Description of the event
The company issued an announcement on promoting the implementation of the “Double Improvement of Quality and Return” action plan. Specific measures include: 1) focusing on the main wind power business to achieve high-quality enterprise development; 2) adhering to innovation-driven growth and becoming a future enterprise; 3) steady management and continuous stability of cash dividends; 4) consolidating governance and improving the level of standardized operation; 5) improving information disclosure and adhering to investors' needs.
Incident comments
In the “Double Improvement of Quality and Return” action plan, the company mentioned specific content in various dimensions such as business focus, R&D innovation, cash dividends, corporate governance, and information disclosure, including focusing on the country's “double carbon” goals, focusing on cutting-edge technology development in the industry, continuing to promote technological innovation in wind power and peripheral product solutions, and insisting on providing investors with continuous and stable cash dividends on the premise of ensuring normal operation. We believe that the “Double Improvement of Quality and Return” action plan issued by the company is expected to continue to strengthen the company's competitiveness and endogenous driving force for business growth, enhance the company's value, return investors, and achieve a win-win situation.
On a business level, the company's fan shipments and in-hand orders have further increased since 2023, and has continued to break through overseas markets. By the end of 2023Q3, the company had shipped about 8.9 GW of fans in 2023, an increase of 26.7% over the previous year.
The company is actively promoting large-scale fans. In the first three quarters of 2023, 4MW and above fan sales accounted for about 99.3%, up from the same period in 2022. Among them: 4-6MW models were about 5.59 GW, accounting for 63%, and 6MW and above models were about 3.25 GW, accounting for 37%. The company has sufficient orders. In the first three quarters, current fan orders were about 31.51 GW (of which internal orders were about 1.57 GW), an increase of about 5.44 GW over the same period in 2022 (of which the company's external orders increased by about 4.36 GW at the end of 2023Q3 compared to the end of 2023Q3), which is expected to lay the foundation for future batch fan shipments and deliveries. At the same time, the company is actively exploring the international market. By the end of the third quarter of 2023, the company's international business had a cumulative installed capacity of 6.36 GW, distributed in 36 countries, including North America, Australia, Asia (outside of China), and South America all exceeded 1 GW. Overseas external orders totaled 3.81 GW, and the equity capacity of overseas projects in operation was about 0.46 GW, which is expected to open up room for performance growth.
At the industry level, the total installed capacity of the domestic wind power industry grew rapidly in 2023, and 2024 is expected to usher in rapid development of the ocean wind industry. Looking back at 2023, the wind power industry added a total of about 75.9 GW of installed capacity, an increase of 102% over the previous year, achieving more than double the year-on-year increase; among them, the scale of landwind installed capacity is expected to grow rapidly. At the tender price level, the tender price of Land Wind (excluding towers) has basically stabilized at the level of 1500-1600 yuan/KW by the end of 2023. It is expected that the bid price for Land Wind will gradually stabilize.
Looking ahead to 2024, we believe that with the commencement of construction of wind power projects, the installed scale of landwind is expected to maintain steady growth, and the scale of installed offshore wind power is expected to achieve significant restorative growth. Currently, project reserves are sufficient, laying the foundation for the growth of the domestic wind power industry.
Looking ahead, we believe that the company is actively promoting cost reduction and efficiency in the fan business, continuously strengthening overseas market development efforts, and is expected to benefit from the installed volume of wind power at home and abroad, thereby achieving an increase in business performance. At the same time, the company is actively expanding wind power operation and maintenance services and carrying out wind farm investment, development and transfer, which is expected to further enhance its performance. It is estimated that in 2023 and 2024, the company will achieve net profit of 1.6 billion yuan and 2.7 billion yuan, respectively, corresponding to PE of about 17.2 and 10.5 times, respectively. Maintain a “buy” rating.
Risk warning
1. The installed capacity of the wind power industry is lower than expected;
2. Increased competition has led to profitability falling short of expectations.