Core views
The company released the 2023 performance report. In 2023, the company achieved operating income of 14.947 billion yuan, an increase of 21.28% over the previous year; realized net profit to mother of 2,003 billion yuan, an increase of 21.5% over the previous year; and realized deducted non-net profit of 1,653 billion yuan, an increase of 3.50% over the previous year. Q4 achieved revenue of 7.46 billion yuan in a single quarter, up 25% year on year; realized net profit of 972 million yuan, up 61% year on year. Q4's single-quarter results exceeded expectations (we previously expected net profit to be 1.84 billion yuan for the full year), which is mainly due to the high volume of Q4 fan shipments, dilution costs, and higher profit from the sale of wind farms.
occurrences
Sany Heavy Energy released its 2023 performance report. In 2023, the company achieved operating income of 14.947 billion yuan, an increase of 21.28% over the previous year; realized net profit to mother of 2,003 billion yuan, an increase of 21.55% over the previous year; and realized deducted non-net profit of 1,653 billion yuan, an increase of 3.50% year on year. Q4 achieved revenue of 7.46 billion yuan in a single quarter, up 25% year on year; realized net profit of 972 million yuan, up 61% year on year.
Brief review
In terms of the fan business, fan shipments are expected to be about 7.5GW in 2023, up 69% year on year. Q4 shipments in a single quarter are about 3.9 GW, an increase of 95% year over year. The reason is that the company's fan business has developed rapidly in recent years, and order intake has increased significantly. Q4 is the peak season for fan shipments.
The gross margin of the company's fan business was about 15% in 2023, down about 7 pct from the previous year. The main reason is that competition in the industry has intensified. Fan prices have dropped significantly in recent years. Fan prices have dropped by more than 20% every year in 2021 and 2022, leading to a decline in gross margin. Compared with peers, the company's gross margin is still in the first tier, and the cost advantage is remarkable.
In 2024, we expect the company's fan shipment growth rate to be about 30%, and the shipment volume will be about 9-10GW. The gross margin is expected to remain flat or increase compared to 2023.
It is estimated that around 600 MW of wind farms will be transferred throughout 2023, of which 250 MW will be transferred to foreign countries in the first half of 2023, with a net profit of 2-3 yuan/W for a single W.
Profit forecast and valuation: We expect the company to achieve operating income of 149.5 billion, 194.5, and 23.51 billion yuan in 2023, 2024, and 2025, respectively, and achieve net profit of 20.0, 23.2, and 2.67 billion yuan, corresponding to PE 16.1, 13.9, and 12.1 times, respectively, to maintain an “increase in holdings” rating.
Risk warning
(1) Risk of fluctuations in the international macroeconomic situation: There is uncertainty about the operation of the global economy, and there are certain challenges in the company's overseas business.
(2) High customer concentration risk: High customer concentration, mainly large state-owned enterprises and state-owned enterprises. Even if problems occur in connecting with a small number of customers, it will cause large fluctuations in the company's performance.
(3) Industry competition intensifies risks: The wind power industry is highly concentrated. Currently, Sany Energy has entered the first tier and faces strong competitors. Fierce competition may affect the company's performance.
(4) Risk of component price fluctuations: The company's upstream raw materials are purchased externally, such as castings, spindles, gearboxes, etc., and fluctuations in the price of upstream raw materials will affect the company's profit level.