The net profit of shareholders in the first half of 2021 rose 42.6 per cent year-on-year to 1.746 billion yuan, better than expected. During the period, the external sales volume of wind turbines reached 2966 megawatts (down 27.7% from the same period last year). Due to a substantial increase in the proportion of sales of large units (3S/4S and 6S/8S series fan products), the comprehensive average selling price of fans during the period was RMB4.20 per watt (up 26.3% from the same period last year).

The gross margin of fans sold during the period (excluding fan parts) rose 8.3 percentage points year-on-year to 20.5%, and directly pushed up the company's comprehensive gross margin to 27.6% (up 10.5 percentage points from the same period last year).

We raised the company's profit forecast under more optimistic assumptions. We expect the company's external fan shipments to reach 10096 MW / 13104 MW / 13815 MW respectively between 2021 and 2023. As the proportion of sales of large wind turbines will continue to rise in the next few years, the comprehensive average price of turbines per watt from 2021 to 2023 is expected to reach RMB4.20 / RMB3.80 / RMB3.60 respectively. The gross profit margin of the fan manufacturing and sales sectors is expected to be 18.0% / 16.6% / 16.1% respectively from 2021 to 2023. Our adjusted net profit per share for 2021 to 2023 is RMB 0.938 / RMB 1.005 / RMB 1.057 respectively.

Reaffirm the "buy" investment rating and maintain the target price of HK $19.10. Considering that the company has more than 20% of the domestic wind power equipment market share, we believe that Xinjiang Goldwind Science & Technology will be the direct beneficiary of the surge in domestic wind power investment in the next decade. Our target price is equivalent to 17.0x / 15.8x / 15.0x 2021-2023p or 1.8x / 1.7x / 1.6x 2021-2023p / b.