1H24 net profit to mother increased year-on-year

The company's 1H24 achieved revenue of 20.202 billion yuan, an increase of 6.32%; achieved net profit of 1.387 billion yuan, an increase of 10.83%. Demand in the wind power industry picked up in 24, and tenders increased year-on-year. We expect the company's EPS to be 0.58/0.70/0.77 yuan in 24-26. Comparable to the company's average PE of 9.31x in 24 years, the company maintained its leading position in the share of wind power plants, and considering that the company's high-gross margin power plant operation scale was ahead of its peers, it gave 13x PE a share for 24 years, with a target price of 7.54 yuan. Based on the average PE-TTM value of 40.86/21.83 for A/H shares in the past year, H shares are given a fixed discount for 24 years, corresponding to 6.95 times PE, corresponding to a target price of HK$4.38. A shares maintain an “increase in holdings” /H shares maintain a “buy” rating.

Industry demand has continued to grow in 24 years, and the company has sufficient fan orders. According to data from the National Energy Administration, 1H24 added 25.84 GW of grid-connected wind power capacity in China, an increase of 12% over the previous year. Looking at the tender volume, the 1H24 domestic public tender market added 66.11 GW of tenders, an increase of 47.88% over the previous year. Among them, the onshore tender volume reached 60.74 GW and the offshore tender volume reached 5.37 GW. The company achieved fan sales volume of 5.15 GW in 1H24, a year-on-year decrease of 10.94%. As of June 30, 2024, the company's external orders were 35.59 GW, up 26.40% year on year. Among them, overseas orders were 5.17 GW, up 12.44% year on year, and order reserves were sufficient.

The fan sales structure has been improved, and the proportion of large-scale fans has increased

The proportion of the company's large-scale fan sales continues to increase. 1H24 achieved a sales capacity of models above 6 MW, an increase of 97.05% over the previous year, accounting for 58.66% of all models, an increase of 32.15 pcts over the previous year. Larger scale helped the company reduce costs. On the other hand, according to Goldwind Technology's statistics, the average bid price for wind power equipment in the entire market in June 2024 was 1,465 yuan/kW, down 5.6% from the March price. The average bid price has been rising for two consecutive months, which is expected to ease the pressure to reduce costs.

The wind farm power generation business has performed well. The wind farm equity has sufficient capacity under construction. The 1H24 company's own wind farm added 1,079 MW of equity grid-connected installed capacity and 225 MW of transferred equity grid-connected capacity. The average utilization time of 1H24 domestic units is 1,268 hours, which is 134 hours higher than the industry average. By the end of June 2024, the total equity installed capacity of the company's self-operated wind farms was 8,143 MW. At the same time, the company's equity capacity was 3,689 MW, and reserves for subsequent projects were sufficient.

Risk warning: Policy progress falls short of expectations, new wind power installations fall short of expectations, and continuous rise in raw material prices have led to a decline in the company's profits.