Matters:
The company released its semi-annual report for 2023. In the first half of the year, it achieved operating income of 2,061 million yuan, a year-on-year decrease of 9.58%; net profit of 273 million yuan, an increase of 55.06% over the previous year; net profit of 249 million yuan after deducting non-return net profit of 249 million yuan, an increase of 48.90% over the previous year. In the second quarter, the company achieved revenue of 1,206 million yuan, a year-on-year decrease of 10.37%, and net profit of 198 million yuan, an increase of 74.31% over the previous year.
Ping An's point of view:
The batch delivery of high-value-added offshore products has driven a high increase in performance. The company achieved net profit of 273 million yuan in the first half of the year, an increase of 55.06% over the previous year. The rapid increase in performance was mainly due to a significant increase in profit levels; in the first half of the year, the company's export business achieved revenue of 911 million yuan, an increase of 32.57% over the previous year, accounting for 44% of revenue, and the gross profit margin of the export business was 27.14%, an increase of 20.61 percentage points over the previous year. The sharp increase in the profit level of the export business is mainly due to improvements in the product sales structure. In the past, the company exported mainly towers. In the first half of this year, the company began large-scale sales of offshore products with significantly higher added value. In the second quarter, it successfully delivered a very large single pile for the Moray Wes T offshore wind power project in the UK, achieving a breakthrough of 0-1 in the delivery of overseas single-pile products. Also, in the first half of this year, the company's own wind farms began to contribute revenue, contributing a certain amount of incremental performance.
Received large orders from European Ocean Wind, consolidating the company's position as a mainstream supplier of offshore wind pipe piles in Europe. Following receiving bulk orders for European and American offshore wind pipe piles in 2022, the company continued to make great strides in the first half of this year. In the first half of this year, it signed a “Offshore Wind Power Single Pile Foundation Preferred Supplier Agreement” with a European energy development company to provide a single pile for an offshore wind power cluster project. The contract amount was about 547 million euros. It then signed a single pile supply contract with a European energy development company for an offshore wind project, with a contract amount of about 196 million euros; these two contracts totaled 743 million euros, providing important support for subsequent company performance growth.
Expand production capacity and build logistics capabilities to enhance overseas business competitiveness. Currently, the company's main export base is the Penglai base, with a production capacity of 700,000 tons. In the future, the company will build export bases in Panjin and Tangshan, and at the same time actively deploy overseas bases in Europe, North America, Southeast Asia, etc., and plan and design a global production capacity of more than 3 million tons. Through self-built shipping bases and specialized transportation teams, self-built wind power offshore equipment, self-built terminal shipping, and self-built special capacity transportation, the company has formed a unique competitive advantage with controllable manufacturing costs+transportation costs+delivery time, which is conducive to prioritizing overseas customer orders, ensuring delivery safety and delivery times, and reducing transportation costs, thus achieving gradual expansion of market share. The company pioneered the “vertical shipping” logistics solution and holds related patents, contributing substantial strength to the industry in solving global offshore logistics problems and improving transportation efficiency.
The wind farm business has begun to contribute to performance, and future growth potential is outstanding. The company began wind farm investment and construction in 2021. In September 2022, the full capacity of the Zhangjiakou 50MW wind farm project was connected to the grid. In the first half of this year, the Zhangwu West Liujiazi 250MW project was connected to the grid for power generation. The scale of the self-operated wind farm already in operation reached 300 MW, with power generation revenue of 45 million yuan in the first half of this year. According to the company's plan, 2 million kilowatts of grid-connected new energy projects will be built in the next three years, and 5 million kilowatts of new energy development resources will be reserved.
Investment advice. Maintaining the company's profit forecast, the company's net profit for 2023-2025 is expected to be 9.31, 13.54 billion yuan, and 1,854 billion yuan, respectively, and dynamic PE 16.4, 11.2, and 8.2 times. The offshore wind power boom is improving, and the company is expected to become the world's leading offshore wind power pipe pile, maintaining the company's “recommended” rating.
Risk warning. 1) The installed scale of offshore wind power fell short of expectations; 2) Large fluctuations in raw material prices and exchange rate fluctuations may have an impact on the company's profit level; 3) Increased competition in the industry and profit levels fell short of expectations.