Dramatic Decline: How the “Leading Energy Storage Stock” Suffered a 90% Market Value Drop and Over 1000% Profit Loss

Market Value Drops by 90%, Performance Plummets by 1054.32%: What Happened to the “Leading Energy Storage Company”?

On April 22, 2023, Pi Energy Technology (688063.SH) released its first-quarter performance report, revealing a revenue of 392 million yuan, a 1.72% increase year-on-year. However, the net profit attributable to shareholders was a loss of 38.17 million yuan, marking a staggering decline of 1054.32%. This is the first time the company has reported a loss in the first quarter since its listing.

Since going public in 2020, Pi Energy Technology enjoyed a significant boost due to the European energy crisis, which created a boom in the household energy storage market. The company became the global leader in household energy storage shipments, with its market value approaching 80 billion yuan. In 2022, its revenue exceeded 6 billion yuan, and net profit reached 1.273 billion yuan, achieving a historical peak. However, this peak was short-lived, as the company’s performance has halved annually over the next two years.

Financial reports indicate that in 2023, the company’s revenue fell to 3.299 billion yuan, a decrease of 45.13%, with a net profit of 516 million yuan, down 59.49%. By 2024, revenue further declined to 2.005 billion yuan, a drop of 39.2%, and net profit plummeted to just 41.11 million yuan, down 92%. After excluding 84.56 million yuan in inventory impairment, the actual profitability situation appears even grimmer.

Compared to its peak, Pi Energy Technology has seen its market value evaporate by nearly 90%, shrinking from the high of 76.495 billion yuan on August 18, 2022, to less than 10 billion yuan today, resulting in significant losses for investors.

Overall, the company’s swift decline in industry standing can be attributed to multiple internal and external factors, including an over-reliance on overseas markets, a lack of product diversity, executive turbulence, and issues of overcapacity and inventory accumulation in a competitive environment.

Pi Energy Technology’s core business is focused on distributed home energy storage systems, heavily dependent on overseas markets, particularly in Europe. In 2022, the European energy crisis led to a surge in household energy storage demand, which the company capitalized on, ranking alongside Huawei and BYD as one of the top three global household storage suppliers. However, overseas markets are prone to volatility and cyclical fluctuations. With the energy crisis easing and electricity prices dropping, coupled with the inventory reduction strategies of downstream European companies, household energy storage demand significantly slowed from the second half of 2023. Pi Energy Technology failed to adjust its market focus in time, with its performance deeply intertwined with the European market, where overseas revenue still accounted for over 94% in 2023. As external demand waned, the company’s sales dropped to just 1.52 GWh, an 18.9% year-on-year decline, resulting in pressure on product prices and steep revenue declines.

Furthermore, the domestic energy storage market has shifted from residential to commercial and industrial sectors, a transition that Pi Energy Technology has not capitalized on despite its attempts to expand domestically. The company’s limited product line and lagging channel development hinder its ability to compete with domestic rivals, causing it to miss structural growth opportunities.

Pi Energy Technology’s challenges stem not only from external factors but also from deeper internal governance issues. Since its IPO, the company has raised over 7.1 billion yuan, but progress on its two main fundraising projects has stalled, raising questions about the efficiency of fund utilization. The management appears more inclined to maintain reported profits through investment in financial products. In 2024, investment income accounted for 51.6% of net profit attributable to shareholders, with fair value changes from these investments making up a staggering 90.05%, masking actual losses from core business operations. This “shifting focus from real to virtual” financial strategy has highlighted uncertainties in the company’s strategic direction.

Compounding these issues, in May 2024, the company’s chairman, Wei Zaisheng, was placed under investigation, leading to significant upheaval within the management team and further eroding market confidence. Although acting chairman Zhai Weidong emphasized operational stability, investor concerns regarding strategic continuity remain unresolved.

Moreover, a shareholder of Pi Energy Technology, Ningbo Zhongbai, disclosed that by the first half of 2024, it had recorded cumulative fair value changes amounting to 150 million yuan in losses. The decline in Pi Energy Technology’s stock price resulted in substantial unrealized investment losses, exacerbating pessimistic expectations in the capital market. The inventory situation is also dire, with the company holding 858.5 MWh of stock in 2024, exceeding half of its annual sales. The decline in market prices has led to significant inventory devaluation, with impairment provisions exceeding 230 million yuan over two years.

In response to its troubles, Pi Energy Technology attempted to stabilize its stock price through dividends and share buybacks, but market reactions have been lukewarm. The core issue lies in the company’s path dependency, with an excessive reliance on a single market and product line, resulting in a fragile risk-bearing capacity. Additionally, its production capacity planning is disconnected from actual market demand. The previously planned 5 billion yuan investment in the Hefei energy storage base has been delayed by a year, reflecting the company’s struggle to navigate a market with slowing demand.

Although analysts once hoped for a recovery in demand following stabilization of lithium prices, the industry landscape has undergone irreversible changes. Pi Energy Technology must accelerate its technological iteration, diversify its market presence, and enhance fund utilization efficiency, or it may struggle to escape the cycle of “bleeding” dividends, making a return to growth seem increasingly distant.