Ningbo Deye Technology

Where we land

Ningbo Deye Technology makes the equipment that lets a household or small shop keep the lights on when the public grid fails. It sells mostly into countries where blackouts are routine, and that kit now makes up about half of its sales. Demand for it helped lift revenue by 45% in a single year. Yet at today's share price, investors are asking for earnings to grow by only about 4% a year from here.

That gap between what the business has been doing and what the price demands is the heart of our view. We see more staying power here than the price allows, and we award Deye gold.

What the business is

Deye has three businesses. The largest, at 52% of revenue, makes distributed power systems: hybrid inverters, the boxes that juggle electricity between rooftop solar panels, a battery and the grid, along with the battery packs themselves. The second, at 31%, is general industrial electrical products, which most likely includes the company's original trade in heat exchangers, the condensers and evaporators inside vehicle and appliance air-conditioning. The smallest, at 16%, sells dehumidifiers and air-source heat pumps.

The mix earns unusually good money. Of every sale, 38% is left after the direct cost of making the product, the gross margin, and 28% remains as operating profit once everything else is paid for. Among its peers only First Solar does better, at 44% gross and 35% operating, while Sungrow manages 31% and 15%. More telling is how little the gross margin moves: over five years it has sat in a band around 38%, typically only 2 points either side. A company whose margin barely shifts while its sales leap is not having to cut prices to win the growth.

Why now

What is driving Deye is a simple, practical purchase. Households and small businesses in places with frequent power cuts are buying hybrid inverters and battery packs, either to back up an unreliable grid or to replace the diesel generators they used to run. Deye is one of the leading Chinese suppliers to these markets.

The business behind that growth is, by our assessment, among the strongest companies we rate on quality, the highest among its peers. Deye has been held in the Gold Income 10 since August 2026 and still meets the rules for a place there.

The case for

The plainest argument is that growth is accelerating rather than fading. Sales rose 44.7% on the year, on top of a three-year run in which they compounded at 26.9% a year, so the latest jump quickens an already brisk trend rather than rebounding from a bad patch.

Those who follow the company most closely are moving the same way. Analysts expect earnings per share to rise 26.8% next year, and over the past 45 days estimates were raised 14 times and cut only 4 times. By our measure, Deye's growth ranks close to the top of the whole market and has edged higher still. When a company is growing this quickly and forecasts are still catching up, the burden of proof falls on anyone arguing that the growth is about to stop.

Where the growth could come from

Most likely, the bulk of the sales rise and the profit growth behind it comes from hybrid inverters and home batteries sold into emerging markets with weak grids; the pattern of sales, rising forecasts and the expected jump in earnings all fits that reading, though our figures do not split inverters from batteries. The economics of that purchase have just improved sharply. Brent crude stood at $114 a barrel at the end of September 2026, up 65% in a year, and dearer diesel for backup generators means a solar panel and battery pay for themselves faster.

Europe is the swing factor. Gas prices there are up 56% in a year, which pushes up household power bills and renews interest in rooftop solar paired with a battery. Against that, many European households finance such installations with loans, and borrowing has been getting dearer. A revival in European home storage would give Deye a second growth market; if the cost of borrowing wins, the region stays a drag. Our figures do not show the European share of sales, so the sign to look for is rising European home battery installations or higher Deye shipments to EU countries.

A third possibility is bigger systems. Deye has been moving into higher-power inverters and battery cabinets for factories and businesses, which face high and volatile energy costs of their own. This is most likely small today and is not separated in our figures, but larger orders per customer would let growth continue even if home demand cools in some countries, making the company less dependent on a handful of emerging markets. The proof would be the company reporting commercial storage revenue or large business orders as a distinct item.

The older businesses play a supporting role. Heat exchangers are a mature, slower-growing trade whose job is to throw off cash that funds the inverter expansion. Their exposure is to metal costs: copper averaged $13,543 a tonne in July 2026, up 39% in a year, which could squeeze margins if price increases to customers lag. A steady gross margin there despite dearer copper would show the cash engine is intact. Dehumidifiers and heat pumps are a smaller option on the same European energy squeeze, since high gas prices can push households towards heat pumps; faster growth in that segment alongside rising European heat pump sales would turn it into a modest third leg.

The case against

The usual worries about a fast-growing manufacturer, thin or unstable margins, do not land here. The real objections lie elsewhere.

The first is that the market has stopped rewarding the story even as forecasts rise. The upward run in Deye's shares has faded markedly over both three and six months, although they remain in the upper part of the market on that measure. When share price and earnings estimates part company like this, one of them is wrong: either investors are slow to notice what the numbers show, or they are pricing in something the earnings data does not yet reveal, such as a sense that the burst of buying in its key markets is nearer its peak than forecasts allow.

The second is that this has happened before. Twelve-month net profit rose from 804m in 2022 to 2.3bn in 2023, fell back to 1.8bn in 2024, then recovered to 3.2bn in 2025 and 4.4bn in 2026. The stumble shows earnings here can reverse even in the middle of a strong run, which makes it risky to draw a straight line from the current growth rate.

The third is price. On our measure of value, Deye sits in the lower quarter of the market, meaning the shares are not cheap against assets, sales or earnings, though they have become less expensive over three and six months as the price has faded. The balance sheet is not the concern: the company holds more cash than debt, with net debt a negative 0.4 times shareholders' equity. The risk is in what is paid for the shares, not in what the company owes.

What the price assumes

Because Deye's profits have climbed in steps, a single smooth growth rate would describe a shape its record does not have. The fairer test is to compare the level of earnings the share price requires with the level the company has reached.

On that test the bar is low. The shares fell 14% over the six months to the end of September 2026, and at that price they require earnings growth of only about 4% a year, against twelve-month profit already at 4.4bn and analysts expecting earnings per share to rise by more than a quarter next year. The simple yardsticks that make the shares look dear ignore growth; once growth is counted, the price asks for far less than the business has been delivering.

The other side of the medal

The one risk to keep watching is that half the business rests on stop-gap buying in a few emerging markets. Households buy an inverter and battery because their grid fails them and diesel is expensive. If the grids improve, the urgency fades. If local currencies weaken, the same Chinese-made kit becomes dearer overnight, and purchases that were stretched become unaffordable.

This matters for Deye in particular because so much rides on it. A stall in the renewable line would not be offset by heat exchangers or dehumidifiers, and it would land on shares that already leave little cushion on asset, sales and earnings yardsticks.

What to watch

The case for staying power is confirmed by Chinese customs figures showing inverter and battery exports to Pakistan, Africa and the Middle East still climbing month after month, and by the renewable line, now 52.1% of revenue, continuing to outgrow the rest of the company. A flattening in those exports would be the first sign of trouble, well before it showed in Deye's own results.

The other warnings would come together: sales growth stalling, the gross margin breaking below its band around 38%, or upgrades to forecasts turning into net downgrades. Any of these would suggest the fading share price was the early signal of another profit setback like 2024's.

The numbers

The same industry, for comparison

Research for information, not personal investment advice or a recommendation to buy, sell or hold any security: see Important information. Data as at 30 September 2026.