Incidents:
The company released its report for the third quarter of 2023. 2023Q1-Q3 achieved revenue of 2,627 billion yuan, +0.67% year-on-year; realized net profit of 205 million yuan, +28.58% year-on-year; and realized net profit of 198 million yuan, +32.46% year-on-year. Among them, Q3 achieved revenue of 1,289 million yuan in a single quarter, -7.44%/55.19%; achieved net profit of 82 million yuan, a year-over-year net profit of 82 million yuan, a year-over-year difference of +99.51%/17.66%; and realized net profit deducted from the mother of $78 million, a year-over-year or month-on-month difference of 114.16%/8.53%. Q3 The ROE for the single quarter was 1.79%, +0.75pct year on year; the ROE for the first three quarters was 4.49%, +0.42 pct year on year. The company's Q3 profitability increased in a single quarter, driving an increase in return on net assets.
Comment:
The fixed increase for the first half of the year was successfully implemented, and financial cost control effects are beginning to show. The company's expense rate for the Q1-Q3 period in 2023 was 12.06%, -0.52pct, of which the sales expense rate was 0.53%. The main reason for the increase over the same period last year was the increase in marketing expenses. The quarterly financial expense ratio for Q3 was 3.23%, down 3.16 pcT from Q2. The reason for the significant decline in the financial expense ratio is that in the first half of the year, the company raised an increase of 1.5 billion yuan, of which 770 million yuan was invested in the 150MW wind power project in Bucheon, and the rest was used for technical improvement and additional working capital at the offshore engineering base. The company used raised funds in exchange for self-financing, so comprehensive financing costs fell.
Furthermore, as efforts to collect final payments from accounts receivable are increased in the future, it is expected that the company's capital costs will continue to be well controlled.
Inventory reserves have increased, industry prosperity has rebounded, and the multi-point layout of production capacity is waiting for demand to be released. In the first three quarters of 2023, the company achieved fan tower production of about 422,400 tons and sales volume of about 299,900 tons, an increase of 20.64% over the first three quarters of 2022. As of September 30, the company's inventory increased by 82.27% compared to the end of 2022. The increase in inventory reserves was mainly due to the fact that most of the fan towers were in production during the reporting period and have not yet been shipped. According to data from the National Energy Administration, 33.48 GW of wind power was added in the first three quarters of 2023. The cumulative installed capacity of wind power in the country exceeded 400 GW, an increase of 15% over the previous year, including 368 GW for onshore wind power and 31.89 GW for offshore wind power. With the arrival of the peak shipment period for the Q3Q4 wind power industry, downstream demand for goods has improved, and the company's onshore and offshore fan tower products are expected to be delivered at an accelerated pace. In terms of production capacity, the company's production capacity layout covers all major new energy bases, including 10 onshore wind power plants and 4 offshore bases. The “14th Five-Year Plan” period on the Shandong Peninsula focused on developing 10 million kilowatt offshore wind power bases. Recently, Shandong Zhaoyuan offshore was planning to build a 2.6 GW offshore wind power project; Jiangsu offshore wind power is expected to restart with approval of the demonstration project, and the Guangdong stock project is progressing. The company is headquartered in Shandong. After the 200,000 ton offshore base in Dongying is put into operation, it will meet the needs of the local offshore wind market under the trend of large-scale and far-reaching offshore development. At the same time, when the technical improvements at the bases in Shanwei, Guangdong and Yancheng, Jiangsu are completed, the company's production capacity will expand further, and the competitive advantages of its products will be highlighted. On the other hand, the company focuses on making up for shortcomings in overseas wind power business, continuously developing overseas markets, and striving to achieve export breakthroughs through cooperation with OEMs.
The earnings performance of wind farms is good, and the collaborative manufacturing industry is developing steadily. The company's two major business segments develop collaboratively, and the profitable new energy power generation business plays a role in supporting and calming cyclical fluctuations in the manufacturing sector business. By the end of 2023Q3, the company owned a total of about 118 MW of grid-connected photovoltaic power plants, achieving revenue of 89 million yuan; in total, it owned about 513.8 MW of grid-connected wind farms, achieving revenue of 350 million yuan, an increase of nearly 20% over the previous year. The company's Q1-Q3 comprehensive gross margin was 23.27%, +2.76pct year on year, and net profit margin was 7.89%, +1.62 pct year on year. The main reasons for the increase in profit are: 1) Tower sales and gross margin increased in the first three quarters compared to the same period last year; 2) The company owned wind resources of the new energy power plant were better. Combined with the 150MW project in Wuchuan, connected to the grid, the power generation capacity increased significantly. A large-scale installation plan was previously signed, which means that the company will actively develop new energy power plant projects while consolidating the tower manufacturing base. Profits are expected to increase under two-wheel drive.
Profit forecast and investment rating: As one of the important suppliers of wind turbine towers in China, the company insists on the collaborative promotion of towers and new energy power generation. As the construction of the landwind industry accelerates, the Haifeng market sentiment is recovering, and we are optimistic about the company's future performance growth. We expect the company to achieve revenue of 41.88/56.89/7.361 billion yuan in 2023-2025, a year-on-year increase of 0.1%/35.8%/29.4%; net profit of 3.93/5.61/715 billion yuan, an increase of 71.8%/42.7%/27.3% year-on-year. The corresponding EPS is 0.38/0.55/0.70 yuan, and PE is 20/14/11 times, maintaining the “increase in holdings” rating.
Risk warning: risk of sharp short-term fluctuations in steel prices; risk of wind power project postponement and installation failure to meet expectations; risk of macroeconomic downturn; risk of global political situation; risk of increased market competition, etc.