The company announced its 2023 annual report and 2024 quarterly report. In 2023, the company achieved revenue of 4.325 billion yuan, or -15.30% year on year, and realized net profit of 425 million yuan, -5.58% year on year; in the first quarter of 2024, revenue of 463 million yuan, or -45.83% year on year, realized net profit to mother of 53 million yuan, or -29.12% year on year. As the world's leading manufacturer of wind power towers, the company will fully benefit from the gradual release of domestic and foreign wind power installation demand in the future, and will continue to maintain an increase in holdings rating.
Key points to support ratings
Determining the “New Two Seas” strategy has achieved remarkable results, and the share of overseas revenue has increased markedly. 2023 is a critical period for the company to transform and upgrade to an “overseas offshore” business. By optimizing the product and market structure, the company actively reduced the scale of onshore products with low yield and poor repayment conditions, which led to a decline in annual performance. However, the company's overseas products achieved revenue of 1,715 billion yuan, +104.63% year-on-year. The revenue share increased from 16.41% in 2022 to 39.64%, driving a significant increase in the company's profitability. In 2023, the company's overall gross margin was 23.44%, +6.71 pct year on year, and the net margin was 9.83%, +1.01 pct year on year.
Customer construction was delayed, putting pressure on Q1 results in '24. Entering 2024, due to the slow start of construction by customers and delays in ordering goods, the company's performance was under pressure. It achieved revenue of 463 million yuan in the first quarter, or -45.83% year-on-year, and achieved net profit of 53 million yuan, or -29.12% over the same period last year. Profitability continued to increase. The company's overall gross margin for the first quarter of 2024 was 31.60%, +12.60pct year on year, and the net margin was 11.44%, +2.70pct year on year.
The company has a significant first-mover advantage, and overseas orders continue to break through. The company is the only supplier in the Asia-Pacific region that has achieved the delivery of offshore wind power infrastructure to Europe. The total number of offshore wind power orders obtained by the company from the European market in 2023 increased by more than 50% compared to 2022, and the total demand for various offshore projects currently participating in Europe, Japan, South Korea, the United States and other places exceeds 3 million tons.
Actively expand production capacity expansion advantages, and strengthen the in-depth layout of the industrial chain to find new growth poles for the power generation business. In terms of production capacity layout, the company actively lays out the “Penglai+Tangshan+Panjin” three offshore export bases, covering all types of offshore products. Among them, the Tangshan Caofeidian Offshore Gigafactory is expected to be completed and put into operation in March 2025, which will significantly improve the company's delivery capacity for overseas single-pile and deep-sea projects; the Panjin Offshore Base will successively deliver two special carriers for offshore wind power equipment to the company in 2025. Furthermore, by continuously deepening the industrial chain layout, enhancing the company's sustainable profitability and consolidating its leading position in the industry, the Zhangwu Xiliujiazi 250MW project has achieved grid-connected power generation, generating more than 400 million kilowatts in 2023, contributing 132 million yuan in revenue. The Tangshan Caofeidian Shilihai 250MW fishery and light complementary photovoltaic project is expected to begin construction in mid-2024.
valuations
Taking into account the progress of domestic and foreign wind power projects, we lowered the company's profit forecast. We expect to achieve operating income of 51.70/70.50/8.123 billion yuan in 2024-2026, achieve net profit of 6.08/8.83/1,056 billion yuan, EPS of 0.95/1.39/1.66 yuan, and the current stock price corresponds to PE 24.1/16.6/13.9 times. Although the company's recent performance is under pressure, the company is gradually releasing domestic and foreign wind power demand. The company is a leading manufacturer of wind power towers in the world Merchants will fully benefit, and considering the company's growth, it will continue to maintain an increase in holdings rating.
The main risks faced by ratings
Wind power installations fall short of expectations; risk of fluctuations in raw material prices; capacity expansion falls short of expectations; risk of international trade policy.