Incidents:
On April 27, Haili Wind Power released its 2023 annual report and 2024Q1 quarterly report. In 2023, the company achieved operating income of 1,685 billion yuan, an increase of 3.22% over the previous year, and realized net profit of -88 million yuan, a year-on-year decrease of 143%. 2024Q1 achieved operating income of 124 million yuan, a year-on-year decrease of 75.22%, and realized net profit of 74 million yuan, a year-on-year decrease of 10.28%, and a month-on-month correction.
The company's revenue scale and profitability in 2023 are under pressure
Performance was under pressure due to adverse factors such as phased shortages in demand, the company's participation in wind farms for power generation, increased depreciation and amortization after the construction and transformation of the new base, and cumulative credit and asset accumulation of 184 million yuan.
By business, the company's pile base achieved revenue of 1.10 billion yuan in 2023, or -11.5% year-on-year, gross margin of 10.3%, or -3.26pct; in 2023, tower cylinders achieved revenue of 390 million yuan, +16.8% year-on-year, and gross margin of 3.52%, and -7.11pct year-on-year. In terms of investment income, the company's investment income in joint ventures and joint ventures was RMB 28 million in 2023 and RMB 100 million in 2022.
The “two seas” strategy is progressing steadily, and production capacity is expanding at an accelerated pace
As of 2023, the company already has multiple production bases such as Haili Offshore and Haili Equipment. Haili Wind Energy, Shandong Dongying and the first phase of Jiangsu Qidong are also expected to be put into operation in 2024. Looking forward to the future, the company's bases in Binhai, Jiangsu, Wenzhou, Zhejiang, and Zhanjiang, Guangdong are also under planning and construction, and the future production capacity layout is expected to be further improved. On the export side, in 2023, the company's export company actively promoted various preliminary work in overseas export business and the investment and construction of terminals and bases. The company plans to lay out export-oriented heavy terminals at Qidong Lusi Port, Hainan, and Zhanjiang Bureau in Guangdong, which is expected to gradually expand overseas markets.
The sea landscape is expected to pick up, and the company or core will benefit
The first quarter was generally a low season for offshore wind power. The company's 2024Q1 order delivery was delayed, and the company's business scale declined year on year; in terms of investment income, 2024Q1's investment income was 50 million yuan, +241% year over year. We expect mainly 2024Q1 wind speed conditions to be good, and the company's participation in wind farms will increase power generation capacity; in addition, in 2024Q1, the company recovered some long-standing accounts receivable of 63 million yuan, helping the company's performance to improve month-on-month.
Looking ahead to 2024Q2, with the gradual commencement of construction in Jiangsu and other regions, domestic sea breezes may enter an accelerated construction period. As a leading domestic installation enterprise, the company's production schedule and delivery are expected to improve month-on-month.
Profit Forecasts, Valuations, and Ratings
Considering the impact of the industry's demand in the first quarter falling short of expectations on the company, we adjusted the profit forecast. We expect the company's revenue for 2024-26 to be 45.0/67.9/8.25 billion yuan, respectively, with growth rates of 167.0%/51.0%/21.4%, net profit to mother of 5.3/77/9.5 billion, respectively, growth rates of 703.2%/45.1%/23.9%, EPS 2.4/3.5/4.4 yuan/share, respectively, corresponding PE 21/14/11 times. Considering that the company is a leading domestic pile-foundation enterprise and is expected to benefit from the recovery of the sea landscape, we gave the company 24 times PE in 24 years, with a target price of 58.64 yuan. Maintain a “buy” rating.
Risk warning: Haifeng's installed capacity falls short of expectations, capacity expansion falls short of expectations, and raw material prices fluctuate.