Incident: On August 29, 2024, the company released its 2024 semi-annual report. 2024H1 achieved revenue of 1.356 billion, a year-on-year decrease of 34.2%; net profit to mother was 0.174 billion, a year-on-year decrease of 36.23%; net profit after deducting non-return to mother was 0.161 billion, a year-on-year decrease of 35.62%. Affected by the slow start of construction in the domestic downstream market and falling prices, etc., the company's overall business scale has declined.

Looking at the single quarter, 24Q2's revenue was 0.893 billion, down 25.96% year on year, up 92.91% month on month; net profit to mother was 0.121 billion, down 38.92% year on year, up 128.16% month on month; net profit after deducting non-return to mother was 0.116 billion, down 34.72% year on year, up 158.66% month on month.

Continuously optimize product and market structures, and improve gross margin and cash flow. 24H1 gross margin was 28.57%, up 4.61 pcts year on year, net margin was 12.82%, down 0.41 pcts year on year; net operating cash flow was 0.247 billion yuan, an increase of 0.495 billion yuan over the same period last year. The profit structure and repayment quality have been further improved. The main reasons are: 1) overseas business accounts for more than 60% of revenue, an increase of 16 pcts over the previous year, mainly contributing to overseas offshore business, with a single pile foundation as the core product; 2) increasing the total revenue share of overseas and domestic offshore businesses to more than 57%; 3) actively reducing the size of onshore wind towers with low yield and poor repayment conditions.

Several offshore projects in Europe have been delivered one after another: 1) Scotland's Moray West (48 oversized single piles, 30 transition sections, 12 sea towers, total delivery volume of about 0.11 million tons) has been delivered; 2) France's Noyllesd'Yeu et Noirmoutier offshore wind farm has a total of 61 single piles. Currently, three batches of 41 single piles have been delivered, and the final batch of products will be shipped soon; 3) Denmark's Thor offshore wind power 1GW project is responsible for autonomous transportation for the first time The product has been shipped; 4) The German NSC offshore wind power 1.6GW project, including 105 single piles and ancillary structures, has successfully completed the first phase of trial production.

Investment advice: We expect the company's 2024-2026 revenue to be 4.72, 6.53, and 8.59 billion yuan, respectively, with growth rates of 9%/38%/32%; net profit to mother of 0.57, 0.9, and 1.31 billion yuan, respectively, with a growth rate of 33%/59%/46%, corresponding to 24-26 PE of 23x/14x/10x. Considering the demand in the wind power industry, the company is expected to deepen its “double seas” strategy and capacity expansion, increase global market share, have outstanding growth, and maintain a “recommended” rating.

Risk warning: Risk of industry demand falling short of expectations, risk of large fluctuations in raw material prices.