Description of the event
The company achieved operating income of 21 billion yuan in the first three quarters of 2023, a year-on-year decrease of 3%, and attributable net profit of 1.2 billion yuan, a year-on-year decrease of 66%. Among them, the company achieved operating income of 10.4 billion yuan in 2023Q3, an increase of 40% over the previous year, and net attributable profit of 600 million yuan, a decrease of 49% over the previous year.
Incident comments
On the revenue side, the company's 2023Q3 revenue increased significantly compared to the same period, with a year-on-month increase of about 33%, which is expected to be mainly due to the increase in sales volume of fan and power plant products. Among them, the company's Q3 fans shipped about 3.5 GW (up about 39% from the previous month), and Land Wind and Sea Breeze shipped about 2.0 GW and 1.5 GW respectively, with sea breeze accounting for more than 40% of shipments.
On the profit side, the company's 2023Q3 gross margin was about 13%, down about 5.4 pct from the previous year, down about 6.9 pct from the previous year. It is expected that the gross margin of Lufeng fans will be under pressure mainly due to the slow recovery pace of rebates from some suppliers. The cost rate for the period was about 9%, down 0.2 pct year on year, and was basically the same from month to month. The sales expense ratio and R&D expense ratio were about 3.5% and 2.7% respectively, down 1.6 pct and 1.5 pct, respectively, down 0.8 pct and 1.0 pct from month on month, management expenses were about 2.5%, down 0.4 pct year on year, up 0.3 pct month on month, and financial expenses were about 0.3%, up 3.3 pct year on year, and 1.5 pct month on month. The company received investment income of about 200 million yuan in Q3, which is estimated to be mainly due to wind farm transfers. At the same time, losses from changes in fair value and asset impairment losses totaled about $24 million, and credit impairment losses totaled about $0.2 billion. In the end, the company achieved a net sales interest rate of about 5.8%, a decrease from the same period last month.
As of the end of the third quarter of 2023, the company added about 10.11 GW of new orders for Q1-3 fans, a year-on-year decrease of about 14.39%, and ongoing orders of about 33.62 GW, an increase of about 3.2 GW over the end of 2022. At the same time, the company's cumulative installed capacity of new energy power plants at the end of the third quarter was about 1.64 GW, and the capacity under construction was about 3.93 GW. Among them, BT power plants under construction are about 2.97 GW (about 76%), and non-BT power plants under construction are about 0.96 GW (about 24%).
In terms of other financial indicators, the company's net operating cash flow for 2023Q3 was about 1.02 billion yuan, a significant improvement over the same period, and capital expenditure was about 2.5 billion yuan. It is estimated that the company is mainly actively promoting wind farm construction.
Looking ahead to 2023Q4, we believe that as the wind power industry enters centralized installation by the end of the year and the commencement and delivery of the Haifeng project, the company's Q4 fan shipments are expected to increase month-on-month, and fan gross margin is also expected to recover significantly month-on-month. At the same time, the company continued to promote wind farm transfers in Q4, thereby laying the foundation for annual performance. The company's net profit is estimated to return about 3,554 billion yuan in 2023, which is about 9 times that of PE. Maintain a “buy” rating.
Risk warning
1. The installation of wind power falls short of expectations;
2. Increased competition has led to profitability falling short of expectations.