Brief performance review
On April 28, 2024, the company released its annual report and quarterly report. In 2023, it achieved revenue of 27.859 billion yuan, a year-on-year decrease of 9.4%; net profit to mother was 372 million yuan, a year-on-year decrease of 89.2%. 1Q24 achieved revenue of 5,075 billion yuan, an increase of 84.6% year on year; net profit to mother was 304 million yuan, an increase of 233.8% year over year, mainly due to the increase in the scale of fan delivery, the increase in the scale of operating power plants, and the increase in the sales scale of power plant products.
Management analysis
Prices declined due to increased competition in the industry, and the share of high-capacity fans increased further: in 2023, the company achieved outbound fan sales of 9.69 GW, a year-on-year increase of 32.7%, total machine revenue of 21.024 billion yuan, a year-on-year decrease of 4.58%, gross margin of 6.0%, a year-on-year decrease of 18.04 pcts, mainly due to a drop in downstream tender prices. Looking at the power segment, the share of high-capacity fans increased further. In 2023, units above 6.XMW achieved sales revenue of 12.247 billion yuan, an increase of 37.0% over the previous year, accounting for 58.25 of total machine revenue, an increase of 17.79 pcts over the previous year, gross margin of 7.9%, and a year-on-year decrease of 17.52 pcts.
The power plant business has been growing steadily, and profitability has improved: the company achieved operating revenue of 1,499 billion yuan in 2023, an increase of 12.24% year on year, gross margin of 63.00%, an increase of 3.12 pct year on year. By the end of 2023, the installed capacity of the company's operating new energy power plants was 2.56 GW, up 70.47% year on year; the installed capacity under construction was 3.30 GW, down 3.49% year on year.
Wind farm sales achieved revenue of 2,080 billion yuan in 2023, up 12.2% year on year, gross margin of 63.0%, up 8.83 pct year on year.
Haifeng's new orders are impressive, and the volume is expected at the end of the 14th Five-Year Plan: According to Wood Mackenzie's statistics, the company signed 1.8 GW of new orders from Haifeng in 2023, ranking first in the world. The company has extensive experience in the field of ocean wind. In 2023, it released the MySE22mW, the world's largest offshore wind turbine, and launched the MYSE18.X-20mW offshore wind turbine with the largest stand-alone capacity and the largest fan diameter in the world.
In line with the 14th Five-Year Plan of each province, the scale of seabreeze grid connection is expected to exceed 10GW in 2024. The company has deep seabreeze orders and technical reserves, which is expected to fully benefit.
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 26.8 (-53%) and 32.1 (-54%) billion yuan. The estimated net profit for 2026 is 3.73 billion yuan, corresponding to PE of 8, 7, and 6 times, maintaining the “buy” rating.
Risk warning
Downstream installed capacity falls short of expectations; RMB exchange rate fluctuates; raw material prices fluctuate.