Goldwind Science&Technology Co., Ltd. (002202) Earnings Call Transcript & Summary

Ladies and gentlemen, and [indiscernible] welcome you to Xinjiang Goldwind Science & Technology 2020 Interim Results Release. [Operator Instructions] Now let's welcome the company representative to do the presentation.

Good morning, good afternoon, and good evening. I'd like to welcome you to Xinjiang for the Goldwind 2022 interim result release. Today, we are very happy to have our directors to lead all of you. They are the President, Mr. Cao, Zhigang, VP, Board Secretary Board and the Company Secretary Madam Ma Jinru; VP, Mr. Kaiguo Wang; and our CFO, Mr. Wang Hongyan. And the release will be divided in 2 parts. First, we're going to have Madam Ma to walk you through the presentation regarding the industrial review and the business review. And later we're going to have Mr. Wang to walk us through the financials results. Later, we're going to get into the Q&A session. Now let's welcome Madam Ma, please.

Okay. Distinguished investors, good afternoon, good morning, and good evening. I'd like to welcome you to join us for the 2022 interim results release. Please allow me to walk you through the market and business development of the company. Please turn to Page 3. On Page 3, we show you the global wind power market, including the new installation. The new installation and the onshore wind data is being all presented here on the left side, you know that in 2020 and in 2021 the group and new installations being kept at a very high level, especially for last year, the new installation accounted for 93.6 gigawatts with onshore wind accounted for 72.5 gigawatts. China accounted for 51% of the total new installation. On the right side, it was showing you the global weighted average housing gas. We can see from 2010 to 2021, the average cost of the global offshore wind power declined by 68%. And from the left side to the right side, it shows the biomass hydro and PV onshore and offshore. So you can really say that the PV for the past few years, the COU decreased by 88%. The same as the onshore one, the onshore one decreased by 68% in terms of the LCOE. So onshore power is probably the revolve in the lowest the LCOE and especially by the end of this year, the LCOE for the onshore resources has already reached USD 0.033 per kilowatt hour. We are coming back to China. You can see in the first half of 2022, and there were new installations in up by 40%. And by the end of June, you can see that the total grid connected the wind power capacity totaled 242.2 gigawatts, taking 40% of the power mix, the similar power decreased by 53.5%. On the one side, it shows you the electricity production. And for H1 of this year, the total power consumption was growing by 2.9%. And the wind power generation accounted for RMB 231 billion kilowatt hour representing a penetration ratio of 9.1%. As you can see, the digitalization rate is still around an [ 95.8% ]. And you can see the domestic part, it was growing very fast. The average utilization was 1,156 hours in H1 of this year, decreasing by 56 hours Y-o-Y. The domestic public tender market totaled 51.1 gigawatts in H1 of this year. And you can see in 2019 due to the rush to build and the public tender market in 2019 represents 65.2 gigawatts. The other year also in the declining trend. This also shows that in the 4th Five-Year Plan and the people are very positive to support the public tender market by having the wind power installation. The onshore public tender accounted for 42.0 gigawatts. The offshore represent a 9.14 gigawatts, 67% are in the northern part of China, 33% are in the southern part of China. The majority of them are in large industrial base and the centralized sourcing. On the left side, it also shows you the average bidding price in domestic China. You can also say that there are some very provincial policies in benefiting the wind power industry. And for example, the implementation plan in promoting high-quality development of new energy in new era, and also the 14th Five-Year Plan for renewable energy development and especially on the 1st of June, NDRC and NEA along with other several ministries and commissions jointly launched the 14th Five-Year Plan for renewable energy development, which proposed the demand growth for the renewable energy development in the 14th Five-Year Plan and also from this and the distributed development of the wind power also present a very good growth. And you can see the power reform also being started in China. And we're going to build a unified national electricity market to further promote the reform of the energy industry. So on the left side, in that map, it also clearly shows us the geographic's of China and the wind power development projects in different geographies of China, including with these projects and the distributed power penetration projects in different parts of China. So this upon such a backdrop, let me just walk you through our business review. Our business, including 4 parts WTG Manufacturing & Sales, Wind Farm Development, Wind Power Service and other services. Regarding the turbine business and the sales was going up by 37.8%. I was just showing you the data. And you can also say that the 3x and the sales is around 2,333 megawatts and representing 57.1% of the total sales with an increase of 102.5% Y-o-Y basis. And talking about the backlog we have, by the end of June, and our total order loss backlog is around 24.1 gigawatts. And we successfully the significant contract of 15.5 gigawatts. On the right side, as you can see, MSPM turbine reached 14.7 gigawatts with the highest portion of the 62% in order mix. This is also another slide ensuring the global business expansion. You can clearly say that the backlog being distributed in different parts of the world, along with our wind farms. According to the backlog, Asia still have a decent backlog, accounted for 1,157 megawatts. And then we have South America and also Australia that are also dividing very fast. And you can see we also have attributable on the construction capacity totaled 581 megawatts, which are mainly located in Australia, and also take a look at the wind farm, and as of June our company's attributable grid-connected wind power projects accounted for 6,135 megawatts, representing 29% in North China, 26% are in East China, 25% are in Northwestern part of China, the rest are the regional. From the January to June, we newly added 350 megawatts to the attributable grid-connected wind power. And the total sales is around 283 megawatts. On the left side, it also shows you the grid-connected by region on the construction. Southern part represents 30% of the under constructed wind farm. And let's also take a look at the utilization rate. And by H1 this year, our sales from wind farm record 1,270-hour utilizations. 114 hours higher than the national average. But generally speaking, to say that the number was somewhat lower than the same period of last year. So the same as what we call from the national capacity utilization hour. So wind power service also we grow decently, and you can see that our installed fleet and our own experience of wind power service business grow steadily and the under-operation capacity totaled 25.3 gigawatts, represented 48% Y-o-Y basis growth. Let's welcome Mr. Wang to walk you through the financials.

Ladies and gentlemen, dear investor. Coming up, please allow me to walk you through the financials of our interim results. Just now, Madam Ma has already walk you through the environmental development and also the public tendering price changes. And you can see that the total wind market and the price was going down very much. The average price was being decreased from more than RMB 3,000 per kilowatt hours to around RMB 1,800, and the price difference is more than 40%. Well, for Goldwind and while in the stage of launching the new products. And so you know that we have a big work to do regarding the product delivery. We are talking about that the first half of this year, you can say that compared with the same period of last year, and -- for H1 of Asia, actually, our revenue for the first half of this year totaled around RMB 16.512 billion. And let's also take a look at the GP margin. And last year, the number was 28.35%. Well, for this year, in H1, it was 24.72%, reduced by around 3%. While on the net profit attributable to the owner of the company used to be around RMB 2,041 million. But this year is only RMB [ 1.920 ] billion and weighted average return on equity. And last year, the number was 8.03%. Well, this is 5.33%. So generally speaking, you can see that for all the 4 profitability indicators, they are all on the downtrend. Please go to the next page. This page shows you the segment results, and that is also regarding our business distribution. For the WTG Manufacturing & Sales and even if the total sales was on the uptrend, but results price was decreasing and especially write-off that what we build last year, and we also see great changes in the turbine manufacturing in the South. The offshore business only accounted for 2% of the total WTG Manufacturing & Sales. So you can say that the sales was increasing, but the revenue was not increasing accordingly. You see that the sales revenue was decreasing a lot. And at the same time, the GP margin was decreased by 7.75% in our interim results, we also emphasized. The product and it's accounted for the 8.1% of the growth because you know that we -- the total pricing in the home market was only decreasing for the turbine product. So generally speaking, the turbine business or the WTG Manufacturing & Sales performance was under expectation. So the size of the WTG Manufacturing & Sales, well when the power service went from development and other business, they are all hitting our target. Wind from development, even if we have a decrease in wind resources, as we mentioned Madam Ma, but you can say that, generally speaking, the utilization rate hours being decreased. But for H1 of Asia because of the installations has been increased by 20%. So jointly speaking, you know that our wind farm being greatly improved. So generally speaking, that you know that the -- wind farm development and the total revenue accounted for RMB 3,294 million, and the GP margin being kept at 68.29%. That's for the wind farm development business. We're talking about the wind farm service, and our wind power service is hitting our expectation and are also further optimize the business. O&M, as you can see that it was growing very fast. Well, for other business, you can see the EPC business in [indiscernible] by China been shrinking, and we also started to have the high value-added, the wind farm development and wind farm O&M business. So you can see the non-O&M business is being further optimized, which further contributed to our score card. So that's the way then we can stabilize the revenue for the wind power service. So all together, you can say that the revenue grew by 70.5% reaching RMB 1,934 million and the GP margin was 19.81%. We are talking about other business. Other business was also keeping our expectation and the revenues being further optimized. For example, the operations were improved. The rates because we have value-added assets and also the water price and water resources done by our internal factory. So you know that the total revenue is being greatly improved for the other business, and the revenue mix being further optimized. So just now -- I just share with you the segmental results of the financials. Talking about the asset and liabilities, there are 2 tables, [indiscernible] share with you, regarding the solvency position for the asset liability and between the structures being taking -- hitting our expectations. And for the asset liability ratio, it was 69.2% for H1 of this year. And by the end of last year, this number was 69.21%. So you know that our company's asset liability ratio maintained below 70% lower than the industrial average. We still have a AAA crediting performance where at the same time, our interest liability and the noninterest liability has a healthy mix. You can say comment on a quick ratio has been also stabilized. So generally speaking for our asset and liability and our cost indicators are hitting the expectation of the company. But talking about the cash flows. On the left side, it shows you the net operating cash flow to revenue. It also shows our industrial features, Q1 and Q2 are actually in the backlog preparation and payment period. For turbine, we have less been delivered in H1 of Xinjiang. So generally speaking, net operating cash flow would be an active number in H1, and then it's going to be narrowed down in Q2. And in Q2 and Q4, again to deliver more turbine and the net operating cash would then be a positive number in Q3 and Q4. So our net operating cash flow already works with the seasonality changes of the whole industry. On the right side, it also show you the cash to total assets. Compared with the industrial average, we are also on the healthy optimization track because it worth to show the data in Q1, Q2 of 2021. And you can see the ratio of the cash to the total asset last year it was 0.01%. Well, for this year and by the end of the June, the ratio of the cash to total assets was 5.99%. So generally speaking for this year, we believe we have a stable performance and optimized the performance regarding the cash to total assets. That's all for the financials. I'd like to thank for all the investors. Thank you.

Okay. Thanks for Madam Ma and Mr. Wang for the presentation and financials.