Matters:
The company released its 2023 annual report and 2024 quarterly report. In 2023, it achieved revenue of 4.325 billion yuan, a year-on-year decrease of 15.30%, net profit of 425 million yuan, a year-on-year decrease of 5.58%; net profit after deduction of 368 million yuan, a year-on-year decrease of 11.83%; EPS 0.67 yuan, to distribute a discovery dividend of 1.82 yuan per 10 shares; and achieved revenue of 463 million yuan, a year-on-year decrease of 29.12%.
Ping An's point of view:
In 2023, various business segments were divided, and the offshore export business rose. The company's revenue scale declined to a certain extent in 2023, the overall profit scale was stable, and various business segments showed significant differentiation. In 2023, the company put into operation a 250MW wind farm in Fuxin, adding about 130 million in revenue and 110 million in profit. The export scale of Penglai Daikin pipe piles increased markedly. Overseas shipping volume was nearly 100,000 tons, sales volume increased by more than 4,000% year on year, and gross margin was significantly higher than the company's other manufactured products. However, due to changes in the design plan of an overseas project, weather factors and special force majeure at the project site, the project execution time was extended, and the project settlement amount decreased, affecting net profit of about 91 million yuan. As a result, the overall profit contribution of Penglai Daikin increased not significantly in 2023. In 2023, the overall domestic tower pipe pile business was in a strategic contraction trend. The overall revenue scale and profit contribution of the company's onshore bases such as Fuxin, Xinganmeng, and Zhangjiakou declined year-on-year. Among them, the profit situation of the Xinganmeng base was relatively good.
The strategy focused on overseas sea breeze business, and the number of deliveries and orders increased dramatically. In 2023, the company completed the delivery of 48 single pile products for the British MorayWes T project, becoming the first domestic enterprise to export wind power offshore products in large quantities to Europe. According to the current order situation, the company's shipments to Europe will increase further in 2024, and various types of offshore products, including single piles, sea towers, and transition sections, will be delivered to various offshore wind farm projects in France, Denmark, the United Kingdom, the Netherlands, etc. In 2023, the company received orders for various European seabreeze projects such as Denmark and Germany, and the number of overseas orders increased by more than 50% year on year, leading the order share in the European market. Recently, Penglai Daikin signed a production lockdown agreement with a European offshore wind power developer. The customer locked up production capacity of no more than 400,000 tons of offshore wind power infrastructure from now until the end of 2030, and paid 14 million euros in a one-time lock in production costs to Penglai Daikin. Overall, the company has become a mainstream supplier of offshore wind power pipe piles in the European market. Considering the subsequent accelerated construction of offshore wind power in Europe and the obvious shortage of supply in the pipe pile sector, the growth potential of the company's offshore export business is worth looking forward to.
Focus on building a production logistics system adapted to the expansion of overseas sea breeze markets. Currently, the company's main offshore export production base is the Penglai base. The company is building the Tangshan Caofeidian Offshore Gigafactory and Panjin Offshore Engineering Base. Among them, the Tangshan base focuses on large-scale deep-sea conduit racks and floating basic products, which are expected to be completed and put into operation in March 2025.
In line with the global strategic layout, the company is focusing on building a supporting global logistics system. The offshore wind power equipment special carrier, which was originally designed and built by the company itself, is 51 meters wide, 240 meters long, has a load capacity of more than 50,000 tons, and a draft depth of 8 meters. The company plans to deliver two special carriers for offshore wind power equipment in 2025.
Based on advanced production facilities and independent logistics capabilities, the company's competitiveness in the overseas sea breeze market will be further enhanced.
The power generation business still has potential for growth. In 2023, the Fuxin Zhangwu Xiliujiazi 250MW wind power project achieved grid-connected power generation, generating more than 400 million kilowatts of electricity throughout the year and contributing 132 million yuan in revenue. The area where the project is located is rich in wind resources, and the scale of power generation and revenue is expected to increase further in 2024. In 2023, the company obtained the target of a 250MW fish-light complementary photovoltaic project in Caofeidian, Tangshan. It is expected that construction will begin in mid-2024 and strive to be completed within this year. Furthermore, the total scale of the company's new energy development projects added to the reserve in Hebei Province is 1 GW, and the profit contribution of the power generation business is expected to continue to grow in the future.
Investment advice. Considering the delivery pace of overseas Sea Breeze orders and domestic business conditions, the company's profit forecast is estimated to be 6.36 billion yuan and 778 million yuan (original forecast values of 759 million yuan and 1,141 million yuan) for 2024-2025, respectively, and an additional profit forecast of 1,131 billion yuan for 2026, corresponding to dynamic PE 21.2, 17.4, and 11.9 times. The company has established a position as a mainstream pipe pile supplier in the European offshore wind power market. In the future, it will benefit from the rapid growth of the overseas sea wind market and the short supply of pipe pile products, and maintain the company's “recommended” rating.
Risk warning. 1) The installed scale of offshore wind power falls short of expectations; 2) Large fluctuations in raw material prices and exchange rate fluctuations may affect the company's profit level; 3) Increased industry competition and lower profit levels than expected.