Key points of investment

Fan prices were under pressure, and net profit to mother decreased by 89.19% year on year in '23

In 2023, the company achieved operating income of 27.859 billion yuan, a year-on-year decrease of 9.39%; net profit to mother of 372 million yuan, a year-on-year decrease of 89.19%; net profit after deducting non-attributable net profit of 206 million yuan, a year-on-year decrease of 93.36%. The main reason for the decline in the company's performance was the decline in fan profitability due to increased competition in the industry. With 2024Q1, the company achieved operating income of 5,075 billion yuan, an increase of 84.60%; net profit to mother was 304 million yuan, an increase of 233.83% year on year; net profit after deducting non-return to mother was 291 million yuan, an increase of 200.39% year on year. 2024Q1, gross sales margin of 20.62%, a year-on-year increase of 6.25pct.

The proportion of high-capacity fans increased rapidly, and the external sales scale of fans continued to grow in 2023. The company achieved 9.69 GW of fan sales, an increase of 32.66% year on year; corresponding sales of fans and related accessories reached 23.517 billion yuan, an increase of 3.11% year on year; gross profit margin was 6.35%, a decrease of 11.42 pct year on year. By product, the share of the company's high-capacity fans increased in 2023, with sales volume of 644 fans above 6.X MW, up 113.95% year on year; sales revenue reached 12.247 billion yuan, up 37.02% year on year, accounting for 58.25% of fan sales revenue; gross margin was 7.92%, down 17.52 pct year on year.

Leading the scale of offshore wind power orders, leading to larger and lighter fans According to Wood Mackenzie statistics, the company ranked first in the number of new offshore wind power orders in 2023 with an order volume of 1.8 GW. As a pioneer in large-scale fans in China, in 2023, the company 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. Currently, the company's stand-alone power covers 1.5-11MW series onshore fans and the stand-alone power covers 5.5-22MW series offshore fans.

The generation revenue from new energy power plants has been growing steadily. Continuing the rolling development of power plants. In 2023, the company's operating revenue was 1,499 billion yuan, up 12.24% year on year; gross margin was 63.00%, up 3.12 pct year on year; the average number of power generation hours the company operated was 1,568 hours. By the end of 2023, the installed capacity of the company's operating new energy power plants was 2.56 GW, an increase of 70.47% over the same period last year; the installed capacity under construction was 3.30 GW, a year-on-year decrease of 3.49%; the total power generation capacity of the new energy power plants in operation by the company was 4,016 billion kilowatt-hours, an increase of 40.46% over the previous year. The company uses a “rolling development” model to carry out the construction of new energy power plants. In 2023, sales revenue of power plant products reached 2,080 billion yuan, a year-on-year decrease of 63.34%; the gross profit margin was 30.97%, an increase of 8.83 pcts over the previous year.

Profit forecasting and valuation

The profit forecast was lowered and the “gain” rating was maintained. The company is a leading domestic wind power unit and is steadily promoting the construction of new energy power plants. Considering the decline in profitability due to the fall in profitability due to the fall in offshore wind power construction and fierce competition in the fan sector, we lowered the 2024-2025 profit forecast and added the 2026 profit forecast. The company's net profit for 2024-2026 is 26.46 billion yuan, 32.11 billion yuan, and 37.25 billion yuan respectively (before the reduction, net profit to mother was 53.75 billion yuan and 7.027 billion yuan), and the corresponding EPS was 116, 1.41, and 1.64 yuan/share, respectively.

Risk warning

Demand for wind power installations falls short of expectations; industry competition intensifies; raw material prices fluctuate; risk of product price fluctuations.