Matters:
The company released its 2023 three-quarter report. The first three quarters achieved revenue of 29.319 billion yuan, a year-on-year increase of 12.06%; net profit of 1,261 billion yuan, a year-on-year decrease of 46.69%; net profit after deduction of 1,026 billion yuan, a year-on-year decrease of 53.97%. In the third quarter, the company achieved revenue of 10.318 billion yuan, an increase of 8.61% over the previous year; net profit of the mother was 0.9 billion yuan, a decrease of 97.88% over the previous year.
Ping An's point of view:
The wind turbine business remains in a leading position in terms of delivery scale and order volume. In the first three quarters, the company achieved external fan sales volume of 8903.66 MW, of which 6MW and above units sold 3253.15 MW, accounting for 36.54%; the company's Q1, Q2, and Q3 external fan sales volumes were 1.11, 4.67, and 3.12 GW, respectively. The company's inventory volume at the end of the third quarter reached 17.5 billion yuan, an increase of 18% over the previous year, a record high in recent years. The fourth quarter is expected to be the peak of fan delivery and revenue recognition. In terms of orders, as of the end of the third quarter, the company's external orders to be executed were 22.0 GW, and the external bid was not signed for 7.9 GW. The total number of external orders in the company's hands was 29.9 GW, of which 3.8 GW were overseas orders.
The wind farm business is progressing steadily, and there was little wind in the third quarter. By the end of the third quarter, the total installed capacity of the company's domestic and foreign self-operated wind farms was 7256 MW, an increase of 334 MW over the previous month; in the first three quarters, the company's domestic and foreign wind power projects added 1,000 MW of equity and grid-connected installed capacity, and sold 822 MW of wind farms abroad, of which about 81 MW were sold abroad in the third quarter. By the end of the third quarter, the company's domestic and foreign wind farm equity was under construction with a capacity of 2,920 MW. The average number of hours used by the company's own wind farms in the first three quarters was 1,867 hours, of which Q1, Q2, and Q3 were 637, 707, and 523 hours, respectively.
The overall profit situation is still being hampered by the fan business, and it is worth looking forward to reducing costs and increasing profits in the fan business. In the third quarter, the company as a whole was in a break-even situation. The month-on-month decline in revenue was mainly due to the month-on-month decline in fan sales. In the face of rising cost rates and low demand, the company's profit situation in the third quarter was basically the same month-on-month. It is estimated that the gross margin level of the fan sales business increased month-on-month in the third quarter, but it is still in a state of loss. According to disclosed information, the gross profit margin of the company's fan and parts business in the first half of the year was 3.64%, clearly lagging behind major competitors. How to solve the problem of low profitability of onshore fans is particularly critical; at the 2023 Beijing International Wind Energy Show, the company released a variety of new onshore products, which are expected to introduce new products from the bottom level design and achieve cost side improvements.
Investment advice. Considering the low scale of wind farm sales in the third quarter and the profit level of the wind turbine business falling short of expectations, the company's profit forecast was adjusted. The net profit forecast for 2023-2025 is estimated at 17.37, 27.98, and 3.755 billion yuan (original forecast values: 26.25, 36.60, 4.261 billion yuan), dynamic PE 21.4, 13.3, and 9.9 times. The company's fan scale advantage is still obvious, and the development momentum of wind farms and other businesses is improving. In the future, it is hoped that through more cost reduction measures, the competitiveness of the fan business will be enhanced and the company's “recommended” rating will be maintained.
Risk warning. (1) Domestic and foreign wind power demand fell short of expectations. (2) The risk of increased protection in overseas trade. (3) The risk that competition in the fan industry will further intensify and the profit level will fall short of expectations.