The offshore wind power bidding in 2024H1 is almost the same as in 2023H1, while the onshore wind power bidding performs well. The offshore wind power will gradually start in the second half of the year, and the bidding is expected to exceed expectations. Bullish on wind power construction in 2025.
According to the Zhitong Finance and Economics APP, Guosheng Securities released a research report stating that the offshore wind power bidding in 2024H1 is almost the same as in 2023H1, while the onshore wind power bidding performs well. The offshore wind power will gradually start in the second half of the year, and the bidding is expected to exceed expectations. Bullish on wind power construction in 2025. Q2 whole machine profitability has improved, mainly because wind turbine prices have gradually stabilized, and the control of overall machine cost and expenses has gradually shown success. Overseas wind turbine sales have gradually been scaled up, and the cost reduction of China's whole machine industrial chain has achieved certain results, thereby driving the profitability of domestic whole machine enterprises to rebound. In addition, the profit of offshore cables is under pressure due to the slower delivery schedule, and it is expected to usher in high-voltage flexible cables bidding in the second half of the year.
Zhongsheng Securities' main points are as follows:
The wind power bidding has started, and the prices have gradually stabilized.
In 2024H1, the newly installed wind power capacity connected to the grid nationwide reached 25.8GW, a year-on-year increase of 12.4%. Among them, the newly installed onshore wind power connected to the grid was 25.01GW, and the newly installed offshore wind power connected to the grid was 0.83GW. In 2024H1, the wind power bidding reached 66.1GW, including 5.4GW for offshore wind power and 60.7GW for onshore wind power. The offshore wind power bidding in 2024H1 is almost the same as in 2023H1, while the onshore wind power bidding performs well. The offshore wind power will gradually start in the second half of the year, and the bidding is expected to exceed expectations. Bullish on wind power construction in 2025. According to Goldwind Science & Technology data, in June 2024, the average bid price for wind power units by the whole market wind power equipment manufacturers was 1465 yuan/KW, a decrease of 11% compared to June 2023. It is expected that the bidding price for main units in 2024 will stabilize.
The wind power sector's profits declined year-on-year, mainly due to the slowdown in wind power construction speed in the first half of the year.
In 2024Q2, the sector's revenue was 85.5 billion yuan, a decrease of 1% year-on-year, and the net income attributable to shareholders was 5.22 billion yuan, a decrease of 15% year-on-year. The wind power sector's revenue slightly decreased year-on-year, and profits declined. The performance of the wind power sector in the first half of the year was poor, mainly due to the slowdown in wind power construction speed and a decrease in the delivery volume of the industry chain. Of the total 11 companies, the net income attributable to shareholders increased year-on-year, while the remaining 19 companies saw a decline. Among them, the whole machine sector achieved a significant increase in net income, with improved profitability.
Significant improvement in the profitability of the complete machine, reaching a turning point in profitability.
In Q2 2024, the revenue of the complete machine sector was 29.1 billion yuan, a decrease of 3% compared to the same period last year, and the net income attributable to the parent company was 1.48 billion yuan, an increase of 34% compared to the same period last year. The revenue of the complete machine sector decreased slightly year-on-year, while the profitability increased significantly year-on-year. The main reason for the improvement in profitability is that wind turbine prices have gradually stabilized, and the current control of complete machine costs and expenses has gradually shown success. Overseas wind turbine sales have gradually become scaled and the cost reduction of the domestic complete machine industry chain has achieved certain results, thus driving the profitability of domestic complete machine companies.
Due to the slower delivery pace of submarine cables, the profitability is under pressure, and it is expected to welcome the bidding for high-voltage flexible power cables in the second half of the year.
In Q2 2024, the revenue of the submarine cable sector was 30.76 billion yuan, an increase of 16% compared to the same period last year, and the net income attributable to the parent company was 2.3 billion yuan, a decrease of 4% compared to the same period last year. The revenue of the submarine cable sector increased year-on-year, while the profitability was under pressure. The main reason is that the progress of offshore wind power construction in Q2 has slowed down, and the delivery pace of submarine cables has slowed down. According to incomplete statistics from Guosheng Securities, a total of 29.1 GW of offshore wind power projects with flat prices have preliminarily confirmed the use of high-voltage / flexible direct cables. Both Qingzhou 57 and Fanshi 12 require grid connection by the end of 2025, so there is hope for submarine cable bidding in the second half of the year.
Due to the slower progress of offshore wind power construction, the revenue and net income of the tower section have declined.
In Q2 2024, the revenue of the tower section was 3.98 billion yuan, a decrease of 38% compared to the same period last year, and the net income attributable to the parent company was 0.319 billion yuan, a decrease of 56% compared to the same period last year. The revenue and net income of the tower section have declined significantly, mainly because the offshore wind power construction in the first half of the year did not meet expectations, resulting in the overall decline in revenue and net income of the sector. In the second half of 2024 and the first half of 2025, the offshore wind power is expected to see a substantial increase in construction, and the delivery of offshore wind power tower foundations will improve, so the profitability of the sector is expected to recover.
Investment recommendation: It is predicted that the installed capacity of offshore wind power will exceed 15 GW by 2025. Since the cost parity in 2022, more than 77.2 GW of offshore wind power projects are accelerating. Complete machine: the profitability of wind turbines is recovering, and the scale of offshore wind power generation is growing. The recommended bottom-up stocks are Goldwind Science& Technology (002202.SZ), followed by Windey Energy Technology Group (300772.SZ). Submarine cables: a high barrier link resistant to deflation, with great growth potential in deep-sea and subsea usage. The recommended stocks are Ningbo Orient Wires & Cables (603606.SH), followed by Jiangsu Zhongtian Technology (600522.SH), Hengtong Optic-Electric (600487.SH), and Shanghai Qifan Cable (605222.SH). Towers: offshore wind power foundation construction is leading the way, and demand and sure revenue are the most responsive. The recommended stocks are Titan Wind Energy (002531.SZ), followed by Dajin Heavy Industry (002487.SZ), Haili Wind Power (301155.SZ), Shanghai Taisheng Wind Power Equipment (300129.SZ), and Qingdao Tianneng Heavy Industries (300569.SZ).
Risk warning: Risks include slower-than-expected development of the wind power industry, slower-than-expected construction of offshore wind power projects, increased competition in the industry, and fluctuation in raw material prices.
