Date of Report: October 29, 2024
Broker: UOB Kay Hian Private Limited
Company Overview
Goldwind Science & Technology (2208 HK) is China’s leading wind turbine generator (WTG) manufacturer, capturing over 30% of the domestic market and 14.2% globally as of 2018. It also holds a 24.2% market share in China’s offshore wind power sector.
Stock Information
- Share Price (as of report): HK$6.91
- Target Price: HK$7.90, representing a potential upside of 14.3%
- Market Cap: HK$45,793.4 million (US$5,892.6 million)
- 52-Week High/Low: HK$4.46/HK$2.75
Financial Highlights for 3Q24
Goldwind reported earnings of Rmb1,792 million for the first nine months of 2024, marking a 42.1% year-over-year increase. This figure aligns with both UOB Kay Hian’s and the market consensus estimates. Key performance metrics include:
- Revenue Growth: 22.2% YoY, reaching Rmb35,839.2 million.
- Consolidated Gross Margin: Improved to 16.4%, up by 2.2 percentage points year-over-year.
- Net Profit Margin: Increased to 5.0% from 4.3% in the prior period.
Operational Performance and Strategic Focus
- WTG Shipment Volumes: Goldwind recorded a 9% YoY increase in WTG shipments, totaling 9,709.8 MW for 9M24.
- High-Margin Focus: The company is shifting focus toward high-margin offshore WTGs and expanding overseas markets to offset the impact of intense domestic competition, which continues to compress average selling prices.
- Management’s 2024 Guidance: Goldwind aims to achieve an annual shipment target of 18-20 GW, maintaining an overseas shipment goal of 2 GW. Offshore shipment volume has been halved to 1 GW, in line with slower-than-anticipated industry installations.
Record Order Backlog
Goldwind’s order backlog reached an unprecedented 44,279 MW, reflecting a 45.6% increase from the end of 2023. This surge in backlog is partly attributed to a strong recovery in domestic wind turbine demand, with open tender volumes reaching 119.1 GW, a 93% YoY growth.
Overseas Market Expansion
Goldwind’s strategic focus on international markets continues to gain traction:
- New Market Entries: In 2024, Goldwind expanded into Morocco, the Philippines, Georgia, and Namibia.
- Overseas Order Backlog: Currently stands at 5,536 MW, with cumulative overseas installations amounting to 8,051 MW.
Future Financial Projections
Goldwind expects stable gross margins for 2024 and anticipates further improvements in WTG margins, targeting over 8% by 2025. Key financial forecasts for the upcoming years include:
- Revenue Growth: Projected at 14.3% in 2024 and 9.6% in 2025.
- EBITDA Margin: Expected to rise from 6.8% in 2023 to 8.8% by 2026.
- Net Profit Margin: Forecasted to improve steadily, reaching 5.3% by 2026.
Valuation and Investment Recommendation
The report maintains a BUY recommendation on Goldwind with an increased target price of HK$7.90. This valuation is based on a discounted cash flow (DCF) model, with an assumed weighted average cost of capital (WACC) of 4.6% and a terminal growth rate of 3%. Key growth drivers include sustained demand for WTGs, particularly high-capacity units, and continued recovery in WTG prices.
Potential Catalysts for Share Price
- Stronger-than-anticipated WTG demand.
- Potential rebound in WTG prices, bolstering profitability in key market segments.
