The company released its 2024 semi-annual report. The company's performance increased 10.83% year-on-year in the first half of the year. The main wind power business revenue grew steadily, and international orders, revenue and gross margin increased simultaneously. Maintain an increase in holdings rating.

Key points to support ratings

The company's performance in the first half of 2024 increased 10.83% year on year: the company released the 2024 semi-annual report, and 2024H1 achieved revenue of 20.202 billion yuan, an increase of 6.32% year on year; realized net profit due to mother of 1.387 billion yuan, up 10.83% year on year; realized net profit without return to mother of 1.373 billion yuan, an increase of 33.01% year on year.

According to the performance calculation, 2024Q2 achieved net profit of 1.054 billion yuan, an increase of 6251.6% year on year and 216.94% month on month. 2024H1, the company's comprehensive gross margin increased 0.98 percentage points year on year to 18.25%, and the comprehensive net margin increased 0.03 percentage points year on year to 7.11% year on year.

Profit from the main business improved, and high-margin units of 6MW and above became the company's main model: in the first half of 2024, the company's fan and parts sales achieved operating income of 12.768 billion yuan, an increase of 0.21% year on year; gross margin increased 6.29 percentage points year on year to 3.75% year on year. In the first half of 2024, the company achieved 5.15 GW of external sales capacity of the unit. As the process of large-scale fans continues to accelerate, the sales capacity of 2024H1's 6MW and above units increased 97.05% year-on-year, making it the company's main model.

Wind farm development revenue increased, and gross margin was under pressure: 2024H1 added 1.08 GW of grid-connected installed equity capacity for domestic and foreign self-operated wind farms, and 225 MW of grid-connected capacity was transferred. The increase in the scale of power plants led to a year-on-year increase of 31.49% to 4.401 billion yuan in the company's wind farm development business revenue. In addition, the gross margin of 2024H1's wind farm development division fell 12.89 percentage points year on year to 56.44%. We believe this was mainly affected by incoming wind conditions. The average number of hours used by 2024H1's domestic units fell 76 hours to 1,268 hours year on year.

The internationalization process is accelerating, and international orders, revenue and gross margin are growing at the same time: the company actively promotes the internationalization strategy, has successfully developed markets in North America, Oceania, Europe, Asia, South America and Africa, and has signed project contracts in the Middle East, North Africa, Central Asia, South Africa, South America, Europe, etc. 2024H1's overseas sales revenue reached 4.779 billion yuan, up 83.88% year on year. The revenue share increased from 13.68% in the same period last year to 23.65%; gross margin increased 5.95 percentage points to 17.02%. As of June 30, 2024, the company's overseas order volume was 5,173.12 MW, an increase of 12.44% over the previous year. We expect that as the quality of the company's products and market influence continues to improve, its overseas revenue is expected to grow further and drive the company's development.

valuations

Under the current share capital, based on the company's semi-annual report, we adjusted the company's 2024-2026 earnings forecast to 0.47/0.62/0.74 yuan (the original 2024-2026 diluted forecast was 0.51/0.62/0.75 yuan), corresponding to a price-earnings ratio of 17.8/13.6/11.3 times; maintaining an increase in holdings rating.

The main risks faced by ratings

Price competition exceeds expectations; raw material prices are higher than expected; industrial policy risks; large-scale cost reduction falls short of expectations; demand for wind power falls short of expectations; overseas development falls short of expectations.