While many mainstream photovoltaic manufacturers continue to post heavy losses, inverter leader Sungrow Power Supply Co.,Ltd. (SZSE: 300274) has stood out as an industry benchmark thanks to its strong earnings. However, as 2026 unfolds, the company's growth momentum has hit an inflection point. After a tepid first quarter, its semi-annual report shows continued declines in both revenue and net profit, with net profit falling by over 30%.

The disappointing operating results have been mirrored in the stock market, where investors have grown frustrated. On August 31, the share price dropped as much as 8% intraday, hitting a yearly low of RMB 89.50, and the total market value fell below RMB 200 billion.

The interim report reveals a structural transformation taking place at Sungrow. The most notable shift is that the energy storage business has, for the first time, contributed to half of total revenue, surpassing its inverter business. Yet, despite the revenue mix change, both the revenue and gross margin from the energy storage system segment have declined year-on-year. International revenue also saw a decrease during the period. As Sungrow accelerates its overseas market expansion and navigates a critical window for its Hong Kong IPO, the race to overcome these hurdles has already begun.

Revenue and net profit both fall

Sungrow recently released its first-half 2026 results, showing declines in both revenue and net profit, with net profit down over 30% year-on-year. The company focuses on R&D, manufacturing, sales, and service of new energy power equipment including photovoltaic inverters, energy storage systems, wind power converters and transmissions, EV motor controllers and power supply systems, charging equipment, and hydrogen energy equipment. It has also expanded into AIDC power supply, offering key products and solutions such as solid-state transformers.

For the first half of this year, Sungrow recorded operating revenue of approximately RMB 30.912 billion, a year-on-year drop of 28.99%. Net profit attributable to shareholders was around RMB 5.259 billion, down 32.01%, while non-GAAP net profit attributable to shareholders fell 42.96% to roughly RMB 4.275 billion.

The company explained in its investor relations activity records that the revenue decline was mainly due to lower domestic and Middle East revenue. Domestic income was affected by a drop in photovoltaic installations and the company's strategic decision to forgo loss-making projects, which led to lower revenue across home photovoltaic, new energy project investment and development, and energy storage. Domestic revenue decreased by 55% year-on-year. Middle East revenue fell 91% to RMB 1.1 billion from RMB 5.7 billion in the same period last year, primarily due to the delivery of a major Saudi project in the prior-year period.

In fact, Sungrow had already reported declines in revenue and net profit in the first quarter of 2026. For Q1, revenue was around RMB 15.561 billion, down 18.26% year-on-year, while net profit attributable to shareholders fell 40.12% to RMB 2.291 billion. Notably, against the backdrop of widespread losses among mainstream PV companies, Sungrow had been on a growth trajectory for its annual revenue and net profit. Financial data shows that from 2023 to 2025, the company's revenue was approximately RMB 72.251 billion, RMB 77.857 billion, and RMB 89.184 billion, respectively, with net profits attributable to shareholders of RMB 9.44 billion, RMB 11.036 billion, and RMB 13.461 billion.

On the secondary market, August 31 saw Sungrow's shares open lower and continue to slide, at one point falling over 8% intraday to the year's low of RMB 89.50. The stock closed down 6.34% at RMB 91.50, translating to a market value of RMB 189.7 billion. Looking at a longer timeline, the share price hit a high of RMB 191.71 on May 27 before trending downward. Over the 67 trading days from May 28 to August 31, the stock accumulated a decline of 50.3%. In May of this year, the company's market value exceeded RMB 390 billion, meaning it has shrunk by over RMB 200 billion in just three months.

It is also worth noting that on August 3, Sungrow announced a share buyback plan of no less than RMB 500 million and no more than RMB 1 billion, at a price not exceeding RMB 188 per share. The repurchased shares will be used for future employee stock ownership plans or equity incentive plans, with the buyback period set within 12 months from the board's approval.

Energy storage now accounts for 50% of revenue

A look at the changing revenue structure of Sungrow reveals a clear shift in its business focus. In the first half of this year, revenue from energy storage systems rose to 50% of total revenue, becoming the company's largest income source. However, this segment did not achieve year-on-year growth. By product line, energy storage systems generated about RMB 15.456 billion, or 50% of total revenue, compared with RMB 17.803 billion and a 40.89% share in the same period last year. Furthermore, the gross margin for energy storage was 32.43% in the first half, down 7.49 percentage points year-on-year.

According to Sungrow, energy storage shipments reached 25 GWh in the first half of 2026, a 28% increase year-on-year. The decline in energy storage revenue was mainly due to lower utility-scale energy storage income, with the Middle East down RMB 5.2 billion compared to the prior year. Meanwhile, revenue from photovoltaic inverters and other power electronics conversion equipment stood at around RMB 12.388 billion, accounting for 40.08% of total revenue, a 19.17% decrease year-on-year. The gross margin for this segment rose to 42.72%, up 6.98 percentage points year-on-year.

In terms of inverter shipments, Sungrow shipped 66 GW in the first half of 2026, compared to 76 GW in the same period last year, a reduction of 10 GW mainly due to a 14 GW decrease in the domestic market, while overseas shipments grew in line with market trends. As early as 2025, energy storage system revenue had already surpassed revenue from photovoltaic inverters and other power electronics conversion equipment. That year, revenue from these two segments was approximately RMB 31.136 billion and RMB 37.287 billion, representing 34.91% and 41.81% of total revenue, respectively.

In addition, for the first half of 2026, revenue from new energy investment and development, PV power plant generation, and other businesses was around RMB 1.258 billion, RMB 296 million, and RMB 1.514 billion, respectively, accounting for 4.07%, 0.96%, and 4.9% of total revenue. According to Bai Wenxi, vice chairman of the China Enterprise Capital Alliance, the rising share of energy storage revenue is a common trend among domestic PV equipment companies, as the integration of solar and storage has become an industry-wide strategy.

Critical period for Hong Kong listing

After its first filing lapsed in October 2025, Sungrow has resubmitted its application to list on the Main Board of the Hong Kong Stock Exchange. In April of this year, the company announced it had updated and submitted its listing application to the HKEX on April 24, with the updated materials published on the exchange's website that same day. Behind this second filing, the company's international revenue, including Hong Kong, Macau, and Taiwan, saw a decline during the critical listing period.

According to the 2026 interim report, revenue from mainland China, excluding Hong Kong, Macau, and Taiwan, was approximately RMB 8.222 billion, accounting for 26.6% of total revenue, halved year-on-year. Revenue from overseas regions, including Hong Kong, Macau, and Taiwan, was around RMB 22.69 billion, representing 73.4% of the total, a decrease of 10.59% year-on-year. Additionally, due to increased exchange losses from the depreciation of the euro and US dollar, Sungrow's financial expenses surged 239.94% year-on-year to RMB 368 million in the first half.

Zhai Dan, president of Xinhua Private Equity Fund, pointed out that when a company has a high proportion of overseas revenue, the risks from exchange rate fluctuations and geopolitical trade barriers also amplify. In terms of shareholding, the controlling shareholder and actual controller of Sungrow is Cao Renxian, who holds 30.46% of the company as of the end of the first half. Cao also controls another A-share company, Taihe Intelligent, which was acquired by Sungrow New Energy at the end of 2024. That company reported growth in both revenue and net profit in the first half of this year: revenue was approximately RMB 309 million, up 24.1% year-on-year, and net profit attributable to shareholders was around RMB 15.2023 million, up 43.73% year-on-year, although non-GAAP net profit fell 35.62% to approximately RMB 7.3181 million. In response to inquiries, Sungrow did not reply by press time.