Date of Report: October 29, 2024
Broker: UOB Kay Hian Private Limited
Company Overview
Goldwind Science & Technology (2208 HK) is the largest wind turbine generator (WTG) manufacturer in China, holding over 30% of the domestic market share and 14.2% of the global market share as of 2018. In the domestic offshore wind power market, Goldwind captures a significant 24.2% share. The company’s focus is on high-margin offshore WTGs and expanding into international markets to reduce reliance on the competitive domestic landscape.
3Q24 Performance Highlights
Goldwind reported earnings of RMB1,792 million for the first nine months of 2024, reflecting a 42.1% year-over-year increase. This accounts for 67% of UOB Kay Hian’s full-year earnings estimate and aligns with market expectations. Key performance drivers include the sale of wind farm products and an improved gross margin in the WTG segment.
- Revenue: RMB35,839 million, up 22.2% YoY
- Gross Margin: 16.4%, up 2.2 percentage points YoY
- Net Profit Margin: 5.0%, up from 4.3% in the prior year
Operational Metrics
Goldwind’s WTG shipment volume for the first nine months reached 9,709.8MW, marking a 9.0% increase compared to the same period last year. Notably, WTGs with capacities exceeding 6MW accounted for 57.6% of total sales, aligning with the global trend toward higher-capacity turbines.
Order Backlog
Goldwind’s order backlog reached a record high of 44,279MW, up 45.6% from the end of 2023. The backlog growth was fueled by a resurgence in domestic wind turbine tenders, which increased by 93% year-over-year to 119.1GW. Goldwind’s overseas order backlog as of September 2024 was 5,536MW, highlighting the company’s successful globalization efforts.
Financial Forecasts
UOB Kay Hian maintains its positive outlook, projecting strong revenue growth and stable gross margins in the coming years. Key forecasts include:
- Net Turnover: Projected to grow to RMB57,437 million in 2024 and further increase to RMB68,443 million by 2026.
- EBITDA: Expected to grow by 29.9% in 2024, reaching RMB4,418 million.
- Net Profit: Forecasted at RMB2,673 million in 2024, doubling from the previous year.
Goldwind’s gross margin is anticipated to stabilize around 16% in 2024, with WTG segment margins recovering as the company focuses on offshore WTG and overseas markets.
Strategic Initiatives
Goldwind is actively diversifying its market base, with a presence now spanning 42 countries. In 2024, the company entered new markets, including Morocco, the Philippines, Georgia, and Namibia, achieving a cumulative overseas WTG installation of 8,051MW.
Shipment Guidance
For 2024, Goldwind targets WTG shipments of 18-20GW, consistent with the previous year’s guidance. The company aims to ship 2GW for overseas orders in 2024, increasing to over 3GW in 2025, with offshore WTG shipment targets set at 1GW in 2024 and close to 2GW in 2025.
Valuation and Recommendation
UOB Kay Hian maintains a “Buy” rating for Goldwind, with a revised target price of HK$7.90. The recommendation is based on a discounted cash flow model, using a WACC of 4.6% and a terminal growth rate of 3%. The company’s strong order backlog, international expansion, and focus on high-margin segments support this valuation.
Key Growth Catalysts
- Increased Demand: Stronger-than-expected WTG demand, particularly for offshore and high-capacity turbines.
- Margin Recovery: Rebounding prices in the WTG segment are expected to drive further margin expansion.
