Goldwind Science & Technology Co., Ltd. (ticker: 002202.SZ), a leading wind turbine manufacturer, reported strong third-quarter results for 2024, underpinned by the growth of the wind power industry and supportive government policies. During the earnings call, company executives outlined the significant increase in sales and backlog, improved profitability, and strategic expansion into global markets.
Key Takeaways
- Goldwind’s Q3 performance was marked by a 9% increase in external sales capacity and a record high order backlog of 44.28 gigawatts.
- The company’s comprehensive profit margin rose by 2.21% year-over-year, with notable improvements in net profit and return on equity.
- Financial stability was highlighted by a healthy interest-bearing debt structure and active measures to manage financial risks.
- Goldwind continues to expand its global footprint, successfully entering markets in Morocco, the Philippines, Georgia, and Namibia, now covering 42 countries worldwide.
- The company is benefiting from favorable policies in China, promoting wind power, particularly in rural regions.
Company Outlook
- Goldwind anticipates continued support from Chinese government policies aimed at accelerating the development of renewable energy.
- The company expects to maintain a healthy asset liability ratio by year-end through improved business models and operational efficiency.
Bearish Highlights
- The company acknowledges the need to further optimize its profit and tax structure, despite reductions in fees and asset impairment.
- Goldwind is working to close the gap between its targets and current performance in inventory turnover days and trade receivables.
Bullish Highlights
- The company’s revenue and net profit margin performance align with its growth momentum, indicating a robust and healthy market position.
- Goldwind’s international expansion strategy is paying off, with significant installations and a strong order backlog in overseas markets.
Misses
- There is still a gap between the company’s inventory management target and its current performance, which Goldwind is striving to improve.
- The asset liability ratio has experienced a slight increase due to the company’s business model pressure.
Q&A Highlight
- The Q&A session addressed investor concerns about the company’s financial health and strategic direction, with executives providing clarity on Goldwind’s operational and financial strategies.
Goldwind’s third-quarter earnings call underscored the company’s strong performance amid a favorable industry environment. With a focus on growth, efficiency, and global market expansion, Goldwind Science & Technology is positioned to capitalize on the increasing demand for renewable energy solutions.
Full transcript – Goldwind (002202.SZ) Q3 2024:
Operator: Ladies and gentlemen, welcome to join us for Goldwind 2024 Q3 update. All the participants are muted now. Now let’s welcome the moderator, please.
Unidentified Company Representative: Dear investors, good afternoon. I’d like to welcome you to join us for Goldwind Science & Technology 2024 Q3 Result Announcement. Joining us here today are VP, Board Secretary and the Company Secretary, Madam Ma Jinru; CFO, Mr. Wang Hongyan; Group VP and the GM of Wind Power Industrial Company, Mr. Chen Qiuhua. Ladies and gentlemen, the meeting will be divided into two parts. First of all, we’re going to welcome Madam Ma to work through Q3 development and operational. Then we’re going to have Mr. Wang Hongyan to walk you through the financials, and then we will get into the Q&A session. Now, let’s welcome Madam Ma please.
Ma Jinru: Distinguished investors, I would like to thank you for joining us for this meeting and thanks for your committed support to Goldwind Science & Technology. First of all, please allow me to walk you through the industry and our business. Let’s take a look at the industry first. Now, if you have a slide in your hands, please go to slide 3. On slide 3 on the left side, it shows the global annual new installation which has already been disclosed in the interim results. But on the right side, that is the wind power energy becomes the best economy renewable energy source. Especially if you see from 2010 to 2023, the localized cost of global onshore wind power has been declined by 70%, decreased from 0.111 USD per kilowatt hour to 0.033 USD per kilowatt hour, but in China, the price is already 0.027 USD per kilowatt hour, while at the same time the cost of global offshore wind power declined by 63% from 0.203 USD per kilowatt hours to 0.075 USD per kilowatt hour, while in China this number was 0.07 USD per kilowatt hour in 2023. If we take a look at the wind power development in China, in the first nine months of 2024 and generally speaking, China recorded 39.1 gigawatts of the newly grid connection, an increase of 16.8%. By the end of September, China’s cumulative grid connected wind power accounted for 479.6 gigawatts hitting 15.2% of China’s power mix, while the thermal power was 44.9%. On the right side, we show you the electricity production as well as the utilization hours. Majority of those data seem available in our interim result. I’m not going to elaborate on that further. Please go to slide 5. Slide 5 shows you the public tendering and the price. You can see by the end of September, domestic public tender market totaled 119.1 gigawatt, grow by 93% on yoy basis; onshore 111.5 gigawatts, offshore total 7.6 gigawatts, so great momentum has been registered for public tender market. While on the right side, by the end of September the overall average bidding price of all WTG suppliers is around 1475per kilowatt. In Q3 of this year there are also some new policies being rolled out regarding energies and the new development. For example, on August 2nd, 2024 the General Office of the State Council issued a work plan for accelerating the construction of the new control system for carbon emission and on the August 06, 2024 the National Development and Reform Commission has already released action plan for accelerating construction of a new power system along with the implementation plan for larger scale equipment updates in key energy sectors on 21st of August along with the new policy rules for the issuance and trading for green power certificate for renewable energy on the 26 October. All the policy issues create commitment and support in developing new energy industry by the central government. On the right side we show you enhancing the advancement of wind power in rural regions, following the notice on organizing the wind power actions in rural regions. In April, Anhui, Gansu, Shanxi and other regions released action plans. Especially in August 2024, the general office of NEA published the notice regarding the issuance as Outline for the Preparation of the Overall Plan for the ‘Wind Power Action in Rural Regions. The notice indicates national energy regulatory authority will establish a regular scheduling mechanism to comprehensively oversee the implementation process of the rural wind power projects. Now let’s take a look at the business review of the company. On slide 8 we show you the sales. From January to September, our external sales capacity totaled 9,709 megawatts, up by 9%. We have a very few WTG under 4 megawatt while we have more sales regarding the WTG above 4 megawatt already reaching 5,596 megawatt. For WTG between 4 megawatt to 6 megawatt, the sales totaled 4,042 megawatt. Well, let’s take a look at the backlog we have. Well, by the end of this year, we have a historical high order backlog rating 44.28 gigawatts among which 41.8 gigawatt are for external orders, including 11.91 gigawatts for successful bidding and 29.47 gigawatt for signed contracts. And there are also some external order mix we can generate your concern for. You can see that around 73% of the WTGs are actually above 6 megawatt. For our global business we also register very smooth expansion where for this year we continue to extend the global market especially in Morocco, the Philippines, Georgia and Namibia, we expanded our business successfully. Our business covers six continents and 42 countries worldwide. By the end of Q3, cumulative installation in overseas market is already more than 8,000 megawatts. In North America, Australia and South America, the installation already exceeds 1 gigawatt. In Asia, excluding China, it’s already more than 2 gigawatts. And our order backlog in overseas market is around 5,536 megawatts. Let’s now take a look at wind power generation. By the end of Q3, our attributable, grid-connected wind power project totaled 8,138 megawatts and around 48% being located in northeast part of China where the company added another 1122 megawatt of attributable, grid-connected wind power capacity home and aboard from January to September this year. And we also have a capacity under construction. So in that way you can see that here now and our total self-run wind farms recorded 1,784 hours of utilization. Okay, next, let me welcome Mr. Wang to walk you through the financials.
Wang Hongyan: Dear investors, good afternoon, my name is Wang Hongyan from Goldwind. I’d like to thank you for KPNI [Phonetic] on the wind farming industry and thanks for supporting Goldwind. Let me just walk you through the Q3 financials. Well, we have characterized the financials into three part — four parts. First one are for profitability index, second one are operational index. We’re also going to show the solvency position and the final part we’re going to talk about the cash flow. For the four parts, I am going to use very different color in helping you to understand the performance. The light blue represents the performance of the four quarters in 2024 and the dark blue color represents the first three quarters of 2024. Let’s take a look at on the left upper corner we show you the revenue of the company. Well for company, generally speaking, you see the full year revenue of 2023 and the first three quarter revenue in 2024, you can see that in the first three quarters our total revenue totaled 35,839 million. Where on the right side, I show you the profit margin, the same as the full year of 2023 and first three quarter of 2024, you can see in 2024, for the first three quarters, the comprehensive profit margin was 16.43%, up by 2.21% on yoy basis. But I’d like to make a special announcement or clarification, during the interim results we have already shared with all the shareholders. After adjusting, the profit improved by 2.21%. So last year we did the comparison tables for your reference. On the left hand corner, which is the net profit attributable to owners of the company, it was increased by 531 million. Where you can see that general shipping for net profit attributable to the owners, it was 1,792 million, while at the same time, our asset empowerment has been reduced by 120 million, further improving the equity efficiency, while at the same time the fees [Phonetic] being reduced by 260 million continue to optimize our profit structure and tax structure. On the right hand corner, the weighted average return on equity has been improved by 1.45%. As we continue to grow the net profit, the ROE has been further optimized. So in the first three quarters of the company, our revenue, net profit margin as well as ROE truly performed in line with our growth momentum. Compared with the same period of last year, we now have a more robust and healthy margin mix. On slide 14, I show you the operational index. On the left side, we showed you the base of the trade receivables. You can see here now we still have a very stabilized trade receivable ratio. It is around 18%, 19 or 20% respectively in the three quarters of this year. While at the same time, the date of the trade receivable was 184 days, still healthy, but still filling a gap compared with our target. We are trying very hard to improve the receivable management with enough to heed our internal efficiency improvement plan. While on the right side, we show the sales of the inventories excluding our new product, that is power station business. The actual inventory to total asset ratio was 8.86%. The inventory turnover days with 95 days, still in par with what we saw last year. Compared with our inventory management target, there’s still a gap. Regarding the turbine delivery circle and the construction circle of the power station, we are trying very hard in improving the inventory management and continue to hit our efficiency optimization target. On slide 15, we show you the solvency position along with the structure. On the left side we show you the interest bearing debt. You can see interest bearing debt and to the total liability, it used to be 55% in Q1, then we optimized to 51% in Q2 and 48% in Q3. As a matter from the interest borrowing debt perspective or the structural perspective, it’s much better than the industrial average, which can also help us to further navigate the business and financing capacity. But at the same time, the interest bearing debt continues to go down and our loan interest rate continues to go down starting from 2021 to now. And for the company, we are going to have a great guarantee for our future development regarding the interest bearing debt. On the right side for asset liability ratio, at the beginning of this year it used to be 71.44% and the total assets used to be 143.5 billion. By the end of Q3, the updated ratio was 33%, total asset was 156.3 billion. The asset liability ratio went up slightly. The reason is because our business model continue to pressure the asset liability ratio where for sure the company also took active measures in responding to the ever increasing asset liability ratio. For example, we continue to optimize business model, accelerate product delivery and also continue to improve the receivable collection, but at the same time we further improve the trading of the power plantation and we also continue to improve the efficiency so the receivables and inventories management, which I have already mentioned just now, and we also continue to improve the non-carbon asset efficiency including the capital expense. So all in all, with the financial risk being well controlled, by the end of this year, we do hope we will be able to well control the assets that are visible rates ratio to a healthy level. For slide 16, we show you the cash flows. On the left side we show you the cash to total asset ratio. Cash to total asset ratio was 6.99%, which indicates a great decline. This is because we continue to improve the safety and liquidity. We also received reserve for the principles. But you can see that for each quarter our financing reserve should be no less than 12 billion, so that’s the reason we will be able to always guarantee the reserve which can help to further reduce the cost. On the right side we show you net operating cash flows. You can see in Q1, Q2, Q3, at least the trend is in line with what we saw last year. In H1 of this year we have the station inventories, which lead to more external expenses, but in Q3 we have a single month positive performance. And in Q4, we are also going to register positive performance. And for the full year, our operational cash flow is going to hit the company expectation. That’s all for the financials of the Q3 performance. Thank you very much.
Q –:
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