Key points of investment:

Incident: The company released its report for the third quarter of 2024. In the first three quarters, the company achieved revenue of 1.061 billion yuan, a year-on-year decrease of 31.76%; net profit to mother was 0.087 billion yuan, an increase of 33.44% over the previous year. Among them, the third quarter achieved revenue of 0.699 billion yuan, a year-on-year increase of 35.40% and a month-on-month increase of 194.29%; net profit to mother of -0.021 billion yuan was achieved, and the performance was in line with expectations.

Shipments increased month-on-month, and gross margin improved significantly. In the third quarter, with the commencement of the Haifeng project, shipments of the company's piling products increased, and revenue increased 194.29% month-on-month; at the same time, as capacity utilization increased, unit costs declined, and profitability improved markedly. Q3 achieved a gross profit margin of 8.15%, an increase of 1.58/7.93 pcts month-on-month, respectively. However, asset impairment affected short-term profits. Of these, a total of 0.053 billion yuan was deducted in Q3, most of which were contract asset guarantees. As the project warranty period expires, the impact of impairment on this type of asset will decrease.

Inventories and contract liabilities have increased, and performance flexibility will soon be released. As of 2024Q3, the company's inventory and contract liabilities reached 1.691 billion yuan and 0.409 billion yuan respectively, up 180.43% and 564.58%, respectively. Currently, the seabreeze construction problem in the key region of Jiangsu has been solved. Offshore wind power has already entered the eve of large-scale construction. Offshore infrastructure, as a part of special needs for sea wind, will significantly benefit from the growth of ocean wind, and the company is expected to take the lead in benefiting.

Maintaining a “buy” rating: Maintaining the profit forecast, the net profit due to mother for 2024-2026 is expected to be 0.327, 0.725, and 1.109 billion yuan, respectively, corresponding to PE of 44, 20, and 13 times, respectively, maintaining the company's “buy” rating.

Risk warning: Haifeng's installed capacity falls short of expectations; the sales price of the company's products falls short of expectations; wind farm investment income falls short of expectations; and stock trading fluctuates abnormally.