The company's 2023Q3 fan profit is under pressure, and the performance is lower than expected, but the share of large megawatt models in sales has increased rapidly; the company's current orders are full, and it is expected that fan shipments will accelerate as wind power installations recover, and the company's profitability is expected to improve by improving the product structure. Based on the company's three-quarter report, considering that wind power installation progress is lower than expected and fan price competition is still intense, we lowered the company's 2023-25 EPS forecast to 0.63/0.86/0.97, maintaining the “increase” ratings for A shares and H shares, and gave target prices of 9.5 yuan (based on 15 times PE in 2023) and HK$4.7 (based on 7 times PE in 2023), respectively.
Performance fell short of expectations, and profitability was under pressure. In 2023Q1-3, the company achieved operating income of 29.319 billion yuan (+12.06% YoY), net profit of 1,261 billion yuan (-46.69% YoY), corresponding gross profit margin of 17.58% (-5.1pcts YoY); of these, Q3 achieved revenue of 10.318 billion yuan (+8.61% YoY, -23.2%) in a single quarter
QoQ), net profit of 0.9 billion yuan (-97.88% YoY, -43.15% QoQ), gross profit margin 18.17% (-0.21pcts YoY, -4.20pcts QoQ). The decline in profitability is mainly due to a sharp drop in fan prices. We expect that as the wind power installation boom picks up, the decline in fan prices will gradually slow down, and the company's profitability will improve.
The sales scale continues to increase, and the large megawatt models are progressing steadily. The company's 2023Q1-3 fan export volume reached 8.90 GW (26.7% YoY), and Q3 sales volume in a single quarter was 3.12 GW (+5.76% YoY). By model, the sales capacity of the company's units below 4MW is 64MW, accounting for 0.7%, and the 4MW (inclusive) -6MW unit capacity is 5587MW, accounting for 62.8%. It is the company's main model. The sales capacity of units of 6MW and above is 3253MW, accounting for 36.5%, and the sales growth rate is accelerating. We expect that under the trend of large-scale fans, the proportion of the company's large megawatt models will continue to increase, and the product structure will continue to improve, which is expected to increase the company's performance.
The order volume continues to grow, with large megawatt models accounting for a relatively high share. 2023Q1-3, the company's total fan orders are about 31.5 GW (+20.7% YoY), including external orders 29.9 GW (+16.8% YoY) and overseas orders 3.8 GW (+22.6% YoY). The company's order reserves have maintained steady growth. At the same time, the order volume for units under 4MW in external orders is 930.7MW, accounting for 3%; the order volume for units under 4MW (inclusive) - 6MW is 15,695.1MW, accounting for 52%; the order capacity for units above 6MW is 13,314.6MW, accounting for 45%. The company continues to promote fan structure upgrades and cost reduction and efficiency. As the wind power industry recovers, we expect the company's large megawatt models to continue to be released rapidly.
The scale of wind farm development has been steadily increasing, and the scale of wind power operation and maintenance services has continued to increase. The company's 2023Q1-3 wind farm added 1,000MW of equity grid-connected capacity and 822MW of transferred equity grid-connected capacity. As of the end of September, the cumulative grid-connected equity capacity was 7256MW, and the equity capacity under construction was 2920MW. The average number of hours used by 2023Q1-3's domestic self-operated wind farms was 1,867 hours (202h higher than the industry average). The company's power generation business developed steadily by optimizing the service structure.
Risk factors: Wind power installations fall short of expectations, fan prices continue to fall, costs fall short of expectations, increased market competition, geopolitical risks, etc.
Investment suggestions: Based on the company's three-quarter report, considering that wind power installation progress is lower than expected and fan price competition is still intense, we lowered the company's 2023-25 net profit forecast to 26.7/36.2/4.10 billion yuan (the original forecast value was 28.4/38.5/4.36 billion yuan). The corresponding EPS forecast was 0.63/0.86/0.97 yuan, respectively. Referring to comparable companies (Mingyang Intelligence, Yunda Co., Ltd., Sany Heavy Energy), the average PE in 2023 was 12 times (based on Wind's uniform profit expectations). Considering Goldwind Technology's leading position in the wind power machinery industry, the market share ranked first, and can enjoy a certain premium. Based on 15 times PE in 2023, it gave its A share a target price of 9.5 yuan (original target price of 12 yuan), maintaining the “increase in holdings” rating; considering the discount brought about by the relatively low liquidity of H shares, the target price of H shares was 4.7 Hong Kong dollars (originally target price of HK$4.7) The target price is HK$5.7), maintaining the “increased holdings” rating.