H1 results of 1.39 billion yuan, +10.8% YoY. In the first half of 2024, the company achieved operating income of 20.2 billion yuan, +6.3% year on year; realized net profit of 1.39 billion yuan, +10.8% year over year; achieved net profit of 1.37 billion yuan without return to mother, +33.0% year over year, mainly due to a significant improvement in the gross margin of the wind power sector business and a reduction in income tax expenses. By business, sales revenue from fan and parts sales/wind farm development/ wind power service business was 12.77/4.4/2.37 billion yuan, respectively, +0.2%/+31.5%/+2.6%; gross margin was 3.75%/56.4%/24.8%, respectively, with a year-on-year change of +6.3pct./-12.9pct./ +9.6pct. In the second quarter of 2024, the company achieved operating income of 13.22 billion yuan, -1.6% year-on-year, +89.5% month-on-month; realized net profit of 1.05 billion yuan, +6252% year-on-year, +217% month-on-month; realized net profit without return to mother of 1.04 billion yuan, +9789% year-on-year and +217% month-on-month.

The results of the globalization strategy are gradually showing. The company's business has spread across six continents and 42 countries, and the installed capacity in North America, Oceania, Asia (excluding China) and South America has all exceeded 1 GW. In the first half of 2024, the company achieved overseas business revenue of 4.78 billion yuan, +83.9% year on year, accounting for 23.7% of overall revenue, +10.0pct year on year. ; The gross margin of overseas sales was 17.0%, +6.0 pct.

In the first half of the year, 5.15 GW of fans were sold, and 35.6 GW was ordered from outside. In the first half of 2024, the company's wind turbine sales capacity was 5.15 GW, -10.9% year on year; fan sales revenue was 12.77 billion yuan, +0.2% year over year. The large-scale expansion of wind turbines continues to accelerate, with units of 6MW and above accounting for 59% of sales capacity in the first half of the year. As of the end of June 2024, the company had external orders of 35.6 GW, +26.4% YoY; of these, overseas orders were 5.2 GW, +12.4% YoY.

Technical reforms have promoted an improvement in the gross margin of fan sales. As the company's technical route gradually shifts to semi-direct drive and double feed routes, the profitability of the company's wind turbine sales business continues to improve. In the first half of 2024, the average sales price of the company's fans was 2,479 yuan/KW, +12.5% year over year; gross profit per unit was 479 yuan/KW, which was corrected year on year (after retroactive adjustment); gross margin was 3.75%, +6.3 pct.

Wind farm investment and development are progressing steadily. In the first half of 2024, China and abroad added 1.08 GW of grid-connected installed capacity, 225 MW of equity transfer capacity, 0.93 billion yuan of transfer revenue, 0.11 billion yuan of equity investment income from the transfer of wind farm projects; domestic power generation capacity was 7.284 billion kWh, +12.9% year on year, total domestic and foreign power generation revenue was 3.47 billion yuan, +3.7% year on year. The subsidiary Tianrun Xinneng achieved a net profit of 1.31 billion yuan, -29.5% year over year. The company's wind farm investment and development business achieved sales revenue of 4.4 billion yuan in the first half of the year, +31.5% over the same period last year. As of the end of June 2024, the company's accumulated domestic and foreign equity grid installed capacity was 8.14 GW, and the wind farm capacity under construction was 3.69 GW.

Risk warning: raw material prices have risen; the industry's installed demand falls short of expectations; the company's wind power development sector's business development has fallen short of expectations; market competition has intensified; geopolitical risks.

Investment advice: Raise profit forecasts and maintain the “better than the market” rating.

Considering that the progress of fan sales loss reduction exceeded expectations and the results of overseas business expansion were shown, we raised our profit forecast. The company is expected to achieve net profit of 1.92/2.75/3.27 billion yuan in 2024-2026, an increase of 44.0%/43.4%/18.9% over the previous year. The current stock price is 16.3/11.4/9.6 times PE, respectively, maintaining the “superior to the market” rating.