The company released its 2023 annual report, with a year-on-year decline of 44.16%. The company's fan sales are stable, profit inflection points are showing, and fan orders and wind resource reserves are abundant, laying the foundation for subsequent steady growth. Maintain an increase in holdings rating.
Key points to support ratings
The company's performance in 2023 decreased by 44.16% year on year: the company released its 2023 annual report, achieving revenue of 50.457 billion yuan, an increase of 8.66%; realized net profit to mother of 1,331 billion yuan, a year-on-year decrease of 44.16%; and realized deduction of non-net profit of 1,285 billion yuan, a year-on-year decrease of 35.32%. 2023Q4 achieved net profit of 70 million yuan, a year-on-year increase of 277.61% and a month-on-month increase of 644.38%.
Fan sales are stable, and the inflection point of profitability is now: in 2023, the company achieved 13.77 GW of fan sales, a slight decrease of 0.71% over the previous year; among them, sales of 6MW and above units were 6.15 GW, an increase of 29.36% over the previous year, and the process of large-scale units continued to accelerate. In addition, the company's on-hand orders grew steadily, reaching 30.40 GW at the end of 2023, an increase of 12.13% over the end of 2022. In terms of profitability, the company's gross margin of the fan and parts sales segment increased 0.18 percentage points year on year to 6.41% in 2023. Looking at the split half year, the gross margin of the 2023 H1/H2 sector was 3.64%/8.16%, respectively. Profitability improved 4.52 percentage points month-on-month in the second half of the year. It is mainly expected that costs will decline after the company changed its technology route.
The revenue and gross margin of the wind power service sector declined, and the types of service products continued to diversify: in 2023, the company achieved wind power service revenue of 5.241 billion yuan, a year-on-year decrease of 7.18%; the sector's gross margin fell 3.97 percentage points to 19.84% year on year. However, the company continues to enrich the types of post-service products. In 2023, it achieved post-service revenue of 3,027 billion yuan, an increase of 22.19% over the previous year, and the domestic and foreign after-sales service business has a project capacity of nearly 31 GW, an increase of 11% over the previous year.
Power plant commercialization transactions led to a 57.96% increase in wind farm development business revenue and a decrease in gross margin:
In 2023, the company's wind farm development business achieved revenue of 10.915 billion yuan, a year-on-year increase of 57.96%, and gross margin decreased 18.09 percentage points year-on-year to 47.30%. We believe that this is mainly due to the company's active implementation of the power plant product sales model, achieving a commercial transaction scale of over 740 MW for power plants and nearly 4.5 billion yuan in power plant product revenue throughout the year, while the company's power generation business operation is relatively steady. By the end of 2023, the company's cumulative equity connected to the grid installed capacity was 7.29 GW, a slight increase of 2.98% compared to the end of 2022. At the same time, the installed capacity of the projects approved by the company and under construction reached 6.29 GW/2.35 GW respectively, laying the foundation for long-term growth.
valuations
Under the current share capital, based on the company's annual report and the industry's relatively fierce price competition, we adjusted the company's 2024-2026 earnings forecast to 0.51/0.62/0.75 yuan (the original 2024-2026 forecast was 0.84/1.04/-yuan), corresponding to a price-earnings ratio of 15.5/12.8/10.6 times; maintaining an increase in holdings rating.
The main risks faced by ratings
Price competition exceeded expectations; raw material prices were higher than expected; industrial policy risks; large-scale cost reductions did not meet expectations; demand for wind power fell short of expectations; overseas development fell short of expectations.