Introduction to this report:
In 2023, there was a strong global wind power boom, and the trend of sea-weatherization and large-scale expansion was obvious. As a leading domestic spindle, the company led casting spindle technology. Relying on the Zhuhai Port Group, it is expected to achieve a sharp rise in product volume and price, leading to a high increase in profits.
Key points of investment:
Investment suggestions: Considering that the company is the leading wind power company in China, the rise in wind power prosperity has benefited from the high boom in offshore wind power and the increase in demand for upstream components. The volume and price of the company's wind power products are expected to rise sharply. The 2023-2025 EPS will be raised to 0.17, 0.21, and 0.28 yuan (+0.02, +0.01, +0.02 yuan respectively), maintain the target price of 3.54 yuan, and maintain the rating increase.
Performance was in line with expectations. The company announced that in the first half of the year, it achieved revenue of 2.86 billion yuan/ -0.61%, net profit of 183 million yuan/ +65.08%; net profit of 175 million yuan/ +81.57% after deducting non-return net profit of 175 million yuan/ +81.57%. The second quarter achieved revenue of 1,433 million yuan/-6.4% yoy /+0.38% month-on-month, net profit of 97 million yuan/YoY +64.91% /12.8% month-on-month; net profit of 93 million yuan/YoY +60.65% /13.97% month-on-month, after deducting non-attributable net profit of 93 million yuan/YoY +60.65% /month-on-month.
Performance has been steady, moderate and positive, and profitability has rebounded markedly. The company achieved a gross profit margin of 20.2% /+6.18 pct and a net interest rate of 6.5% /+2.55 pct in the first half of the year. The gross profit margin for the second quarter was 21.3% /+7.33pct.
The increase in the company's gross margin is mainly due to 1) the impact of the epidemic has subsided and the demand for installed equipment has increased steadily; 2) the wind power industry has ushered in a boom cycle, and demand for spindles and forgings has accelerated; 3) the price of raw materials has declined. By product, in the first half of the year, the wind power spindle/casting/other forgings/powder alloy products/wind power equipment modular business achieved revenue of 6.58/5.41/5.90/2.44/141 million yuan, respectively, compared with +57.8%/+63.9%/+5.8%/+25.1%/-68.3%. The revenue of high-margin wind power spindles, castings, and other forgings increased. The revenue of the wind power equipment modular business declined, and the product structure improved.
The global wind power boom is booming, and the company's casting spindle technology is leading. In 2022, China added 37.63GW/ -21% of wind power connected to the grid. There is a clear gap compared to the 98.5 GW tender volume. Wind power installations are expected to maintain a high increase in 2023. The company is a leading wind power spindle. Accelerated by ocean weathering and large-scale expansion, supply and demand for core components such as spindles are tightening. It is expected that the volume and price of related products will rise sharply, leading to a high increase in profits.
Risk warning: Wind power installations fall short of expectations, fan prices continue to fall, and raw material prices rise.