Matters:
On February 5, the company issued a notice on promoting the implementation of the “Double Improvement of Quality and Return” action plan, and formulated specific measures for the “Double Improvement of Quality and Return” action plan.
Ping An's point of view:
Vigorously expanding overseas markets is an important gripper for the company to achieve high-quality development. In recent years, against the backdrop of increased competition in the domestic onshore fan market, the company has stepped up overseas expansion efforts and actively obtained overseas orders with a relatively high level of profit. Currently, its overseas business has spread across 6 continents and 38 countries around the world. By the end of the third quarter of 2023, the company had a total of 29.9 GW of external fan orders, including 3.8 GW of overseas orders. The company's new overseas orders reached a record high in 2023. The company achieved a major breakthrough in offshore fan exports. In December 2023, the results of the 2nd offshore wind power project jointly organized by Korea's Ministry of Industry, Trade and Resources and the Korea Energy Administration were announced. VENSYS, a German subsidiary of the company, won the bid for Korea's Yongguang Lachyue offshore wind power project. The total planned installed capacity of the project is 365 MW, and 64 VENSYS 5.7MW units will be installed. We believe that the competitive advantage of the domestic fan industry compared to overseas is prominent, the situation of speeding up the expansion is clear, and the company is expected to fully benefit from its brand advantage and many years of overseas layout.
Since 2023, the offshore wind power business expansion has achieved remarkable results, which is expected to boost the level of profitability. Since 2023, the company has won bids for offshore wind power projects such as Fujian Zhangpu Liuao (200MW), Sanxia Jiangsu Dafeng (800MW), Fujian Pingtan Area A (450MW), and the market share is leading in the domestic market share; the company has accelerated the layout of offshore wind power production bases and plans to build new offshore wind power industrial bases in Qinhuangdao, Hebei and Beihai, Guangxi, to help the company become one of the complete machinery companies with the most complete layout of seabreeze industry bases in coastal provinces. In 2023, the company's first 16 MW high-capacity offshore wind turbine achieved grid-connected power generation, demonstrating the company's technical strength in the field of offshore fans and leading the large-scale development of global offshore fans; the company cooperated strategically with the Wenzhou Municipal Government to build a zero-carbon headquarters base for deep-sea offshore wind power in Wenzhou, which is expected to become a leader in the development of floating offshore wind power in the world. In addition to making great strides in the offshore wind power equipment manufacturing business, the company has made a breakthrough in offshore wind farm development and operation. Recently, the People's Government of Ruian City, Wenzhou City, Zhejiang Province issued the “Approval Notice Concerning the Approval of the Ruian No. 2 Offshore Wind Power Project”, and Goldwind Technology's 600MW offshore wind power project in Wenzhou, Zhejiang was approved. Overall, the company's share of the offshore fan market is expected to increase in the future, and offshore wind farm development and operation will establish a new profit growth point, boosting the company's overall profit level.
Continue to promote product upgrades and focus on solving the current low profit level of onshore fans. Currently, one of the core challenges facing the company is the low profit level of onshore fans. In the first half of 2023, the gross profit margin of the company's wind turbine and parts business was 3.64%, down 8.95 percentage points from the previous year. Considering that onshore fan prices are still on a downward trend, it is expected that fan companies will still face severe profit pressure in the future. The company follows industry trends and continues to promote technological innovation and product upgrades. In October 2023, the company unveiled a new series of onshore units at the Beijing International Wind Energy Exhibition, covering 6.X to 10.X MW. Compared with the previous generation, the new series of onshore units generated more than 23% at the same wind speed, reduced the number of wind farm stations by more than 20%, and increased internal yield by 1.6% to 3.3%. We believe that the promotion and application of the new series of onshore units is expected to reduce costs and increase efficiency, helping the company to better cope with the domestic onshore fan competition situation.
Investment advice. Considering the continued decline in onshore fan prices and adjusting the company's profit forecast, net profit of 2023-2025 is estimated at 15.83, 20.11, and 3.268 billion yuan (original forecast values of 17.37, 27.98, and 3.75 billion yuan), or 17.7, 13.9, and 8.6 times the dynamic PE. The company's fan scale advantage is still obvious, and the wind farm and other businesses are developing. In the future, it is expected that more measures will reduce costs to enhance the competitiveness of the fan business and maintain the company's “recommended” rating.
Risk warning. (1) Domestic and foreign wind power demand falls short of expectations. (2) The risk of increased protection of overseas trade. (3) Risk of further intensification of competition in the fan industry and lower profit levels than expected.