Event: Tianneng heavy Industry released its mid-2023 report that the company's revenue in the first half of the year was 1.339 billion yuan, an increase of 9.95% over the same period last year, and its net profit was 123 million yuan, an increase of 4.10% over the same period last year. The company's revenue in the second quarter was 830 million yuan, up 6.12% from the same period last year, and its net profit was 69 million yuan, down 24.68% from the same period last year.

The scale of sales continues to improve, and profitability continues to improve. In the first half of 2023, the company achieved a net profit of 123 million yuan, an increase of 4.10 percent over the same period last year, of which the second-quarter performance was mainly affected by credit impairment. After taking into account special matters such as credit impairment, the first-half net profit was 151 million yuan, an increase of 27.97 percent over the same period last year. At the same time, the company achieved a gross profit margin of 28.62 percent, an increase of 1.77pct over the same period last year. The performance growth in the first half of the year is mainly due to the large increase in the company's wind turbine tower shipments. H1 Company realized fan tower sales of about 131700 tons in 2023, an increase of 29.75% over the same period last year. At the same time, the cost of raw materials for manufacturing business has declined, adding to the steady growth of the new energy power generation business with high gross margin, and the company's profitability has continued to improve.

The scale and layout of production capacity has been continuously improved, and the expansion of offshore production capacity has been accelerated, waiting for the release of sea breeze. The company continues to expand its sea and land production capacity and develop its marine business. The marine engineering base built in Dongying City, Shandong Province has been put into trial operation in May 2023. The company's current production capacity layout is perfect, and the layout of each major base is close to the market. There are 14 wind turbine tower production bases (including construction) throughout the country, with a total production capacity of about 880500 tons (including construction). It basically covers the new energy bases on the seven continents and five major offshore wind power bases, of which four marine equipment bases have been completed and put into operation, with a total production capacity of 480000 tons. At the same time, the company strengthens the research and development of new technologies and products such as pipe rack and offshore wind floating foundation. With the gradual lifting of domestic sea wind restrictions, China's offshore wind power is expected to enter a period of accelerated growth, and the company is expected to be the first to benefit.

The business of new energy power generation has increased steadily, and new energy power stations have been actively built. The company's new energy power generation project is operating well, and actively declare and promote the landing of the new project, among which Wuchuan 150MW wind power project of Tianneng heavy Industry was successfully connected to the grid in March 2023. The power plant operation business has not only played a good role in stabilizing the income fluctuation of the manufacturing sector business, but also played a good collaborative role in promoting the company's manufacturing sector business. By 2023, H1, the company holds a total of about 631.8MW of new energy power generation business, with an operating income of about 313 million yuan and a gross profit margin of 70.63%, including about 118MW of grid-connected photovoltaic power stations and about 62 million yuan of operating income; holding about 513.8MW of grid-connected wind farms, achieving operating income of about 251 million yuan, new energy power generation business has become a stable source of income and profits for the company.

Maintain profit forecast and maintain "overweight" rating: the company is a wind power tower pile head enterprise, and the power generation business provides the company with sustained and stable profits. We maintain the company's profit forecast for 2023-2025. It is estimated that the return net profit of the company in 2023-2025 will be 5.09,7.13 and 911 million yuan respectively, corresponding to EPS 0.50,0.70,0.89 yuan per share, and corresponding PE to 14,10 and 8 times respectively.

Risk tips: the installed capacity of wind power is not as expected; the capacity release is not as expected; the construction of new energy power generation projects is not as expected.