Event: Tianneng heavy Industry released its annual report in 2019. During the reporting period, the company achieved a revenue of 2.464 billion yuan (+ yoy76.83%); a net profit of 269 million yuan (+ yoy163.33%); and a weighted average return on net assets of 14.17%, an increase of 8.21pcts over the same period last year. Of this total, 2019Q4 realized revenue of 979 million yuan, an increase of 58.42% and a ring increase of 55.54%, and a net profit of 124 million yuan, an increase of 192.04% and 99.97%.
Benefiting from the recovery of the wind power industry, tower tube revenue and profitability increased significantly: the company's performance increased significantly in 2019, mainly due to: 1) the overall recovery of the domestic wind power industry led to a substantial increase in orders and sales. By the end of 2019, the company's tower tube orders totaled about 3.512 billion yuan, an increase of 69.42% over the same period last year. Realized fan tower sales of 286200 tons, an increase of 62.34% over the same period last year, sales revenue of 2.248 billion yuan, a substantial increase of 73.50% year-on-year, gross profit margin increased to 24.46%; gross profit per ton reached 1921 yuan / ton, a year-on-year increase of more than 30%. 2) by the end of 2019, the company held about 108MW of grid-connected photovoltaic power stations, with operating income of about 118.75 million yuan and profit of about 49.7 million yuan. In total, it holds a wind farm connected to the grid about 123.8MW, with a revenue of about 58.3575 million yuan and a profit of about 23.9677 million yuan. At present, the layout of the company's tower tube production base has been expanded to 8, with a total production capacity of about 295500 tons. A new factory has been set up in Xingan, Inner Mongolia in 2019, and the production capacity is expected to be formed in 2020.
Offshore wind power and high-power tower tubes are advancing rapidly, actively expanding to the downstream operating end: in 2019, with the increase of offshore wind power projects in Guangdong, Jiangsu and other areas, offshore installation ushered in a rapid growth.
Relying on Jiangsu Tianneng, the company actively improves its position and market competitiveness in the field of middle and high-end tower barrel manufacturing. In 2019, the production capacity of Jiangsu Tianneng Ocean heavy Industry Co., Ltd. was gradually released, contributing 28.02 million yuan in net profit. Looking forward to 2020, the company will continue to strengthen the development of offshore wind power market, expand offshore wind turbine towers, single piles and other business, and gradually cultivate the ability to expand overseas market business. In addition, since 2018, the company has actively developed new energy business, and the construction and operation of wind farms and photovoltaic power stations have become an important source of profits for the company. In 2019, the company acquired Jiangyin Yuanjing Huili Energy Co., Ltd and Jingbian Fengrun Wind Power Co., Ltd., and owned the wind farm about 123.8MW. In addition, the first phase of the 50MW wind farm project of Texas Xintianeng New Energy Co., Ltd., a wholly owned subsidiary of the company, completed the hoisting of the wind turbine mainframe in December 2019 and is expected to be connected to the grid before the end of June 2020. At the same time, Texas Phase II (50MW), wholly-owned subsidiary (50MW), wholly-owned grandson (40MW) and controlling grandson (100MW) are expected to be connected to the grid by the end of December 2020. We believe that the company's extended layout of the construction and operation of downstream wind farms will strengthen strategic cooperation with mainframe factories and is expected to form a good synergy effect.
Investment advice: we expect the company's net profit from 2020 to 2022 to be 349 million, 437 million and 501 million respectively, with a net profit growth rate of 29.36%, 25.31% and 14.66% respectively.
Risk tips: wind power installation is not as expected, steel prices rise unilaterally, and so on.