IPO Foresight | Deye Shares (605117.SH) Listed in Hong Kong: An Interpretation of the “Two Sides” of High Gross Profit and High Growth

The photovoltaic and energy storage industry is facing unprecedented development opportunities under the grand narrative of accelerating the global energy structure to a clean and low-carbon transition. As a core participant in this wave, Ningbo Deye Co., Ltd. (hereinafter referred to as “Deye Shares”, 605117.SH) is reaching another important milestone in its capital market. Following its listing on the main board of the Shanghai Stock Exchange in 2021, Deye Co., Ltd. submitted a listing application to the main board of the Hong Kong Stock Exchange for the second time on July 28, launching the “A+H” dual capital platform layout.

According to Frost & Sullivan data, in terms of sales volume in 2025, Deye Co., Ltd. has become the world's largest provider of household energy storage inverters. So what highlights did Deye Co., Ltd. bring to the table again this time?

From low voltage inverter heads to integrated optical storage solution providers

The business layout of Deye Co., Ltd. shows a clear “two-wheel drive” pattern. Its core growth engine is the new energy business, focusing on the three major product lines of energy storage inverters, photovoltaic inverters, and energy storage battery packs. At the same time, the company has more than 20 years of experience in environmental management equipment such as dehumidifiers, solar air conditioners, and heat exchangers. This diverse product portfolio not only gives business resilience, but also forms reusable cost control genes on the manufacturing side.

According to the Zhitong Finance App, in recent years, the global energy storage market has exploded. According to Frost & Sullivan's report, the global household energy storage system market increased from 10.80 billion yuan in 2021 to 67.60 billion yuan in 2025, with a compound annual growth rate of 58.3%. The market size is expected to grow to 290.6 billion yuan in 2031, with a compound growth rate of 27.6% in 2026-2031. Factors driving this growth include global countries' pursuit of carbon neutrality goals, economic considerations brought about by rising electricity prices, and rigid demand for backup power in regions with unstable power grids.

Deye Co., Ltd. has accurately grasped the historic opportunities of the global energy transition. Unlike most peers competing in the Red Sea in mature markets in Europe and the US, the company adopted a differentiated strategy of “three-dimensional marketing+brand going+deep localization” to take the lead in entering emerging markets such as South Africa, Pakistan, and Brazil with weak power grids and high electricity prices. With hard core performance such as low voltage and high current technology, millisecond on-grid switching, and seamless compatibility with diesel generators, its products accurately solved the “immediate demand” for electricity consumption in weak power grid regions, and quickly established a first-mover advantage.

The results of this strategy have been remarkable. According to the prospectus, the company's products have spread across six continents in more than 150 countries and regions. The share of overseas revenue has climbed from 58.0% in 2023 to 79.7% in 2025, and reached 87.6% in the first four months of 2026, clearly outlining the successful trajectory of the global layout. Thanks to its deep cultivation in emerging markets and continuous international expansion, Deye Co., Ltd. has reached the top of the global household energy storage inverter market. According to Frost & Sullivan data, its 2025 sales amount ranked first in the global industry, establishing the position of a global leader in the field of optical storage.

While consolidating the advantages of inverters, Deye Co., Ltd. is transforming into an energy storage system solution provider. The energy storage battery pack business has become the fastest growing sector. Shipment volume and revenue in 2025 achieved rapid growth of 67.2% and 56.3% year-on-year respectively. Through the four “spring, summer, autumn and winter” product series, the company has achieved full coverage from low-voltage household use to high-voltage commercial and industrial use, from portable energy storage to containerized large-scale storage.

Behind high financial growth

Financial data also confirms the growth trajectory of Deye Co., Ltd. From 2023 to 2025, the company's revenue increased from 7.48 billion yuan to 12.22 billion yuan, and annual profit increased from 1.79 billion yuan to 3.17 billion yuan. Entering 2026, the growth momentum continues unabated. In the first four months, revenue of 6.18 billion yuan and profit of 1.61 billion yuan were achieved, an increase of 74.3% over the previous year. This growth rate not only outperformed the industry average, but also showed that the profit growth rate was significantly higher than the revenue growth rate. The net profit growth rate of 65.3% in 2024 far exceeded the revenue growth rate of 49.8%.

In terms of profitability indicators, the company's gross margin remained at 38.0% in 2025, and the net margin reached 25.9%. The gross margin of the core product of energy storage inverters remained above 51% for a long time. The achievement of this high profit margin stems, on the one hand, from the company's vertical integration of domestic replacement procurement of upstream core components such as IGBTs and key structural components, and on the other hand, from its bargaining power in emerging markets.

In the face of rapid growth in the industry and performance, the company is also facing multiple tests.

First, the expansion of scale has brought hidden worries on the balance sheet side. By the end of April 2026, the company's accounts receivable surged from 570 million yuan at the end of 2023 to 2.04 billion yuan, inventory increased from 750 million yuan to 3.08 billion yuan, and the number of working days was extended to 39 and 80 days, respectively. Although the cash on the company's account is as high as 5.615 billion yuan, and operating cash flow continues to cover net profit, if downstream distributors fail to meet expectations, the risk of inventory price drops cannot be ignored.

The second is intense market competition. The photovoltaic and energy storage industry has attracted a large number of participants, and increasing competition may lead to price wars, thereby reducing profit margins. And supply chain risks cannot be ignored. The company's production relies on key raw materials such as battery cells and IGBTs, and price fluctuations and supply stability directly affect the company's cost and delivery capacity.

Geopolitics and international trade policies are another risk point worth paying attention to. The vast majority of the company's revenue comes from overseas, and global macroeconomic fluctuations, trade frictions, and changes in tariff policies (such as the US imposing tariffs on Chinese products) may have an impact on its business. In addition, exchange rate fluctuations are also an important variable. Since the company's overseas sales are mostly settled in US dollars or euros, changes in the RMB exchange rate will directly affect its financial performance.

At the operational level, the company also faces a series of challenges such as customer concentration, inventory management, product quality, and overseas business compliance. For example, the company has sold to internationally sanctioned Syrian customers, and although the amount is small and remedial measures have been taken, it still revealed the compliance risks it may face when expanding into the global market.

Looking forward to the future, Deye Co., Ltd. plans to use the capital raised in this IPO mainly in four major directions: improving R&D capabilities, expanding production capacity, strengthening the global marketing network, and supplementing working capital. The company is actively deploying next-generation technologies such as silicon carbide (SiC) technology, high-power industrial and commercial products, and solid state transformers, and plans to build new production bases in Malaysia and other places to optimize the global production capacity layout and improve cost efficiency.

All in all, the Hong Kong stock listing application of Deye Co., Ltd. shows a clear picture of the successful transformation from traditional manufacturing to a leading global new energy company. With leading technology, a diverse product portfolio, and strong global channels, it has an advantageous position in the rapidly growing energy storage circuit. Despite facing multiple challenges such as market competition, supply chain, and geopolitics, its sound financial fundamentals and clear strategic planning have laid a solid foundation for its continued future growth. This listing in Hong Kong will undoubtedly inject new capital impetus into its globalization journey and is worthy of continued market attention.