Abstract
Is the appreciation of the Renminbi impacting the profits of residential energy storage (RES) companies?
As the disclosure period for Q3 2026 financial reports concluded, the RES sector, which primarily targets overseas markets, delivered a highly polarized performance: revenue saw collective high growth, while profitability generally weakened.
Pylon Technologies and Ailuo Energy turned from profit to loss, Hoymiles' losses expanded significantly, Huawei New Energy's non-GAAP net profit nearly hit zero, and only leading players like Deye Technology landed safely thanks to their robust earnings base.
Behind this divergence, the appreciation of the RMB exchange rate was the most direct trigger, but far from the whole story.
Exchange rates are not the sole profit killer. Announcements from Pylon, Ailuo, and Hoymiles simultaneously cited multiple factors; the losses were the cumulative result of "FX losses + rising raw material prices + reduced export tax rebates + price cuts to grab market share + increased R&D and marketing investments."
Revenue Growth Without Profit Increase: How Did Exchange Rates Erode Profits?
If looking solely at revenue, the RES industry remains booming.
Pylon Technologies achieved CNY 1.433 billion in revenue in Q3, a significant year-on-year increase of 66.05%; Hoymiles' Q3 revenue grew by as much as 98.98% year-on-year; revenues of Ailuo Energy and Huawei New Energy also maintained double-digit growth.
With inventory digestion in Europe concluding and emerging markets ramping up, the industry demand curve is still trending upward. But the income statement tells a completely different story.
Pylon Technologies reported a net profit attributable to shareholders of -CNY 16.1659 million in Q3, a year-on-year decrease of 147.63%, shifting from profit to loss quarter-on-quarter. In its announcement, the company directly attributed the cause to "significant foreign exchange losses during the reporting period due to volatility in international forex markets."
The situation for Ailuo Energy is even more severe: it posted a single-quarter loss of CNY 25.19 million in Q3, down 394.66% year-on-year, and accumulated a loss of CNY 60.32 million over the first three quarters, a year-on-year decline of 140.13%. Hoymiles recorded a loss of CNY 118 million in Q3 and an accumulated net loss of CNY 282 million over the first three quarters.
Although Huawei New Energy maintained overall profitability, the quality of its profits has been significantly discounted: net profit attributable to shareholders for the first three quarters was CNY 43.39 million, down 69.55% year-on-year, with non-GAAP net profit remaining at only CNY 1.08 million, shrinking by 98.54% year-on-year.
The macro backdrop of this profit erosion is the sustained appreciation of the RMB. In the first half of 2026, the RMB central parity rate against the USD rose from approximately 7.02 to 6.81, an accumulated appreciation of about 3%; in Q3, the Euro and USD continued to weaken against the RMB.
For RES companies, where overseas revenue typically accounts for 70-80% or more, this means that upon end-of-period translation, foreign currency accounts receivable and deposits on the books concentratedly generate foreign exchange losses.
Multifaceted Squeeze Beyond Exchange Rates: Where Is the Way Out for RES Companies?
Attributing all profit declines to exchange rates is not fair.
A close reading of various announcements reveals that almost every company simultaneously cited a combination of multiple pressures: rising costs due to rebounding prices of raw materials such as lithium carbonate, changes in export tax rebate rates, increased provisions for product warranty expenses, and proactive price cuts to capture market share.
This reflects the deep structural shift the RES industry is undergoing—sliding from a blue ocean of high margins to a red ocean of thin margins.
The era of windfall profits driven by the European energy crisis in previous years attracted a flood of players. Now, with oversupply and strengthened channel bargaining power, net margins for second- and third-tier enterprises have been compressed to below 5% or even into losses, while leading companies achieve simultaneous growth in volume and profit through brand premiums and channel barriers, accelerating the concentration of industry profits.
Deye Technology is the most distinct control group among the various RES Q3 reports. The company achieved a net profit attributable to shareholders of CNY 1.555 billion in Q3, an 88.50% year-on-year increase.
What Did Deye Do Right?
While peers crowded into the European RES market, Deye chose to bypass Europe and the US when it first entered the RES inverter track—markets characterized by long certification cycles, high channel barriers, and slots already filled by local brands and early-entrant Chinese manufacturers—and instead entered regions with weak grids and frequent blackouts, such as South Africa, Pakistan, and Brazil.
Furthermore, regarding products, Deye no longer relies solely on RES inverter shipment volumes to drive growth. Instead, it leverages existing inverter channels for reuse, cross-selling battery packs and commercial/industrial storage inverters to existing customers.
It should be noted that exchange rates did impact Deye—its gross margin decline was mainly due to lower battery pack selling prices compounded by USD exchange effects, and its financial expense ratio for the first three quarters rose by 2.73 percentage points year-on-year. The difference lies in the fact that its net margin of around 25% provided it with sufficient buffer.
The same foreign exchange losses act as a speed bump for Deye's profit growth, but for second-tier enterprises with single-digit net margins or those struggling near the break-even line, they are the last straw that breaks the camel's back.
Looking ahead to Q4 and next year, RES companies need to rebuild their profit defenses across multiple dimensions, hedging risks through exchange rate management, expanding localized operations, upgrading product structures, and other strategies.