within this cohort of dual-growth leaders, Sungrow stands out most prominently. Its 33% revenue growth ranked first among peers, reflecting robust market expansion and scaling capabilities; meanwhile, its 56% profit growth ranked second only to GoodWe among dual-growth firms—and significantly exceeded its own revenue growth rate—demonstrating outstanding profitability and cost-control discipline. As the undisputed industry leader, Sungrow’s dual leadership in scale advantage and growth momentum further solidifies its core position in the inverter赛道. II. Valuation Comparison Among Inverter Listed Companies From a valuation standpoint, P/E ratios (TTM) across inverter-sector listed companies exhibit pronounced polarization—closely tied to actual performance and market expectations. Among the ten sampled firms, valuations vary dramatically: GoodWe and Yutong Technology trade at premium levels, with GoodWe’s P/E (TTM) reaching 173.6x and Yutong exceeding 150x; Hoymiles, suffering steep earnings declines, has slipped into negative valuation territory—highlighting acute valuation distress; most others fall within the 30x–100x P/E band, underscoring clear valuation stratification across the sector. Against this backdrop of generally elevated valuations, Sungrow displays notable valuation appeal: its P/E (TTM) stands at just 21.1x—the lowest in the inverter sector. This level is far below high-valuation peers like GoodWe and Yutong Technology—and also lower than peers such as Jinlang Technology, Shangneng Electric, and AERO Energy—creating a conspicuous valuation “discount.” Coupled with its 33% revenue growth and 56% profit growth, Sungrow delivers high growth while maintaining a sector-low valuation—reflecting market confidence in its earnings delivery capacity and highlighting strong valuation attractiveness and investment value resilience. III. Summary Looking at long-term price trends, Sungrow’s stock traded in a narrow, low-volatility range prior to 2020. Starting in 2020, it entered two major bull phases aligned with rising sectoral sentiment in photovoltaics and energy storage—reaching an all-time high in 2025 with substantial cumulative gains. Notably, its share price appreciation has consistently tracked earnings growth: in the first three quarters of 2025, its profit growth reached 56%, decisively outpacing its stock price gains—explaining why its P/E (TTM) remained anchored at a modest 21.1x despite record highs. In other words, its rally has not led to valuation excess. The market’s relatively low valuation for Sungrow stems primarily from persistent concerns about the photovoltaic industry’s cyclical nature—driven in recent years by overcapacity, price wars, and overseas trade barriers—causing continuous downward revisions to the sector’s valuation benchmark.

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