Energy Storage Surge: Can Sungrow Soar Again?
On the evening of October 28, 2025, $Sungrow Power Supply(300274.SZ) released its third-quarter report for 2025. Sungrow delivered results that were generally in line with market expectations. Specifically:
1. Third-quarter revenue slightly below expectations: Total revenue for the third quarter was 22.9 billion, a quarter-on-quarter decline of 6.7%, also below the market expectation of 24.8 billion. The main reason for the quarter-on-quarter decline was the significant drop in revenue from power station investment and development.
Although the overall revenue from the energy storage business slightly declined quarter-on-quarter, considering the overseas rush installation due to tariff issues in the second quarter, the effect in the third quarter has significantly weakened. The company maintaining the scale of the second quarter in energy storage is already commendable, with shipment volume remaining roughly the same as in the second quarter.
By business segment:
a. Energy storage business continues to perform well, becoming the company's largest revenue source: In the first three quarters of 2025, energy storage system revenue reached 28.8 billion, with a year-on-year growth rate of 105%, making the energy storage business Sungrow's largest revenue source.
In terms of shipment volume and energy storage unit price, energy storage shipments in the first three quarters were 29GWh, with a year-on-year growth rate of 70%, roughly in line with the global energy storage installation growth rate (global energy storage installations grew by 68% year-on-year to 170GWh in the first three quarters). Sungrow continues to steadily increase its market share in global energy storage through its advantages in technology, channels, and brand.
Sungrow's high growth in energy storage is still mainly driven by high growth in overseas energy storage shipments, while the domestic energy storage market remains highly competitive, with relatively poor profitability per Wh. Therefore, Sungrow's business focus remains overseas.
In the first three quarters, overseas energy storage shipments were 24GWh, while domestic shipments were only 5GWh. The proportion of overseas energy storage shipments increased from 63% in the same period in 2024 to 83%, which also led to a 21% year-on-year increase in the average sales unit price to 0.99 yuan/Wh.
b. Photovoltaic inverter business maintains steady growth: In the first three quarters of 2025, photovoltaic inverter revenue was 23.4 billion, with a year-on-year growth rate of 12%, maintaining relatively steady growth.
However, after the release of Document No. 136, due to the cancellation of guaranteed purchase prices and marketization of electricity prices, the short-term returns of photovoltaic projects declined, and the uncertainty of returns increased. Domestic photovoltaic installation demand was suppressed, and Sungrow was affected by the decline in domestic photovoltaic rush installation in the third quarter, resulting in a quarter-on-quarter decline in overall photovoltaic inverter shipments.
c. New energy power station development business declined significantly: In the first three quarters of 2025, power station development business revenue was 11.3 billion, a year-on-year decline of 13%. Similarly, due to the increased uncertainty of benefits for photovoltaic power stations after the release of Document No. 136, the scale of new development in the third quarter declined significantly quarter-on-quarter, leading to a significant quarter-on-quarter decline in new energy power station development business revenue.
2. Gross margin continued to improve in the third quarter, mainly due to the increase in overseas proportion: Sungrow's gross margin in the third quarter was 33.8%, a quarter-on-quarter increase of 2 percentage points, also higher than the market expectation of 31.6%. The main reason for the gross margin improvement was still the increase in the proportion of overseas business revenue. Compared to the relatively "inward" domestic market, overseas photovoltaic inverter and energy storage businesses still have higher unit prices and gross margins.
Third-quarter overseas business revenue was 15.4 billion, with the proportion of overseas revenue increasing from 57% in the first half of 2025 to 67% in the third quarter. The increase in the proportion of overseas revenue was partly due to the further increase in the proportion of overseas energy storage shipments and mainly due to the negative impact of the decline in domestic photovoltaic inverter business after Document No. 136, with the proportion of domestic shipments falling from 48% to 40%.
3. Net profit in the third quarter slightly exceeded expectations, mainly due to the improvement in gross margin: Sungrow's net profit attributable to the parent company in the third quarter was 4.15 billion yuan, a year-on-year increase of 57%, slightly higher than the market expectation of 3.9 billion yuan. The net profit margin attributable to the parent company reached 18.1%, a quarter-on-quarter increase of 2.1 percentage points, mainly due to the better-than-expected gross margin driven by the increase in the proportion of overseas business, combined with a quarter-on-quarter reduction in the three expenses.
Dolphin Research's commentary:
Overall, Sungrow delivered a report card that was generally in line with expectations. Although the total revenue was below market expectations due to the significant quarter-on-quarter decline in new energy power station business revenue, the gross margin continued to improve quarter-on-quarter due to the continued increase in the proportion of overseas business revenue, leading to better-than-expected performance in gross and net profit this quarter.
What the market is truly concerned about is the performance and future growth trend of Sungrow's energy storage business. The energy storage business revenue continued to maintain a high growth trend in the first three quarters, with a year-on-year growth rate of 105%, replacing the photovoltaic inverter business as the company's core growth engine.
From the overall energy storage shipment volume this year, 29GWh has already been shipped in the first three quarters. Sungrow continues to maintain its target of 40-50GWh shipment volume, and Dolphin Research conservatively estimates that Sungrow's energy storage shipment volume in 2025 can reach 42GWh, with energy storage system shipment volume maintaining a high growth rate of nearly 50%.
Looking ahead to 2026, Sungrow expects the global energy storage market to continue to maintain a high growth rate of 40%-50%. The core driving factors for the global energy storage explosion are mainly due to:
1) Increased penetration of new energy generation: New energy generation (wind power + photovoltaic) requires energy storage "power banks" to meet the rigid demand for grid balance due to its intermittent and volatile characteristics (energy storage has functions such as frequency regulation, backup capacity assurance, and transmission congestion relief). When the proportion of new energy exceeds 20%, energy storage is needed for balance, and energy storage also expands the development space for new energy. At the same time, overseas grids, due to their long service cycles, generate rigid demand for energy storage from a safety and stability perspective.
2) Economic breakthrough: The cost of energy storage systems has decreased (since 2023, the cost of energy storage systems has decreased by more than 50%, and the price of energy storage systems has now dropped to 0.54 yuan/Wh).
3) Optimization of business models in some countries (such as China's introduction of capacity electricity prices/spot price differences, market-oriented reform of electricity prices, and capacity markets/ancillary services in the US/Europe), significantly improving the IRR of energy storage projects;
4) New demand from data centers driving increased demand for energy storage: According to third-party data estimates from the IEA, data center power demand will double by 2030, driving continuous growth in energy storage demand.
Data centers, as high-energy-density loads, have three main characteristics: high reliability requirements, large load fluctuations, and high electricity costs (electricity costs account for half of operating costs). Energy storage can solve issues such as insufficient grid capacity, support load fluctuations, and reduce electricity costs through peak-valley arbitrage for data centers.
As a global leader in energy storage system integration, Sungrow will directly benefit from this round of global energy storage demand explosion. At the same time, due to Sungrow's own grid-forming and three-electric integration technology (adapted to overseas weak grid demand), channel and operation and maintenance advantages, and brand power addition, Dolphin Research expects Sungrow's global market share to continue to grow, with energy storage system shipment volume expected to reach 61GWh in 2026, maintaining a high year-on-year growth rate of 47%.
The current market expectation for Sungrow's profit in 2026 is between 18 billion and 20 billion yuan. Dolphin Research expects Sungrow's net profit in 2026 to be 19.3 billion yuan. Based on Sungrow's future profit growth rate, a PE valuation of 20-22 times is given for 2026, corresponding to a reasonable valuation of 386 billion to 424.6 billion yuan for Sungrow.
Longbridge Dolphin Research Sungrow Power Supply Co., Ltd. (300274.SZ) historical articles:
April 20, 2022, conference call "Sungrow Power Supply Co., Ltd.: Inverter + Energy Storage, Stable Volume but Unstable Profit (Minutes)"
April 19, 2022, financial report commentary "Sungrow Power Supply Co., Ltd.: Full of Apologies, High Expectations Lowered in Shock?"
November 16, 2021 - Industry Depth - "Left Hand Parity, Right Hand Carbon Neutrality, Is Photovoltaic the Hope of the New Energy Village?"
February 7, 2022 - Company Depth - "Photovoltaic Off to a Bad Start, Sungrow Power Supply Co., Ltd. Ends with a Whimper?"
February 8, 2022 - Company Depth - "After the Emotion Leaks, Is Sungrow Power Supply Co., Ltd. Still a 'Chasing Light Youth'?"
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