21Q3's performance slightly exceeded expectations. The company's 2021Q1-3 realized operating income of 33.55 billion yuan (- 9.4% YoY) and net profit of 3.013 billion yuan (+ 45.6% YoY), corresponding to a gross profit margin of 26.3% (+ 9.0pcts YoY). The performance slightly exceeded expectations. Among them, Q3 realized revenue of 15.647 billion yuan (- 11.1% YoY,+41.2% QoQ), net profit of 1.164 billion yuan (+ 46.6% YoY,+32.8% QoQ) and gross profit margin of 24.3% (+ 7.2pctsYoY hands 3.4pcts QoQ). The year-on-year improvement in profitability was mainly due to structural upgrading of large megawatt fans and cost reduction in the supply chain.
The fan sales structure has been optimized and the profitability has rebounded steadily. The export scale of the company's 2021Q1-3 fan reaches 6.35GW (- 23.7% YoY), of which Q3 sales volume is 3.38GW (- 19.8% YoY,+80.7% QoQ).
Driven by offshore wind power rush installation, 2021Q1-3 6S/8S model sales 1487MW (+ 332%YoY), capacity accounted for 23.4% (+ 19.3pcts YoY); 3S/4S model sales 2511MW (+ 224%YoY), capacity accounted for 39.6% (+ 30.3pcts YoY); 2S model sales 2303MW (- 67.1% YoY), capacity accounted for 36.3% (- 48pcts YoY). Benefiting from the optimization of the structure of large-megawatt models, the improvement of economies of scale, and the enhanced ability of cost control in the supply chain, the profitability of the company's fan business has rebounded steadily.
The size of orders remained stable, and the proportion of orders for large megawatts continued to increase. As of 2021Q3, the total number of fan orders in hand is about 16.4GW (+ 1.3% YoY), including external order 15.1GW (- 3.3% YoY) and internal order 1.34GW (+ 136% YoY). The reserves of the company's orders remain stable, but the proportion of the capacity of models with 3x4S and above in external orders has increased to 64% (+ 16pcts YoY), which is expected to further promote the upgrading of the fan structure and reduce costs and increase efficiency. As wind power enters the stage of parity, the average bidding price per kilowatt of 2021H1 mainstream 3s and 4S units has dropped to 2410 YoY 2326 yuan respectively. Driven by large-scale cost reduction, the bidding scale of 2021Q1-3 domestic wind turbines has reached 41.9GW (+ 142% YoY), indicating that the installed capacity of the industry may pick up significantly in 2022, and the company is expected to speed up the upgrading of models to achieve scale growth.
The scale of wind farm development has increased steadily, and the power generation business has been operated efficiently. Company 2021Q1-3 wind farm new rights and interests grid-connected capacity 540MW, transfer rights grid-connected capacity 473MW, as of Q3 cumulative rights and interests grid-connected capacity 5554MW, rights and interests under construction capacity 2406MW. The average utilization hours of 2021Q1-3 domestic units are 1896 hours (14.4% YoY higher than the national average of 256 hours per hour). As wind power enters the stage of unsubsidized parity, benefiting from the accelerated decline in the cost of wind power equipment supply chain, the rate of return of the company's new wind power projects is still expected to remain relatively high, and the long-term value of wind farm assets is prominent.
Risk factors: wind power installation is not as expected, wind turbine prices continue to decline, cost reduction is not as expected, and so on.
Investment advice: based on the company's three-quarter report, taking into account the accelerated decline in spare parts costs and large-scale wind turbine upgrades are expected to support a relatively stable gross profit margin, we raised the company's 2021-23 net profit forecast to 42.9 shock 48.6 / 5.46 billion yuan (the original forecast is 40.8 shock 46.7 shock 5.15 billion yuan), corresponding to the EPS forecast of 1.01 pound 1.15 pound 1.29 yuan. Its A-share current price corresponds to PE 16-15-13 times, maintaining the "buy" rating, raising the target price to 23.00 yuan (based on 2022 20 times the original target price of PE; 17.60 yuan); its H-share current price corresponds to PE 13-11-10 times, maintaining the "buy" rating, raising the target price to HK $22.40 (based on the 2022 16 times PE; original target price of HK $21.10).