Brief performance review
On April 26, 2024, the company released its annual report and quarterly report. In 2023, it achieved revenue of 1,685 billion yuan, an increase of 3.2% year on year; net loss to mother was 88 million yuan, down 143.0% year on year.
1Q24 achieved revenue of 124 million yuan, a year-on-year decrease of 75.2%; net profit to mother was 74 million yuan, a year-on-year decrease of 10.3%.
Management analysis
Prices declined, and new production capacity was compounded by depreciation, and the company's profit was under pressure: in 2023, the company's comprehensive gross margin was 9.8%, -4.98PCT year on year, with a tower gross profit margin of 3.5%, -7.11PCT year on year, 10.32% year-on-year, and -3.26PCT year on year, mainly due to the drop in product prices after sea breeze parity. The company's net interest rate was -5.13%, -18.11% year-on-year, mainly due to a decrease in gross margin, increased depreciation and amortization expenses for the conversion of new bases, and the accrual of 184 million assets and credit impairment. In 1Q24, the company's net profit to mother changed sequentially, mainly due to the recovery of 63 million long-standing accounts receivable and the preparation of corresponding bad debts to be transferred back.
The 14th Five-Year Plan project is gradually being implemented, and the company's performance is expected to improve: the planned seabreeze grid capacity of the 14th Five-Year Plan is close to 60 GW, and there are still more than 30 GW planning indicators that have not yet been connected to the grid. Combined with downstream projects already started and tender data, the scale of Haifeng's grid connection is expected to exceed 10 GW in 2024. The company's Haili Wind Energy Base, Shandong Dongying Base, and Weihai Rushan Base have completed infrastructure construction at the end of 2023, and production is expected to be put into operation in 2024. With the recovery in downstream demand for installed offshore wind and the gradual expansion of the company's new production capacity, the company's performance is expected to improve significantly.
The revenue scale decreased, and the expense ratio increased during the 1Q24 period: the company's sales, management, R&D, and finance expense ratios were 2.65%/17.79%/4.86%/2.06%, respectively, +2.23/+13.98/+3.88/+2.36PCT. The total cost ratio increased 22.45 PCT year over year, mainly due to the reduction in revenue scale and the increase in cost share. As the subsequent Sea Breeze project progresses and accelerates, the increase in the company's revenue scale is expected to dilute expenses.
Profit Forecasts, Valuations, and Ratings
According to the company's annual report, quarterly report and our latest judgment on the industry, the 2024-2025 net profit forecast was lowered to 5.65 (-36%) and 7.36 (-38%) million yuan. The estimated net profit for 2026 is 967 million yuan, corresponding to PE of 17, 13, and 10 times, maintaining the “buy” rating.
Risk warning
Raw material prices fluctuate; Haifeng's installed capacity fell short of expectations; industry competition intensified.