Incident: The company issued the “Notice on Obtaining the Wind Power Project Approval Certificate”, and the decentralized wind power project it declared was approved.

The 200MW wind farm has been approved, and green energy construction has taken a critical step. Previously, the decentralized wind power project declared by the company was included in Shandong Province's “Provincial Energy Green and Low-Carbon Transition Pilot Implementation Plan”; recently, the company obtained an approval certificate. The project includes four decentralized wind farms distributed in various cities. A single wind farm project covers an area of 0.361 hectares. It is planned to build 10 wind turbines with a total capacity of 50 MW, generating an annual power generation capacity of about 125 million kilowatts. The total fan scale of the project is 200MW, and the total annual power generation capacity is about 500 million kilowatts. In accordance with the requirements of the “Provincial Energy Green and Low-Carbon Transition Pilot Implementation Plan”, the company will continue to promote the integration of green energy strategies and advanced manufacturing industries, accelerate the construction of a large-scale “zero carbon” park, based on the rubber framework material industry, and focus on energy demand to achieve “spontaneous self-use, surplus electricity connected to the Internet” for wind power generation.

Self-built green energy can help reduce costs and promote overseas, and the 200MW wind farm is expected to save more than 200 million yuan in electricity costs every year. According to our estimates, for every 50 MW wind farm approved, the company can save 56.4 million yuan in electricity costs every year after completion. The 200 MW wind farm approved this time is expected to save more than 200 million yuan in electricity costs every year. The onshore wind power construction cycle is usually 2 to 3 quarters. According to this estimate, the company is expected to build a wind farm and connect to the grid by the end of 2024, and achieve self-use of wind power by 2025, thereby significantly reducing production costs. At the same time, overseas requirements for green carbon reduction for imported products are becoming more and more strict. By building their own wind farms, the company increases the proportion of green energy products, which helps to develop overseas markets such as Europe and the US, and further increase its global share.

The fundamentals of the industry have improved, and the company's forward-looking layout of new products has ushered in development opportunities. Since 2024, raw material prices in the tire frame material industry have gradually stabilized, energy prices have entered a downward channel, and the company's cost-side pressure has improved. In terms of new products, the company is forward-looking to lay out high-end special steel wire. The cable-shaped steel wire launched in December 2022 has high added value and can be used in high-performance car and aircraft tires. At the same time, the company sees huge application potential of special steel wire and lays out special steel wire for robot dexterous hands, which is expected to enter the blue ocean circuit for humanoid robots.

Profit forecasting and investment advice. We expect the company's revenue for 2023-2025 to be $55.03/61.98/7.024 billion yuan, respectively, and net profit to mother of 1.12/1.92/358 million yuan, respectively. The current market value corresponds to the 2023 PE of 33.5X. The company's downstream growth is picking up steadily, and cost optimization in the main business has clearly boosted profits. New superimposed special steel wire products are expected to break through new tracks such as robots and maintain a “buy” rating.

Risk warning: risk of a sharp rise in raw material prices; risk of macroeconomic downturn; risk of green energy projects and new products falling short of expectations.