FY2023 and 1Q24 results are in line with market expectations
The company announced FY2023 and 1Q24 results: the company's revenue in 2023 was 18.73 billion yuan, up 7.7% year on year; net profit to mother was 414 million yuan, down 32.8% year on year. 1Q24's revenue was 3.75 billion yuan, up 7.8% year on year, and net profit to mother was 71 million yuan, down 4.2% year on year. The company's FY2023 and 1Q24 results met market expectations.
The company's business progressed actively across the board in 2023. In 2023, the company delivered 8.47 GW of fans, an increase of 18.9% over the previous year, of which it completed the shipment of about 500 MW offshore fans for the Zhejiang Guodian Xiangshan Project.
In 2023, the company added 15.8 GW of new orders, including 1.3 GW of overseas orders. By the end of 2023, the company had accumulated 23.9 GW of active orders, maintaining a large scale. In the power plant business, the company achieved 359 MW of additional grid-connected equity in 2023, and transferred 60 MW of power plants for the first time. At the end of 2023, the cumulative total equity connected to the grid was 781 MW.
The gross margin of 1Q24 fans has rebounded. The gross margin of the company's fan business achieved 12.5% in the full year of 2023, of which 2H23 gross margin has dropped to 10.3%. The 1Q23 company achieved 2.1 GW of fan shipments, and the fan gross margin rebounded to about 13%, mainly due to the reduction in the cost of larger units and the reduction in parts procurement costs.
Development trends
The gross margin of fans is expected to show an upward trend, and various businesses are actively developing. In 2024, we expect that as parts costs fall, the company's fan gross margin is expected to continue the upward trend of 1Q24, with 2H24 expected to be higher than 1H24. The company plans to add 600 MW power plants in 2024, and has also announced the transfer of 250 MW power plants. We believe that the company's power plant business is expected to continue to grow incrementally. On the offshore and overseas side, we expect the company to continue to actively fulfill orders at sea and overseas in 2024 as domestic sea wind demand picks up and overseas tenders are gradually released.
Profit forecasting and valuation
We keep the company's profit forecast for 2024 unchanged. As the gross margin of the company's fans has shown an upward trend, and the smooth transfer of power plants has begun, we raised the company's 2025 net profit forecast by 20.4% to 888 million yuan. The company's current stock price corresponds to 10.7 and 7.8 times the price-earnings ratio for 2024 and 2025. We maintain the company's outperforming industry rating and maintain the company's target price of 13.1 yuan, corresponding to the price-earnings ratio of 14.8 and 10.7 times in 2024 and 2025, with 37.7% upside compared to the current stock price.
risks
Demand in the wind power industry fell short of expectations; increased competition in the industry led to a decline in profit margins.