The domestic manufacturing business dragged down performance, and cash flow improved sharply in the first half of the year. In the first half of the year, the company achieved revenue of 1.356 billion yuan, or -34.20% year-on-year; net profit to mother was 0.174 billion yuan, or -36.23% year-on-year. The gross sales margin for the first half of the year was 28.57%, +4.61 pct year on year; net profit margin was 12.82%, -0.41 pct year on year. The company's net operating cash flow in the first half of the year was 0.247 billion yuan, an increase of 0.495 billion yuan over the previous year.

Second-quarter results increased sharply month-on-month, and domestic business dragged down gross profit margins. In the second quarter, the company achieved revenue of 0.893 billion yuan, -25.96% year-on-year, +92.91% month-on-month; net profit to mother 0.121 billion yuan, -38.92% year-on-year, +128.16% month-on-month. The gross profit margin for the second quarter was 27.00%, -0.47pct yoy, -4.60pct month-on-month, net profit margin 13.53%, -2.87pct yoy, +2.09pct month-on-month.

Domestic revenue has declined sharply, and gross export margin has been rising steadily. Wind power equipment revenue in the first half of the year was 1.223 billion yuan, -38.65% year on year, gross profit margin 22.65%, +0.92pct year on year. ; Revenue from new energy generation was 0.118 billion yuan, +164.26% year over year, gross profit margin 85.87%, -14.13% year over year. Domestic revenue in the first half of the year was 0.598 billion yuan, -48.04% year on year, gross profit margin 29.81%, +8.37 pct year on year. ; Overseas revenue was 0.758 billion yuan, -16.72% YoY, gross profit margin 27.59%, +0.45pct.

Domestic land tower business has been actively contracted, and domestic sea wind demand has fallen short of expectations. Since this year, domestic turrets have continued to be under pressure due to multiple factors such as changes in technology routes and increased competition in the industry. The company has taken the initiative to reduce the scale of the turret business with low yield and poor repayment conditions. Domestic sea breezes are affected by multiple factors, and construction progress falls short of expectations. It is expected that with the successive approval of local projects, domestic sea breezes are expected to enter the peak commencement period.

Overseas projects are progressing smoothly, and the leading position of pipe piles going overseas is stable. Up to now, the company has completed the delivery of all products for the Scottish MW project, the single pile, transition section, and sea tower. This is the company's first large-scale supply project to the European seabreeze market. In the first half of the year, the company completed the shipment of 41 single piles in three batches for the French NOY project; the first batch of TP-less (no transition section) single piles built by the company for the Danish Thor project completed the first batch of shipments, and the German NSC project completed the first phase of trial production.

Risk warning: Overseas market development falls short of expectations; raw material prices have risen sharply; industry competition has intensified.

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

The profit forecast was raised considering the company's overseas business performance and domestic and foreign gross margin differences in the first half of the year. We expect the company to achieve net profit of 0.511/0.817/1.235 billion yuan in 2024-2026 (the original forecast value was 0.646/0.93/1.319 billion yuan), and the current stock price corresponding PE is 25/16/11 times, respectively, maintaining the “better than market” rating.