Shenzhen Shenghong Electric Co., Ltd. 2024 Annual Report Summary

Important Notice

This annual report summary is derived from the full annual report. Investors are encouraged to read the complete report published in designated media by the China Securities Regulatory Commission to gain a comprehensive understanding of the company’s operational results, financial status, and future development plans. All board members attended the board meeting to review this report. The audit opinion from Deloitte Touche Tohmatsu CPA Ltd. is a standard unqualified opinion. This year, the company changed its auditing firm to Deloitte Touche Tohmatsu CPA Ltd.

Non-standard audit opinion: Not applicable

Profit distribution plan approved by the board during the reporting period: It is proposed to distribute a cash dividend of 5.00 yuan (including tax) for every 10 shares from a total capital stock of 310,332,260 shares (after deducting the shares held in the repurchase special account) to all shareholders.

Company Overview

1. Industry Status

Industrial Power Supply Business

The power quality industry is one of the most critical basic energy industries in national economic development and an essential part of public utilities. In 2023, the National Development and Reform Commission issued Order No. 8, which implemented the “Temporary Measures for Power Quality Management” from April 1, 2024. This measure improves the responsibilities of relevant parties in power quality governance and encourages businesses to engage in related work, marking the initial formation of a regulatory mechanism combining government oversight, industry self-regulation, and corporate responsibility.

In recent years, China’s economy has rapidly developed. With the “13th Five-Year Plan” promoting “innovation-driven development strategies” and the construction of a “strong technological country,” industries such as high-end new materials, major technical equipment, smart manufacturing robots, and new energy vehicles have experienced accelerated growth.

During the “14th Five-Year Plan” period, the fast development of renewable energy generation from wind and solar power has occurred alongside the accelerated construction of electrified railways and urban rail transit. The widespread use of electric vehicle charging stations, along with the continual emergence of high-precision electronic devices and advances in artificial intelligence (AI), has intensified long-standing power quality problems while also creating new challenges. The quality of electrical power directly affects production efficiency, product quality, and operational stability across various industries.

Power Quality Products

The company, a leading enterprise in the power quality sector and one of the first in China to develop low-voltage power quality products, continues to prioritize technology and product innovation. The company has expanded its product types and application fields in the power quality domain. It was the first to apply modular three-level technology to power quality products. Currently, its power quality products cover harmonic management, reactive power compensation, subway energy storage, voltage sag protection, and industrial UPS systems to ensure power supply safety.

In 2024, Shenghong launched a silicon carbide (SiC) model that significantly enhanced the device’s voltage and temperature resistance, leading to a qualitative leap in product reliability. The product features a modular design and supports hot-swappable functionality, allowing operational personnel to replace faulty modules in under five minutes, ensuring continuous and stable system operation. This innovation significantly reduces fault handling time and guarantees the reliability of power supply in applications such as smart computing centers. To meet multi-device management needs, Shenghong also introduced a wireless cloud platform solution that enables remote monitoring of device status, enhancing management efficiency.

Industrial Power Supply

According to data from the National Energy Administration, China’s photovoltaic industry is steadily growing, with an additional installed capacity of 277.57 GW in 2024, a year-on-year increase of 28%. The capacity from centralized installations reached 159.39 GW (up 33%), while distributed installations accounted for 118.18 GW (up 23%). The utilization rate of photovoltaic power generation was 96.8%, with production in key segments of the photovoltaic industry increasing by over 10% year-on-year. The demand from downstream customers remains robust, driving steady growth in the company’s product sales revenue.

2. New Energy Vehicle Charging and Swapping Services

By the end of 2024, the number of new energy vehicles in China reached 31.4 million, an increase of 10.99 million vehicles. The total number of charging stations stood at 12.818 million, a growth of 49% year-on-year, with a vehicle-to-charger ratio of 2.45. Public charging stations numbered 3.579 million, with a vehicle-to-charger ratio of 8.77. The penetration rate of fast charging is expected to increase further, and the Chinese government continues to implement policies supporting the construction of charging infrastructure.

3. New Energy Power Conversion Equipment Business

In recent years, climate change has become a global focal point, with over 70 countries announcing participation in carbon neutrality plans. The promotion of new energy technologies has led to significant transformations in energy consumption patterns, with a shift from traditional fossil fuels to renewable energy sources. The new energy storage installation scale is projected to exceed 70 GW by the end of 2024, marking a 130% increase from the previous year.

4. Battery Formation and Testing Equipment

In 2024, global lithium-ion battery shipments are expected to reach 1545.1 GWh, a year-on-year increase of 28.5%. The demand for battery formation and testing equipment continues to grow, with the company focusing on technological advancements to enhance product reliability and performance.

Major Business Activities

The company specializes in power electronics technology applications in industrial power supply and new energy sectors, providing efficient and safe electric energy solutions for high-end manufacturing, data centers, energy, and rail transportation. Its main products include:

• Power quality products to enhance electrical quality and safety.
• Charging and swapping equipment for new energy vehicles.
• Core devices and comprehensive solutions for energy storage microgrid systems.
• Battery formation and testing equipment for consumer and power batteries.

The company has achieved significant operational results, with total revenue reaching 3,036,170,730.45 yuan in the reporting period, reflecting a year-on-year growth of 14.53%. Net profit attributable to shareholders was 428,975,205.06 yuan, a 6.49% increase from the previous year, driven primarily by the expansion of the industrial power supply and new energy vehicle charging sectors.