Incident: Tianneng Heavy Industries released its three-quarter report for 2023. The company's revenue for the first three quarters was 2,627 billion yuan, up 0.67% year on year, and net profit was 205 million yuan, up 28.58% year on year. Among them, the company's revenue for the third quarter was 1,289 million yuan, down 7.44% year on year, and net profit was 82 million yuan, up 99.51% year on year. The performance was basically in line with expectations.
Manufacturing business: Tower shipments increased quarter by quarter, and gross margin increased year over year. In the first three quarters of 2023, the company achieved a total sales volume of about 300,000 tons of fan towers, an increase of about 20% over the same period last year. Benefiting from the acceleration of domestic landwind construction in the third quarter, the company's shipments increased sharply in the third quarter, achieving tower sales of 168,000 tons, an increase of 93% over the previous year, and a 14% increase over the previous year.
At the same time, the company achieved a gross profit margin of 23.27%, an increase of 2.76pct over the previous year. In terms of expenses, the cost ratio for the third quarter was reduced month-on-month. The sales/management (including R&D) /financial expenses ratio was 0.39%/4.34%/3.23%, respectively, -0.46pct/-2.45pct/-3.16pct month-on-month, respectively. The company's profitability is expected to further improve through continuous management optimization.
New energy power generation business: In March 2023, the company's 150MW wind farm was connected to the grid. The power generation volume of the company's new energy power plant increased in the first three quarters compared to the same period last year. The third quarter was a light wind season. The company's wind farm is expected to contribute 140 million yuan in revenue in the single third quarter, with gross margin reaching 70%. As of the end of the third quarter of 2023, the company held a total of about 631.8 MW of new energy power generation business. The new energy power generation business has become a stable source of revenue and profit for the company.
The scale layout of production capacity has been continuously improved, and the offshore production capacity has been expanded smoothly. The company continues to expand offshore production capacity and boost offshore business. The offshore engineering base built in Dongying, Shandong was put into trial operation in May 2023. Currently, four offshore equipment bases have been built and put into operation, with a total production capacity of 480,000 tons. The offshore production capacity will further increase to 560,000 tons in 2024. At the same time, the company is stepping up research and development efforts on new technologies and products such as conduit racks and offshore wind power floating foundations. As domestic ocean wind restrictions are gradually lifted, 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.
Lower the profit forecast and maintain the “increase in holdings” rating: Considering that the slow construction of domestic offshore wind this year affected the company's offshore shipping volume to a certain extent, compounded by credit impairment, we lowered the company's 2023-2025 profit forecast. The company's net profit forecast for 2023-2025 is estimated to be 3.73, 6.15, and 870 million yuan (original values were 5.09, 7.13, and 911 million yuan), corresponding to EPS of 0.37, 0.60, and 0.85 yuan/share, corresponding to PE 20, 12, and 9 times, respectively, the company's wind power tower Leading enterprises, the share of offshore production capacity is constantly increasing. Currently, the sea wind problem has been basically solved. Domestic sea wind construction has accelerated, and growth is outstanding. Referring to the average valuation of comparable companies in 24 years, the company was given 14xPE for 24 years, maintaining an “increase in holdings” rating.
Risk warning: wind power installed capacity falls short of expectations; capacity release falls short of expectations; construction of new energy power generation projects falls short of expectations.