Introduction to this report:

As a leader in wind power flanges, the company is actively expanding the wind power bearing industry. Under the ocean wind trend, the volume and price of components are expected to rise sharply in the second half of 2023; in addition, the company's computing power center is expected to bring in additional volume.

Key points of investment:

Investment suggestions: Due to delays in the release of wind power installed capacity growth in the first half of 2023, the company's performance for the first half of the year was slightly lower than expected. The 2023-2025 EPS was lowered to 0.58/1.19/1.65 yuan (-0.30/-0.31/-0.26 yuan from the previous forecast). Considering that the installed volume of Seabreeze in 2023H2 is expected to improve and the demand for components will increase, the volume and price of the company's wind power flanges and bearings is expected to rise sharply. Furthermore, the company's layout of a computing power center is expected to bring in additional volume, maintain the target price of 34.25 yuan, and increase holdings.

Performance fell short of expectations. The company announced that in the first half of 2023, it achieved revenue of 846 million yuan/ +4.32%, net profit of 55 million yuan/ +30.1%; net profit of non-attributable income of 50 million yuan/ +54.91%. The second quarter achieved revenue of 414 million yuan/-5.87% yoy/-4.42% month-on-month, net profit of 26 million yuan/YoY -12.83%/-11.01% month-on-month; net profit after deducting non-attributable net profit of 223 million yuan/+0.22% YoY /-14.76% YoY.

The commencement of construction of 2023H2 Seabreeze is highly certain, and the company's Seabreeze flange business is expected to benefit. Seabreeze tenders in Guangdong Province and Fujian Province have been implemented one after another. Q2-Q3 is the peak season for seabreeze installations. The launch of competitive projects in multiple provinces indicates that 23H2 will begin to improve the operating rate of Sea Breeze. We judge that 2023 and 2024 will be the big year for seabreeze installations. The company is one of the few companies in the world that can supply 7.0 MW and above sea wind tower flanges. The maximum diameter for tower flanges exceeds 7.5 meters, and its competitive strength is remarkable.

The company enters the Computing Power Center to control the core assets of computing power. AI big model technology promotes demand for high-end computing power support. Existing domestic East-Western computing projects are difficult to meet demand, and there is a shortage of high-end computing power supply.

The computing power center is being built quickly, and the company's current layout is expected to achieve computing power leasing revenue as soon as 2023Q3. The industry barrier is the ability to obtain high-end GPUs. The company's partner, Shanghai Liufu Technology, laid out the AI computing power industry earlier, has a strong ability to obtain cards, and has a competitive advantage.

Risk warning: Haifeng's installed capacity falls short of expectations, and the development of the computing power industry falls short of expectations.