Incident: In 2023, revenue was $50.46 billion, up 8.7% year on year; net profit to mother was 1.33 billion yuan, down 44.2% year on year. Among them, 2023Q4 revenue was 21.14 billion yuan, up 4.3% year on year, up 104.9% month on month; net profit to mother was 0.7 billion yuan, up 277.6% year on year, up 644% month on month.
Profits have been under pressure in the short term, and expense ratios have been declining steadily. Profit side: In 2023, the company's gross sales margin/net margin was 17.1%/3%, down 0.5/2.2pp; single Q4 gross margin/net margin was 16.5%/0.7%, respectively, up 5.4/0.6pp year on year. Expense side: The company's 2023 sales/management (excluding R&D) /finance expenses were 6.3%/3.9%/2.2%, respectively, -0.6 pp/ -0.3 pp/ -0.08 pp, respectively. The overall cost rate control was good.
Revenue from the wind farm business is growing rapidly, and the fan business is expected to benefit from the steady recovery of the industry. In 2023, the company's wind farm investment and development revenue was 10.9 billion yuan, up 58% year on year, of which power generation revenue was 6.4 billion yuan, power plant commercialization revenue was about 4.5 billion yuan, and the overall wind farm business gross profit margin was 47.3%, down 18 pp from the previous year, mainly due to the low gross margin of the new power plant commercialization business. In 2023, the company delivered 17.1 GW of fans, a year-on-year decrease of 10.5%. The fan revenue was 32.94 billion yuan, an increase of 1% over the previous year. In 2023, the company added 15.7 GW of domestic wind power installed capacity, accounting for 20% of the domestic market share, ranking first in the country for 13 consecutive years; with 16.4 GW of installed capacity added globally, the company had a 13.9% global market share, ranking first in the world. The approval and commencement of wind power projects in 2024 is expected to accelerate, and the company, as a leading fan company, is expected to fully benefit from the recovery in industry demand.
The scale of the post-wind power service and water services business continued to grow, and the energy storage business achieved a breakthrough of 0 to 1. The wind power business achieved revenue of 5.24 billion yuan in 2023, down 7% year on year, of which post-service revenue was 3.03 billion yuan, up 23% year on year; water business achieved a breakthrough of 0 to 1 in 2023 and built 3 GWh production capacity in 2023, covering domestic large storage, industrial and commercial storage and international scenarios. The domestic bid was won 3-4 GWh throughout the year, ranking among the top four in the country. The company realizes a diversified business layout and opens up room for long-term growth.
Profit forecasting and investment advice. The company's revenue for 2024-2026 is expected to be 57.43 billion yuan, 65.07 billion yuan, and 73.66 billion yuan respectively; benefiting from the recovery of the wind power industry, the company's net profit is expected to recover significantly in the next three years. The year-on-year growth rate for 2024-2026 is expected to be 52.6%/30.5%/20.5%, respectively. The global wind power business market space is broad. The company focuses on technology accumulation and innovation. Future product sales structure optimization is expected to enhance the company's profitability and maintain a “holding” rating.
Risk warning: risk of economic environment and exchange rate fluctuations; risk of rising raw material prices; risk of policy adjustments with national support and guidance; risk of falling demand for wind power orders and declining capacity utilization.