The domestic wind power market share has ranked first for 13 consecutive years, and ranked first in the global wind power market in 2023, maintaining a leading position in the industry for many years.
Zhitong Financial APP learned that Goldwind Technology is one of the earliest enterprises to enter the field of wind power equipment manufacturing in China, and after more than 20 years of development, it has already become the No1 in the industry, but in recent years, it has encountered development bottlenecks, stagnant revenues, declining profits, and net profit will decline by as much as 64% in 2021-2023. Affected by the performance, the company's market value continued to fall, and the high point of the cycle fell by 82%.
According to the data of the Energy Administration, the installed capacity of wind power in 2023 will be 440 million kilowatts, a year-on-year increase of 20.7%, maintaining a double-digit growth rate. The company's valuation has recovered this year, but the fundamentals have not shown a significant inflection point, and Q1 profits continue to be under pressure, falling by 73% year-on-year.
At present, the investment environment of Hong Kong stocks is getting better, the Hang Seng Index continues to rebound, and the money-making effect of major sectors continues to be highlighted, so can Goldwind use the market to reverse the valuation trend?
The wind power industry continues to grow
Performance is the basis of valuation, and Goldwind needs to reverse the trend of declining profits if it wants market capitalization and performance Davis double-click. According to the "14th Five-Year Plan", the annual installed capacity of more than 50 million kilowatts will be added, which also ushered in development opportunities for the wind power operation and maintenance market.
According to the data of the Energy Administration, the installed capacity of wind power in mainland China will be 440 million kilowatts in 2023, accounting for 15.1% of the total installed capacity of energy, with a compound growth rate of 16% from 2020 to 2023, but the average annual installed capacity will be 39 million kilowatts, which is more than 22% lower than the planned target. This is mainly due to factors such as wind turbine instability and wind curtailment, and the cancellation of onshore wind power subsidies has dampened the enthusiasm of participants, but after the return of market rationality, the industry is expected to accelerate under the general direction of energy transition.
It is worth mentioning that most provinces in the country have proposed to promote the use of wind power generation in the implementation plan for carbon peaking, and some provinces have put forward requirements for the development of wind power installed capacity, such as Hebei Province to reach 119 million kilowatts of wind power and photovoltaic power generation capacity by 2027, and Sichuan Province to require the total installed capacity of hydropower, wind power and solar power generation to reach more than 138 million kilowatts by 2025. Some institutions predict that the market size of China's wind power industry is expected to exceed 70 billion US dollars in 2027.
In order to better grasp the policy outlet, wind power enterprises include pure wind power enterprises and thermal power transformation enterprises, actively increase the layout of the industrial chain, control the supply chain and costs, which forces the target that relies on wind turbines as a source of income to also carry out the industrial chain layout, such as Goldwind, and continue to increase the layout of wind farms and wind power services. The competition among wind turbine participants is fierce, and strong competitors to Goldwind include Mingyang Intelligence, Envision Energy and Yunda Co., Ltd., which leads to the instability of "volume and price", and the profits of participants continue to be compressed under price competition.
Wind turbines dragged down performance
Goldwind is the leading fan company in China, and it is also most affected by the layout of the industrial chain and industry competition. From 2021 to 2023, the growth rate of wind power installed capacity will be 17%, 12% and 19% respectively, while the company's revenue growth rate will be -9.62%, -8.85% and 8.63% respectively. In fact, the company's fan shipments are still growing, but the decline in shipment prices has led to a decline in performance, deviating from the industry trend, which has also led to a continuous decline in profit margins.
In 2023, the company's wind turbine shipments will be 13.8GW, with a three-year compound growth rate of 13.62%, but the compound growth rate of wind turbine revenue will be -9.2%, which is mainly caused by the decline in wind turbine shipment prices. From 2021 to 2023, the company's wind turbine shipment prices will be 374 yuan/MW, 235 yuan/MW and 239 yuan/MW respectively. Affected by the shipment price, the company's fan profit has been losing year after year, with a pre-tax loss of 620 million yuan in 2023, with a loss rate of 1.88%.
The wind turbine business is not profitable, but the wind farm business is "ruthlessly profitable", and under the layout of the industrial chain, Goldwind's power generation business has made up for the loss of the wind turbine business. In 2023, the company's wind turbine, wind farm and wind power service revenue share will be 65.56%, 21.72% and 10.43% respectively, of which the wind farm development business has performed eye-catchingly, with a revenue growth rate of 57.96% in 2023 and a three-year compound growth rate of 43.14%.
The wind farm business is the company's most profitable business, with a pre-tax profit of 4.446 billion yuan in 2023, a profit margin of 40.73%, and a profit contribution of 176.43%, which has contributed more than 100% to profits in the past two years. As of 2023, the company has a total of 7.3GW of installed capacity of self-operated wind farms inside and outside the company, 1.8GW of new grid-connected installed capacity of domestic and foreign wind power projects, and 2.35GW of capacity under construction, accounting for nearly 50% in Northwest China.
In addition, Goldwind's wind power service business revenue has obvious volatility, and profits are also declining at an accelerated pace, with a pre-tax profit of 317 million yuan in 2023, a year-on-year decline of 69.5%, and a profit margin of 6.05%. The wind farm power generation business has saved the wind turbine and wind power service business, and the company is also increasing investment in the wind farm business, and the asset scale continues to expand, and the wind farm assets will be 76.548 billion yuan by the end of 2023, accounting for 35.43%.
On the one hand, the business still occupies the core of revenue, which has an immediate effect on improving profitability, and on the other hand, the business accounts for more than 50% of assets, while the debt ratio is 66.4%, which is lower than the 74.7% of wind farms. In 2024, the "volume" of the business may improve significantly, with 1436.34MW of wind turbine sales capacity in Q1, a year-on-year increase of 29.4%, but the "price" is still severe, resulting in revenue growth and profit continues to decline.
As of March 2024, the company's total external orders to be executed are 24.4.GW, of which 11GW are 4MW (inclusive) to 6MW units, and 12.7GW are 6MW and above, accounting for 97.1% of the total. In addition, the company has a total of 32.4GW of external orders in hand, of which 5.5GW of overseas orders and 33.7GW of orders in hand, a year-on-year increase of 13.76%. If the shipment price of wind turbines is stable, the growth of orders can drive profit optimization through scale.
Fundamentals are expected to improve
In the long run, the wind turbine business for Goldwind is mainly based on the advantages of the supply chain, and the development focus is on the wind farm power generation business, which has high profit margins and broad prospects, which will be the key to whether the valuation can return to a high level. The company's wind farm business has two main development directions, namely the development of offshore wind power and the development of overseas markets.
For example, in November last year, the company announced that in order to grasp the rapid growth opportunities of the domestic offshore wind power market, it will invest in the construction of a zero-carbon wind power industrial base in Beibu Gulf, with a total investment of 6 billion yuan; In May this year, the company officially entered the Philippine market with TBC, a leading renewable energy company in Southeast Asia, with the Kalayaan 2 wind power project, while expanding its business to 40 countries on six continents.
In 2023, Goldwind's overseas market revenue will be 7.83 billion yuan, a year-on-year increase of 82.7%, and the revenue share will be 18.46%, and it is expected to maintain a high growth trend in 2024 according to overseas orders. At present, the company's overseas layout of non-current assets accounted for only 7.57%, of which Australia and Argentina, non-current assets accounted for 1.5% and 5.53% respectively, as more overseas projects landed, overseas business will become an important growth curve for the company. In order to prevent exchange rate fluctuations from affecting overseas performance, the company announced in March this year that it would launch exchange rate and interest rate hedging business.
It is worth noting that the company actively rewards shareholders and insists on paying dividends every year, and this year announced the return plan for the next three years (2024-2026), with the cumulative profits distributed in cash in the last three years not less than 30% of the average annual distributable profits achieved in the last three years, and at the same time, medium-term dividends can be paid according to profitability. According to Oriental Choice data, since 2010, the company has paid dividends 14 times, with a dividend ratio of 33.34%.
On the whole, Goldwind's performance decline is mainly affected by the wind turbine business, and the shipment volume of wind turbines in Q1 of 2024 will increase significantly, but the shipment price is still at a low level, and the improvement in profitability is limited. The wind farm power generation business has become a key business for the company, and the increase in revenue contribution will significantly improve the company's fundamentals with high margins.
In the short term, Goldwind's valuation is still suppressed by the profitability of the wind turbine business, but in the long run, under the "dual carbon" policy, the wind power industry is still one of the sectors for long-term investment, and the company's global wind power layout has released cost advantages, and profitability is expected to improve, while its dividend payout is stable, and the long-term valuation is expected to return.