Incident: The company released its 2024 three-quarter report. In the first three quarters of 2024, it achieved revenue of 2.306 billion yuan, net profit of 0.282 billion, gross profit margin of 27.2%, +3.2pct year; 24Q3 achieved revenue of 0.95 billion, -25.3% YoY, +6.4% month-on-month, net profit 0.108 billion, YoY -20.1%, -10.6% month-on-month, gross profit margin 25.2%, YoY- 2.3 pct, month-on-month ratio - 1.8 pct.

Performance review: The company's performance declined month-on-month in the third quarter, mainly due to 1) adjustments in the delivery model for overseas offshore products, which made the pace of confirmation of overseas marine products slower than the actual delivery pace; 2) the power generation business was affected by seasonal factors and the profit level was lower; 3) Q3 management expenses increased 0.03 billion month-on-month.

Strong global ocean breezes are driving a rapid rise in basic demand for ocean breezes. Domestically, there has been significant progress in key projects, and the pace of approval, tendering and construction has gradually accelerated, raising demand expectations for 25-26. Overseas, in the first half of the year, Germany and the Netherlands each announced the results of the 8/4GW seabreeze tender. In the second half of the year, Denmark initiated the largest seabreeze tender process, France announced that it will launch the AO10 process in early '25 and plan to bid for 9.2GW offshore wind power, and the UK will award more than 5GW offshore CFD contracts. At the same time as the European region is rapidly gaining momentum, the seabreeze market in other regions of the world is also beginning to flourish. South Korea announced in August that it plans to auction 7-8 GW of ocean wind capacity from the second half of '24 to the first half of '26. Japan has completed two rounds of ocean wind project auctions, and the results of the third round are expected to be announced by the end of '24. The global ocean wind industry is booming, laying the foundation for high growth in 2025-2030 and further boosting basic demand for ocean wind fans.

Overseas offshore delivery is growing rapidly, and abundant on-hand orders contribute to incremental performance flexibility. In the first three quarters of 2024, the company delivered the Scottish MW Sea Tower Project and the French NOY Single Pile Project, released two ships of the Danish Thor Project single pile products, and completed trial production of the first batch of products for the German NSC Sea Wind Group Project. At the same time, construction has also begun on a very large single-pile project newly signed in Q3 to be provided for a seabreeze project in the Baltic Sea region in 2025. According to incomplete statistics from the announcement, up to the end of the 22-year period, the company has signed a total of overseas orders with a total value of more than 1.2 billion euros (some order amounts are disclosed). With the gradual release of overseas orders, the profit level of overseas offshore engineering is better, supporting the rapid growth of the company's performance.

Cooperate with the world's leading floating sea breeze developers to cultivate another performance growth pole in the future. In September '24, the company signed a “Memorandum of Understanding” with BlueFloat Energy, the world's leading floating developer, to cooperate in the construction of a floating offshore wind power supply chain. The focus of cooperation includes technological innovation, supply chain optimization and decarbonization, in line with the future development trend of offshore floating wind power.

Profit forecast and investment rating: The domestic Seafreeze downstream market has gradually resumed, shipments have increased significantly, and profit levels have gradually been restored; overseas Seafreeze market companies have a beach-grabbing layout, obvious first-mover advantage, full on-hand orders, and excellent profit levels, contributing to incremental flexibility as orders are gradually fulfilled. We expect the company to achieve net profit of 0.45/0.75/1.12 billion yuan in 24-26, respectively, with year-on-year increases of 5%/70%/49%, respectively. The current stock price corresponds to PE 34/20/13 times, respectively. First coverage, giving a “buy” rating.

Risk warning: Seabreeze demand falls short of expectations, risk of price fluctuations of major raw materials, risk of market competition risk, risk of overseas business profits falling short of expectations, risk that project progress falls short of expectations, risk that public data used in research reports may lag behind information, etc.