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On January 3, Zhejiang's new energy giant Aero Energy officially fired the first shot in its 2024 listing. The prospectus shows that Ailo Energy was established in 2012 and was formerly known as Zhejiang Ailo Power Co., Ltd. It is reported that Ailo Energy is a provider of photovoltaic energy storage systems and products, mainly providing photovoltaic energy storage inverters, energy storage batteries and grid-connected inverters to overseas customers, which are applied to distributed photovoltaic energy storage and grid-connected fields. In fact, the road to listing for Arlo Energy was full of ups and downs. The IPO was interrupted six times due to reasons such as expired financial information and the securities service agency it hired was filed. Now, the clouds have finally cleared and the moon has been successfully listed on the Shanghai Stock Exchange Science and Technology Innovation Board. On the first day of listing, the price opened at 98 yuan per share, with a total market value of more than 15.4 billion yuan. As the first company to ring the bell in the new year, how did Aero Energy support its IPO? The answer is that it seized the opportunity of household energy storage going overseas. From 2020 to 2022, Aero Energy achieved revenue of 389 million yuan, 833 million yuan and 4.612 billion yuan respectively; the net profit attributable to the parent company was 33.0643 million yuan, 62.8745 million yuan and 1.134 billion yuan respectively. It can be seen that 2022 is an important turning point for Aero Energy. After that, annual revenue soared to the 4 billion mark, and net profit increased by nearly 34 times compared with 2020. Ultimately, the main reason is that the global energy structure has been continuously transforming to clean energy such as photovoltaics in recent years, industry support policies have been introduced one after another, and the price of electricity for European residents has risen, which has led to a rapid growth in the market demand for household energy storage products. With its first-mover advantage in entering the household energy storage business earlier, Arrow Energy has successfully caught this wave of dividends. The main products of Aero Energy include energy storage inverters, energy storage batteries, grid-connected inverters, etc. Among them, energy storage batteries contribute more than 50% of the sales share, and the revenue in the first half of 2023 reached 1.796 billion yuan. ▲ The picture comes from the prospectus of Aero Energy In its prospectus, Arlo Energy stated that with the full-scale outbreak of the household energy storage market and the rapid growth of market demand, the sales of Arlo Energy's products have ushered in explosive growth since 2021. Among them, the sales of energy storage batteries soared from 177.09MWh in 2021 to 1125.80MWh in 2022, and the sales of energy storage inverters soared from 22,300 units in 2021 to 145,800 units in 2022. From the perspective of market layout, the main market of Arlo Energy is currently the European market. The prospectus shows that its sales in the European market in 2022 will be 4.358 billion yuan, accounting for 94.50% of the total revenue, while other markets account for only 5.50% in total. ▲ The picture comes from the prospectus of Aero Energy Although the IPO road finally came to a successful conclusion after many twists and turns, there are still many hidden concerns about the future development of Aero Energy at this stage. During the reporting period, Arrow Energy's sales revenue in Europe accounted for 74.25%, 78.11%, 94.50% and 93.04% of its total revenue respectively. This also reflects an invisible problem behind the beautiful performance curve: over-reliance on the European market. Affected by factors such as channel dealers' inventory backlogs and the decline in European electricity prices, the demand in the European household storage market has declined. Therefore, in the third quarter of 2023, Aero Energy's performance declined compared with the second quarter. Unfavorable factors in the European market environment, such as major adverse changes in industry support policies, changes in energy supply and demand in Europe and other regions leading to a sharp drop in electricity and other energy prices, or saturation of downstream market demand, may all lead to a decrease in demand for Aero Energy's household energy storage products, thereby facing the risk of a significant decline in performance. In terms of the supply chain, Arlo Energy purchases all the battery cells used in the production of energy storage batteries from outside, and has a high degree of dependence on battery cell suppliers. From 2020 to 2022, the amount of its purchased overseas brand chips accounted for 76.93%, 72.70% and 76.02% of the total amount of purchased chips respectively. Therefore, if there is a shortage of battery cell market supply in the future, or if the production cost of energy storage batteries increases significantly, it may have an adverse impact on the business operations of Aero Energy. With more than ten years of market experience and excellent core products, Aero Energy has successfully seized the trend of new energy and policy support dividends, and its performance has soared and achieved dozens of times growth. However, it is foreseeable that there will still be many uncertainties in the future European market environment, especially the decline in wholesale electricity prices, the reduction in subsidies in European countries and other dividends. The performance growth of Aero Energy will still face multiple challenges. As we all know, outdoor energy storage is a technology-intensive industry with high market access requirements, long certification cycles in various countries and regions and by customers themselves, and high barriers to entry. As industry competition intensifies, it is becoming increasingly difficult to open up new markets and develop new customers. Therefore, for Arlo Energy, going public does not mean that it can sit back and relax. Only by building core technology barriers and continuously strengthening its competitive moat can it maintain sustainable growth.
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