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

[Audio Gap] the company, Mr. Chen Qiuhua, Group VP and GM of Wind Power Industrial Companies. First of all, we're going to have the company to introduce the performance of 2023. Then we're going to have Mr. Hongyan Wang to walk you through the financials of 2023 and later we're going to go into the Q&A session. Madam Ma, please.

Okay. Thank you very much. Dear investors, I'd like to welcome you, and thanks for supporting Goldwind. So first of all, please on me to walk you through the wind power industry and our industrial development. Please go to Page 3. You can see that -- this is actually the data being published. In 2023, the global new installation in 2023 was 75.7 gigawatts, grew by 101% and especially the onshore new installation was 441.3 gigawatts, accounted for 50.1%. And also, we can see that the thermal power has been reduced to 47.6%. On the right side, we can also see that we're speaking, there are more countries will have the total installation. And you can also see that the global wind power generation has been -- grew by 16.2%. We are also in 2023, and we also continue to see 27 European Union countries and the U.K. altogether 28 countries -- the penetration will continue to be improved, and we can take a look at the wind power development in China. In the year of 2023, newly installed installation was 75.7 gigawatts, grew by 101% -- where by the end of 2023, the total grid-connected new installation was 441.3 gigawatts, accounted for 51.1% of the total power installation and the thermal power being reduced to 47.6%. On the right side, we can also see that the wind power is becoming a new trend. And especially in 2023, the total consumption of the power in the society has been growing very fast, grew by 6.7%, where at the time in the wind power, power generation has been grown by 16.2%. In the year of 2023, 27 European countries and the U.K. altogether 28 countries, the total wind power penetration rate improved to 20%. Denmark makes 56%. So you can say that in China, we actually see an average increase in rate of the wind power installation and we still have further room to further improve this -- we are coming next. Let's also take a look at the utilization hours. On the left side, you can see that the utilization largely -- averagely speaking, was 2,225 hours, improved by 7 hours. In 2022, the average utilization rate of wind power was 97.3%, improved by 0.5 bps, especially Tianjin, Shanghai, Shijiazhuang, [indiscernible]. For the 12 provinces, the wind power utilization reached 100%. On the right side, we also show you the construction cost and [indiscernible]. And you can also say that -- and the wind power becomes more competitive, and we're not going to elaborate you on the specific number. Coming next. Let's also take a look at public tender market in China. In a 2023, in the public tendering market, the newly installed -- newly [ 86.27 ] gigawatts, down by 12.5%. Onshore tendering was 77.38 gigawatts. Offshore was 8.89 gigawatts. In Northern part of China, the public tendering was 71% of the national total. Southern part of China, 29%. The majority of the public tender is being done in Northern part of China. On the right side, you can also see average bidding price of different services of the product. So by the end of last year and the average bidding price was RMB 1,535 per kilowatt. This is another slide in showcasing the policy to drive the growth momentum of the industry. In 2023 with carbon neutrality and the [indiscernible] carbon emission strategy, the China Energy [indiscernible] bra and also the Reform and Development Commission continued to grow our policies to continue to prevent the wind power industrial development. For example, we do have a China green development of white paper. It proposed we're going to march towards [indiscernible] green carbon development and continue to build the wind, PV power large industrial base, and also continue to promote the distributed wind power in the rural area where at the same time, and China also started to build the 2023 energy work guidance and also continue to build the infrastructure to further support the wind-power development, where at the same time, and we also published the policies to continue to improve the renewable power penetration responsibility [ full time ] for example, and the China -- the regulator has already proposed the key appearance, especially proposing of having the biomass power generation and the marine time power generation and the renewable power generation projects, supportive measures and also continue to have the great certificate full coverage, where at the same time, and the government also proposed to continue to improve the management of the warming gashouse emissions and also continue to strengthen the management of the carbon footprint with all those measures being available in the wind power industry in China going to make continuous and high-quality development. So with such an industrial backdrop is phenomenally through the industrial development of the company. We have 4 major businesses. Let me just show them one by one. The first business is regarding the wind turbine manufacturing and sales, it was accounting 65.28% of the total revenue. The second one was wind power investment development accounted for 21% of our total revenue. The third part is wind power service accounted for 10% of our total revenue. We also have other businesses where we can say that the company according to our latest data, you can also say that -- [indiscernible] wind, we continue to rank #1 in terms of the market share in China for 13 consecutive years and the top 3 market share worldwide for 9 consecutive years. By the end of 2023, our total installation was 140 gigawatts, covering 36 countries and the regions. We also have 8 global R&D centers to continue to drive high quality and intelligent development of the company. Well, within all those business dividend, so please allow me to share with you the sales capacity of the company. First of all, let's talk about the wind power business. In the year of 2023, our total external sales capacity was improved to 30,000 megawatts down by 0.7%. From the structure perspective, still the large capacity turbines, the total sales has already become 46% of the total and 4 megawatts to 6 megawatts turbines accounting for 54.3% of the total sales, where let's also take a look at the order backlog by the end of last year, the total backlog was 30.4 gigawatts. External order was 29.8 gigawatts. For the external order, 9.1 gigawatts been contracted, and we have 20.7 gigawatts that has already signed the contracts, waiting to be implemented. On the right side, we also show the external order mix. And there, we have more order from the 6-megawawatt above sales. And I can also say that 4 megawatts to 6 megawatts turbine sales accounted for a very major part of the total sales mix and order mix. For the past few years, the company also continued to promote global business of the menus of the development, our global business also continued to further consolidate expectation. And in last year, we have already covered 36 countries. So altogether, we have a 6.8 gigawatts installed and especially in North America, [indiscernible] and in Europe and Asia and the South American market and African market, we continue to improve our development. And you can also say that after our overseas external order continue to rise. While let's also take a look at the wind power generation business. Please go to Page 30. I -- so at the end of 2024, our attributable grid-connected wind power projects totaled 7,289 megawatts, 29% is being located in Northwest part of China, 23% in northern part of China, 27% in Eastern part of China and 6% in the rest of the world. So on the right side, we already show you the pie chart. In 2023, the attributable under-construction wind capacity [indiscernible] totaled 1,793 megawatts when at the same time, and for the total attributable grid-connected wind power sites also be further improved. Well, let's also take into at the utilization hours. The utilization hours of our self-operated wind farm was 2,441 hours, 260 hours higher than the industrial average. Our wind power service industry, and we will be able to continue to further improve our operational and maintenance service because of our very robust and technological accumulation for the past few years, we continue to improve our wind power service business by the end of 2023, and the total maintenance service was close to 31 gigawatts, 2.8x higher than what we have in 2022. So for the company, we continue to improve our financial performance, but also seek to advance the sustainable [indiscernible]. Our company has already published more than 10 social responsibility and sustainable development reports. And also in 2023, we renamed our social responsibility report into ESG report, which is fully in line with what has been required by the Hong Kong Stock Exchange. And also in 2023, we also made our sustainable development strategy. So in our ESG targets, we continue to advance ESG practice and the sustainable development, including the 5 main parts: compliant operation, green environmental operations, sustainable supply chain, fair and healthy work environment and harmonious community relationship. So for the 5 sectors, we do have the qualitative data and key projects being arranged. For example, last year, our qualitative data and quantitative data will be demonstrated on the slide with 90 key projects being named. So the quantitative data, for example, from the integrated and the compliance operation in 2023, we actually got the [indiscernible] from the Shenzhen Stock Exchange and the Information Disclosure Assessment results. And you can also see 33% of the Exchange listed companies could get the A result. In 2023, the compliance acceptance and settlement, we've reached 100%. And in 2023, the Southeast interest of conflict application completion rate was 100%. For green and environmental operations in 2023, and the company on the operational level, we have already reached the carbon neutral additive for Scope 1 and Scope 2. In 2023, our self-green power generation has accounted for 51% of the total power consumption. By the end of 2023, we have 8 factories that has been certified by ISO by 0001 and management system, and we also did a very good job for social responsibility, all data, where you can also say that you [ lost ] again, and we also have 9 key projects that has been conducted to further advance our ESG practice. For example, last year, the company actually started the Life Cycle Assessment, LCA over our 4 turbine types -- so you can also say that in the year 2022, and we started our LCA, and we will be able to continue to provide the LCA over our product. So ESG and the green sustainability will be a product that design, R&D, production and the Whole Life Cycle of the wind turbines. In that way, we will be able to continue to reduce the carbon emission. And the carbon emission is less than 30% of the total power being consumed by PV. So -- as we have a better robust technology, reliable quality, we will also be able to improve our environmental protection practice. And we also have other measures for sustainable development. For example, reutilization of the logistics and packaging materials, we will be able to continue to reduce the weight of the logistics packaging, and we also have the renewable blade. For example, leveraging resin to be the material of the blade and continue to improve the recyclability of the total product, like wholly of episodic foundations for our future sustainable practice. Last year, it is also the first time for us to publish the timely action, white paper, which truly showcases our philosophy and actions to be taken. Ladies and gentlemen, come, let me just welcome Mr. Wang to walk you through the financials.

Distinguished shareholders, good afternoon. My name is Hongyan Wang. I'm the CFO of the company. This is actually the slide showing our financial indicators. On the left of the corner, you see this is actually the revenues be made. So in 2023, the total revenue was CNY 50.4 billion, grew by 8.66%. On the right side, we show you the GP margin, and you can see in 2023, the comprehensive GP margin was 17.14%, which is slightly decreased compared with 2022. And just now, Madam Ma has already mentioned for turbine manufacturing, the revenue will be a key part of the total revenue, started -- contributed 65% of the total revenue, where compared with other 3 business lines, wind turbine-making, the business revenue was relatively low. So that's reason the revenue and the GP margin, the overall development be impacted by the turbine delivery. Well, if we have additional turbines being delivered and it's also going to drive the revenue, but also to some extent by the GP margin. This is what we saw from the [indiscernible] pictures. Well, for the left down corner, we show you the net profit attributable to the shareholders of the parent company. The net profit attributable to the shareholders of the parent company was [ CNY 1.31 billion ] down compared with last year. There are 3 reasons: from the GP margin perspective, we see that domestic turbine manufacturing, the business contribution was lower than what has been expected by the company. In the year of 2023, we continue to make R&D expenses. -- where at the same time, and we have already circulated a notice of making the empowerment provision, where at the same time, due to the wage revision and the net profit attributable to the shareholders of the parent company continue to go down. And then you can also say that the average weighted net asset return rate was 3.45%, down by 3%. The attributable assets also be further reduced. So that is the reason the average weighted net asset return rate is being reduced. So that is regarding the overall financials. Let me just give you a business-specific financial performance interaction. This is the product line-specific financial indicators. There are some, for example, for wind turbine and spare parts, the total revenue was CNY 32.9 billion. The GP margin was 6.41%. And you can see it's been improved compared with 2022. And more importantly, in 2023, the wind turbine -- the business structure has been further optimized. There are 2 reasons for that: first of all, for the onshore overseas turbine, the delivery scales is being been further improved, while at the same time, for the domestic onshore delivery, it was being reduced. So that's the reason the turbine GP margin as the overall bidding price of the whole industry continues to go down, but still, we will be able to safeguard the GP margin by optimizing our turbine business structure. Well, at the same time, we continue to explore the new markets, which bring us extra stream of the revenue. So that's the reason we have a very good revenue growth compared with 2022 regarding the turbine and component sales business. And the second business was wind farm development and the revenue was CNY 10.9 billion, accounted for 21.63% of the total revenue. GP margin was 47%. This business, I have to say, it is actually the key contributor for the GP margin of the company. The third business is wind power service, wind power service business. And The total size was 31 gigawatts, revenue was CNY 5.2 billion. The GP margin is being further diluted. The reason because the actual promotions we made. But excluding the promotions we made with the GP margin of the Wind Power Service is flat with what we saw in 2022. But for sure, in 2023, we further optimized the Wind Power Service business with 2 points. First of all, we can see, the post-service revenues be improved, while at the same time, the [indiscernible] project in a China is further shrink. We are more focusing our products and the studies for the post-service market. And we also have an environmental protection business with [indiscernible] business. The revenue and the GP margin will be improved compared with 2022. So this is actually the business-specific financial performance of the company. Coming next. Please allow me to walk you through the operational indicators and performance. Well, this is a slide showcasing the receivables. In 2023, the total receipt provided of the company was RMB 25.5 billion, accounted for 80% of the total assets. And it was having a flat growth. Receivable turnover days has been reduced to 180 days, but benchmarking with our industrial peers, and we'll still be able to further improve our receivable turnover days. On the right side, we show you the inventory turnover days. And you can say that the inventory [indiscernible] by the end of 2023 was RMB 16.61 billion, accounted for 12% of the total assets. And the inventory and the contractual asset turnover days in 126 days. The reason because we have the wind farm business, we have to consider the inventories. But excluding this new business, you can see, our inventory turnover and the efficiency is better than one we have in 2022 and also stay ahead of the industrial average. But actually, in the year of 2023, we continue to improve our operational efficiency to further improve our performance. The next slide shows you the liability indicator. On the left side, you see the interest [indiscernible] liability. Interest [indiscernible] liability, the total guidance was CNY 51.8 billion, accounted for 50% of the total liability, which was being reduced. Last year, it was 53% of the total liability. But for this year, interest [indiscernible] liability only accounted for 60% of the total liability. While at the same time, we also strictly followed the business model to have the short-term debt and long-term debt. The net gearing ratio, also we further improved. On the right side, we show you our total asset was CNY 143.5 billion, and the net gearing ratio was 71.96% by the end of 2023. So few -- for the past few years, our power generation assets continued to be further expanded. Starting from our financial statement, you can see for one of our key developments, the asset was around CNY 75.6 billion, the highest number for the past few years. So that's reason our net gearing ratio is more than 70%. While for sure, the company is going to take multiple measures to help to further stabilize the net gearing ratio, making sure it will stay rational and comfortable versus the industry. Coming next, let me also share with you the cash in hand and also the cash reserve. On the left side, you can see the cash reserve was above -- the cash reserve to total asset ratio was 9.93% by the end of 2023. We made very stringent management over that. But at the same time, every month for every quarter, we also make sure that we have enough reserves to guarantee enough liquidities for the safe operations of the company. Well, on the left side, that is operating cash flow. The operating cash flow will still be quite strong. Just speaking, we do more inventories in Q1, we stand more cash flow. In Q2, we started to deliver projects -- non-GAAP. In Q3, we have positive cash flow. In Q4, we have centralized the delivery of the project so that we will be able to have a good cash flow, a positive number. The operating cash flow is also in line with the pace of our business. So that's all for our financials. Thank you very much.

Okay. Thank you very much. Thanks for Mr. Wang. Coming next, please allow me to walk you through the future prospects. You can see that IAEA also forecasted for the future of the market would be. The renewable energy installation from 2023 until 2028 will reach 7,300 gigawatts. In 2028, wind power and PV power new installation would be close to 710 gigawatts, 2x higher than that of 2022. This come on power generation cost advantage and the policy support in the next 5 years, PV and wind power newly installed capacity in the make 96%, where on the right side, GWEC also forecasted by 2027, the newly installed offshore installation peak would be 31% in the next 1 decade. There will be some better robust growth. So with that 31% of the CAGR in the next 10 years, the CAGR would be low to 12%. So in other words, in 2026, the newly added offshore installation will be more than 30 gigawatts and more than 50 gigawatts in 2030. So in other words, offshore would be a great opportunity for the wind power market. We are coming next. Let's also take a look at how IAEA is going to forecast the energy structure. IAEA forecasted in -- from 2023 to 2028, the renewable energy installation capacity would be more than 2 gigawatts -- terawatts, which was 3x higher than the past 5 years. And now in China, wind, thermal and the PV coverage generation, the economic performance is much better than thermal power. So in the near future, wind power and PV power installation, they're are going to have a very strong growth. By 2030 in China, the accumulative wind power and PV power installation will be more than 1,200 gigawatts. On the right side, [indiscernible] forecasted from 2023 to 2032, the onshore wind power industry, the average new installation capacity would be more than 59 gigawatts. And also, you've seen that renewable needs of the onshore wind power are going to starting to show up, which also be a strong driving force of the future wind power development in China. As I have already introduced, the company continued to dive deep in the 5 sectors of the sustainable environment. And we also proposed many challenging targets for the future. So for those wins, we're going to continue to improve our performance in hosting 5 sectors. On the right side, we show you the internal target we have for sustainable environment. Those are indeed very challenging and stretchable target. For example, for green and -- operation in 2025, the unique MW green [indiscernible] emission will be reduced by 25% compared with 2020. In 2025, production water consumption density would be 50% lower than 2020. And we also, by 2031, we're going to make sure our production and operation has 100% of the green power to support our operations. We are, at the same time, we also make sure, in the near future, we're going to have 100% of the sustainable practice over our suppliers. Where at the same time in 2023, we're going to have our key suppliers of reaching 100% of the green power to produce the key components. In 2040, we're going to make sure 100% of our turbine could be recyclable and be reused. So as a company, we seek for sustainable development to benefit the society and the company and also supporting the whole society for sustainable growth. That's all for my presentation. Thank you.

Thank you. Thanks for the management team. Thanks for your presentation. Coming next, let's get into the Q&A session. In order to improve the efficiency of the communication, please identify yourself and please make sure you raise no more than 2 questions. Operator, please help to show the instruction and please welcome the first question.

[Operator Instructions] First of all, let's welcome [indiscernible] from [indiscernible] Securities to raise the first question, please.

Okay. Thank you very much. Thanks for the management team. I'm [indiscernible] from [indiscernible] Securities. I have 2 questions. My first question is regarding profitability. We would like to know that last year for your wind turbine business, what about is GP margin? And in Q4, do you see any recovery of the GP margin? And how the turbine business GP margin going to be in 2024. This is my first question. My second question, I would like to know more about the industrial demand because we all get into April of 2024. Do you feel that the turbine shipment has been further accelerated? And what or the total public tenders for onshore and offshore market in China? And what about the total shipment of the year?

Thank you. Let me help to respond to the first question -- and all of you hear me, right? Let me have to respond to the first question. Let me put it in this way. The overall GP margin of the company will continue to be optimized. But indeed, the GP margin in 2023 was not yet been optimized due to 2 reasons: first of all, it's about the market price factor and the second reason is because of the turbine GP margins being relatively low. Actually, compared with the same period of last year, comprehensively speaking, the GP margin of the turbine business was not been changed that much, but while we have a flat growth -- you can say that mid-speed magnetic sales product, which accounted for 84% of the total revenue in 2022, no matter in Q3 or for the full year results of this mid-stage magnetic service product was going down, but the GP margin has been further improved. So that's reason in 2023, the turbine business, GP margin is actually having a U-shape curve, which will also serve for the cost control of 2024, where in the year of 2024, the company will step up our efforts and continue to improve the GP margin of the turbine business. Well, let me also respond to the second part of the question. I do believe in the year 2024, there might be around 10% to 15% growth compared with last year regarding the public tender and building. And in China, the public tendering the whole would be around 95 to 100 gigawatts. Wherein in, total installation would also have a slight growth. It's going to be around 75 to 80 gigawatts and total installation of 2021, but the structure is going to be different. I believe the offshore newly installation going to have a huge growth, mainly the offshore new installation tend to grow by 10 to [ 15 ] gigawatts in 2024. Well, let's also talk about the overseas business. In 2024, we're also going to see some very nice growth for the international business. So regarding the business in 2024, we believe for offshore and international business, the growth and the businesses, they are going to be further improved. But overly speaking, offshore installations, they are going to be the key of our total installation. That's all.

Ladies and gentlemen, coming next [indiscernible] from CICC to raise the next question.

I'm [indiscernible] from CICC. I have 2 questions. My first question, just continuing with what has been discussed before, -- so you can say that for onshore, offshore plus international business, do you have any guidance for the total shipment of 2024? Where -- this is my first question. My second question, I would like to ask you a follow-up question. Just enough. I did a rough calculation in H1 of 2023 for turbine and component business, GP margin was 6.6% -- [ 3.6% ], but it was 8.2% in H2 of the year. You mentioned for energy storage business, those are actually the so-called emerging business. So do you have any component contribution or the component only, GP margin concerning revenue contribution excluding the turbine business?

Thank you very much. Let me respond to your first question. In the year of 2024, the total shipment of the company would be 8 to 25 gigawatts. We're talking about the distribution, onshore would be 2 gigawatts. The offshore would be 2 gigawatts. The rest part would be the onshore installation. I will ask my colleagues to respond to GP Margin.

I know that many people were just concerned about GP margin. Actually, in our annual report, you'll probably see the GP margin presentation -- we continue to improve the GP margin in the year 2022. The comprehensive GP margin was 5.88%. It was 5.87% in 2028. But as I mentioned before, by the very beginning of 2023, we do public tendering bidding. You know that the price being reduced greatly by more than 20%. So the turbine business GP margins, we guaranteed it and we safeguarded it. And I also mentioned, we also have the GP margin improvement for 2 quarters. When you were talking about the components for spare parts businesses. Component or spare parts, it's been around 10% of the total turbine and components business and its GP margin is more than 10%. Thank you very much. Thanks for your questions.

Okay. thanks for Madam Ma. Just one follow-up question to Madam Ma. Jus t you mentioned about 80 to 20 gigawatts. Is it the external sales?

I was talking about the total shipment in 2024. External sales was 16 gigawatts. The total shipments would be 80 to 20 gigawatts.

Thank you very much, very clear. No further question from me.

Coming next, let's welcome [indiscernible] from [indiscernible] Securities to raise the next question, please.

I have 2 questions. My first question is regarding the industry. You can see that last year in 2023, the total public tendering bidding was on the down trend. In 2025 or 2024, what would be the public tendering bidding for the whole wind power industry? Is it going to be stabilized? Will it go up or go down? What would the trend? This is my first question. My second question because for Goldwind, you used to expand to the overseas market. Lately, I started noticed that Southeast Asia countries started to have more projects being done by Chinese companies. So what would be your profitability and the backlog and the demand for the overseas market business? Two questions from me.

Thank you very much. I didn't get your first question. You were talking about the bidding price going down in 2023. I was talking about the total bidding volume was going down in 2023. You would like to know the trend in 2024, right? For this year, also including in the next few years would be the profit tendering trend for the overall market. Thank you very much. As far as I believe that in 2024, we feel very positive on the total public tendering and bidding. As Mr. [indiscernible] has already mentioned, the total public tender would be around 95 to 105 gigawatts, close to [ 400 ] gigawatts. Last year, the number was 36 gigawatts. So in 2024, there's going to be a good growth for the public tendering volume. I'm just announced, I also share with you the third-party statistics are forecasting the demand in China and the rest of the world. I think public tendering for in China would be around 100 gigawatts. This is still a number that is consumable.

Okay. My second question is regarding the demand of the overseas markets.

Let me just be brave in responding to the question of the overseas market. The overseas market, yes, indeed, we've seen a very healthy and good growth. Where from the business structure perspective, there are some changes. In South American wholesale, in Southeast Asia region, the wind power and the solar power business was growing very robust. We are also seeing Southeast Asia countries due to the industrial adjustment, and they are in need of more power to later Southeast major countries, we also see a nice pickup of the demand. For solar wind, in the past, we stand around 1 decade to be further exploring overseas market. The overseas market, we still have the holder or project driving business development. We have already further consolidated our competitive edges in overseas markets. And Australia has been a key place to accommodate the new installations for the past few years. While in the near future, there are a few growth points for our international business. First of all, the South American countries would be a key growth destination because the local market release more demand, we'll also be able to take care of the needs there. And also in East Asia and in Middle East contracts, we also see very good growth. We have already made very good business deployment in past 2 years, starting from 2024 to 2025, in those countries and regions, Renewable energy seeing good opportunities for the renewable energy development. Renewable energy development in those countries first started from the power structure changes. Those countries are going to see more solar power and wind power into their primary resources structure, where in Middle East. And there are many projects along with green power, hydrogen making and [indiscernible]. Those countries started to improve their power structure in Middle East. So regarding the overseas business, we do have our business already. But in the 8 regions, we have already costed, each region will be able to see sustainable growth driver in the near future. That's all. Thank you. Okay. Great... Well, for this year, the total shipments in overseas market would be around 2 gigawatts. The backlog for international markets last year, I have to say we have newly added 3 gigawatts of the backlog in overseas market, where in 2024, you're going to see more accelerated growth. The overseas business has a much higher GP margin in the domestic business. Domestic and international business, they are very much different. So it's very hard for you to have the head-to-head confirmation on profitability. Overseas business, we not only take care of the product, the quality and the product delivery for overseas projects. We need to be store that turbine. So in otherwise, overseas business required as marine time shipping service, starting from the port to wind farm logistic service, where at the same [indiscernible] in the wind farm, we are supposed to provide the [ TTCI ] service that is responsible for the maintenance, installation and engineering management, making sure the turbines be installed and be ready for power generation and handle the projects to the customer. So the scope of the business for international business and the domestic business are very much from each other. It's very hard for us to provide you Head to Head confirmation. Thank you very much.

Ladies and gentlemen, coming next. Let's welcome [indiscernible] from HSBC to was the next question.

I'm [indiscernible] from HSBC. I have 2 questions. My first question, I noticed in the year of 2023, your wind farm development business pretty much was going down. I think the key reason because you have some wind farm-specific products. Would you like to just share was is -- what will be the return for the wind farm development? And how you're going to calculate its return in the near future? My second question is also regarding a news. Maybe they are going to work with [indiscernible] for the green methanol cooperation. So would you like to provide some outlook of having green methanol in producing hydrogen?

Thank you very much margin. [indiscernible] Let me just talk about the GP margin of the wind farm business, why it was dropping? For wind farm development business, the GP margin was dropping, the reason because our business structure in being changed -- for the -- wind farm product in 2022, it was only CNY 319 million. But in 2021, we've already started to sell the wind farm product in 2022 -- then come to 2023, the wind farm business, actually, the total capacity improved to more than 4 billion, which been increased by more than 10x compared with 2021. So the wind farm development business, the GP margin is very close to the power generation business. As we continue to improve the size of the power farm development, its GP margin was also on the down trend. If you take a look at the wind the power business, wind farm business, it was around 67%. The industrial benchmarking performance was much lower. We stay ahead of the industrial average. So for wind farm business, the GP margin was going down. The reason is because some of the great connected wind farms started to write off, now going to continue to hurt the GP margin of the power generation. Well, for wind farm product regarding its profitability, how it's going to be? For wind farm product, they are very much different with different geographic location and tax [indiscernible]. So different farms does have very different GP margin performance. It's very hard for me to give you a specific average number. It really depends on the wind farm itself to count the GP margin. Just now, you were hosting a question regarding the methanol for hydrogen manufacturing. How it's going to be in the near future? I have a few factors I'd like to share with you. Then I will talk about maybe in the -- when the -- on power plus business strategy we're going to take a few factors of the backdrop that I can share with you. First of all, as we go towards zero-carbon emission, we already would have to hit the carbon peak emission and the carbon neutrality to strategy. In the past, we are more focused on the power structure from the power generation perspective. Besides hydropower, PV and also wind power started to be the key source of the power generation. So with the total backdrop and the electrification, new energies started to write off, which will help to further reduce the carbon emission. The second growth factor is because in shipping industry, no matter [indiscernible] shipping, holding the transitional logistics industry or in the greenfield, how it's going to impact on the carbon emission? If we will be able to further optimize the ocean shipping, the carbon oxide emission would be greatly reduced. So this is actually the overall backdrop of the whole industry. We have electrification and also the write-off of the greenfield. The greenfield could actually work for the Green Power Plus strategy. In other words, we leverage [indiscernible] carbon emissions, green power to produce hydrogen and [indiscernible] and given [indiscernible] to further help to reduce the carbon dioxide emission. There is another factor. When green power worked with [indiscernible], to a great extent, it can also help to have the peak shaving performance as we are having a higher penetration ratio from the renewable energy, the stable supply of the power started to become a key challenge for not only China, but also other countries worldwide. So as we have great energy plus green power, we don't need more technology to make sure we have a very stable supply of the power, where you can also search online or go for some professional agency to take a look at the statistics. For the World Maritime Association, they mentioned definitely to reduce the carbon emission by 20% to 30%. Those are the [indiscernible] demand of the whole industry. It also going to benefit the Green Power Plus for greenfield industrial development in the near future. This is also in base what we would like to embrace in our emerging industry. We started to have green power plus greenfield as an extended service in the near future.

Next, let's welcome [indiscernible] from [indiscernible] Securities to raise following questions.

Management team, my name is [indiscernible] from [indiscernible] Securities. Two questions from me. The first question is regarding the wind farm business. The wind farm being developing very fast, it was contributing a lot to the overall profit. So what about your plan for this business? How much is going to be [indiscernible]? How much is going to be transferred? My second question is regarding the upstream price issues. So to now, may I kindly ask for the price and how we're going to control the cost and the overall plan? That's all.

Let me talk about the wind farm business first. As has been mentioned before, we experienced the start-up period and then we get into the validation stage. And that was from 2021 to 2022. In 2023, it was supposed to be a year of mass delivery and sales. But you can also say that the wind farm self continue to go up dramatically, and we have actually 750,000 kilowatts being newly aided. So the revenue continue to go up. From the GP margin perspective, and we also would like to continue to improve the GP margin of each project. It's very hard for us to specifically talk about average GP margin of all the farms. In 2024, we hope we'll still be able to grow our performance. But whether the growth would be more than [ CNY 10 billion ], actually, we are working very hard to achieve the target. In the near future, we hope we can have a healthy business model continue to cash out on the wind farm business to improve its profitability. Thank you very much for your first question. Let me respond to your second question regarding the upstream price. What we see from the market is that no matter for turbine price or the spare parts price, we do see that the price continue to go down. There are a few things we can do, first of all, -- and as the capacity of each turbine continue to go up, it indeed can help to further dilute or slow down the cost to rise up. And because the capacitive of the turbine per unit is [indiscernible] much quicker than the cost increase. For the past 2 years, we know that actually capacity per turbine was continue to be expanded further. So from the gross perspective, I do see, maybe the capacity in the near future are going to slow down a little bit. Well, for the upstream supply chain, what we are adopting in the [indiscernible] technology for the new materials. In that way, we will be able to continue to reduce the systematic cost. For example, we use carbon fiber. It was less adopted in the cost. But even now for the routine blade, we started to have the use of carbon fiber, but having the carbon fiber to be built into the blade. The structure is being reinforced. It can also help to further reduce the weight of the component. The weight of the components being further reduced, the costs will therefore be further diluted. This is a very good example I'm going to share to you regarding the product innovation. We adopted a new material and new technology to continue to dilute the cost. And the second point is regarding economy of scale to continue to improve the profitability to continue to dilute the cost from upstream. So in the whole process, turbine company and the component maker, we need to work together, starting from product design to product manufacturing and production, we need to take care of the process while still being able to guarantee the quality so that we will be able to respond to the furious competition in the market. That's all for me.

A follow-up question from me regarding the wind farm. How many wind farms are going to do -- in 2024? Attributable grade connected power would be around 1.2 gigawatts. Okay -- thank you very much -- that's all for me. No further question from me.

And actually, great connected attributable power would be 3.5 gigawatts, half for the wind farm business. Okay? Great.

[Operator Instructions] Let's welcome [indiscernible] from [indiscernible] Securities to raise the next question, please.

Management team, my name is [indiscernible] from [indiscernible] Securities. I'd like to ask you, according to your financial statements, you also have energy storage business as an emerging business. So you mentioned about your capacity is around 3 gigawatts. And I also see that you have made a backlog of 3 gigawatts in 2023. So I'd like to ask you for the energy storage business, where did you look at those orders? Is it related to your wind farm business? What is your competitive advantage for power storage business? What about the future outlook of this business?

Well, for power storage business, last year, we shipped 3 gigawatts in 2024. We hope we can make it 5 gigawatts. Well, regarding energy storage business or power storage business, we have established this business for 3 years. The technology has a great future, first of all, from the business perspective, we do -- we started from -- we don't do batteries and cells. We started from the battery pack to systematic integration. That is what we have regarding the supply chain, where you see that in the past -- in the workflow industry, we do have the inverter and many of our existing converter technology can be used for power storage, making sure we have a good charging and discharging performance of the battery, guarantee the longevity of the battery. More importantly, we have the BMS management. As you probably noticed, the power storage public tendering price, I see the raw material has been going down a lot. From the competition perspective, the price has been going very much. I think the public tendering feeding price being down by 43% for the energy storage projects. So for energy storage business, we are still very much concerned on the product innovation and the quality reliability, taking this as our key investments. We are also going to work with upstream cell producers, making sure we can play our role by reducing the value to the market. We will also talk about the customer and the power storage business. We have the 3 major clients. And the wind farm and PV station, when they do investments, they need huge energy storage facilities, around 50% of the project or 20% of the projects are actually for power storage. And even in certain regions, they need to have a full hour power storage facility. So this is actually a great value [indiscernible] for the power storage business. Those clients are actually over lacking with our wind farm business client. There are still the major wind farm operators or the owners, they truly recognize our value. So that reason our wet farm business supported the energy storage business by providing the same cost base. Another part is around utility power storage, commercial and utility power storage, especially those large 2B business clients. In certain regions, for the distributed power and the need to set a rate they have a regulation for common storage. And the third customer stream is actually the independent power storage solution provider. Until now, we don't have too much our storage use for the wind farm. In the market, we see more and more independent power storage solutions being needed. That's the reason more people want to invest in that direction. That is also another growth driver for the energy storage business. That's all.

Thank you. Thanks for your comprehensive response. Just one follow-up question. In your future business development, besides of market in China and overseas market -- are you going to have yourself commissioned attributable power storage business?

Yes, indeed, for the self-build -- our storage station, the return was not the optimum position. But in the near future, I think the independent will share the power storage is going to play a key role in the peak shaving for the grid. The value is going to be pronouncing in the near future. But at least from what I can see from a market principle perspective, the retest of the power generation from the power storage business is still not very good. We may make some investments according to the market needs. Where for the overseas market, yes, indeed, starting from 2023, we already started to provide power storage business -- and also continue to have base customers and signed new contracts in the rest of the world. In 2024, you see power storage business tend to be grow in overseas market. That's all.

Thanks for the investors. Now let's welcome Mr. [indiscernible] to recap the session.

Okay. A few words from me. Thank you. Thanks for analysts, and thanks for investors. Let's [indiscernible] on Goldwind. You probably has seen for the past 2 to 3 years, the competition become more serious in the industry, far more than what we expected. Every year, people believe the price is reaching the bottom, but after 1 more year, the price goes down again. But on the other side, -- you know that for different industries, we believe renewable energy, especially wind power industry are still the business growth has been greatly demonstrated no matter in China or in the overseas market. For those countries for the wind farm and the business development, it's going to continue to improve, and we see very good development from that. We will also think about how can we further improve and embrace the market growth opportunities and making sure we're not going to have any exhaustion of the market. So there are a few points I think that is confirmed here. We can leverage innovation and quality management -- to continue to expand into new markets and acquire more customers, to show the long-term value to our customers. To stay in the market, we continue to have the capacity of the turbine to make new breakthroughs. In China, we also started to have the capacity for us in more than 10 megawatts. For those larger capacity turbine going to be massively delivered in 2024 and 2025. So besides making technical breakthroughs, quality is also the key. In other words, the manufacturers need to improve the quality. In much of year, international peers, they also proposed the 5 to 7 gigawatts for onshore installation and 10 to 15 gigawatts for offshore installation. The international peers, they propose they're willing to work for both capacities further, whether that's slightly selling out the capacity per unit, as the capacity per unit continued to go up with the ever diluted cost. In the near future, we're going to have more material and new technologies being available for the wind power business. For example, I mentioned about carbon fiber blade. We need to continue to promote these technical trends, where for the gearbox, especially the highly focused gearbox and also the converter product, energy storage new solutions, new technology, new application, new materials in a fairly short period of time needs to be scaled out and be massively delivered. Only in that way, we will be able to take care of the competition in the market. So besides making innovation, we should also keep an eye on how to well manage the quality to basic extend what we're doing now, some of the wind farms, the Xinjiang, [indiscernible], in Fujian, in Guangzhou, and each place been deploying new wind farms -- because we hope we will be able to validate the cutting-edge technology. In Guangzhou, we used to have 60 megawatts of test badge, which will be improved to 20 megawatts, which will help us to further validate the product quality. All those investments were actually be the bottom line to further improve the capacity and product quality. I do believe that we need to further stabilize our business and we need to consider the reliability, and we need to have very robust development as a whole. This is actually the key points I'd like to mention. Another key point I would like to mention is that -- I can say that in our operational, I have already mentioned, we have improved the sales, it was growing by 8% in 2023. But you can also say that the turbine sales for domestic China market was going down. International and offshore business going to be half of the total turbine sales. So offshore plus the international market, altogether is going to be more than half of your total turbine sales in 2024. And we also have a few incubated projects in the past, which was growing very fast in 2023. For example, like cement tower rack for energy storage businesses. And also the post-service market, those are the business that going to not only improve our overall business scale, it is also good to continue to improve our profitability. Well, regarding the 3 growth drivers, that would be the wind farm product solution. So the wind farm development to ETC and to wind turbine development manufacturing plus the long-term service being packed into one solution. That is a 10K solution to the customer. In the year of 2023, the business was growing by 10x. It's going to be doubled in 2024, which will help to further support the business growth. Well, you can also say that we also talk about Wind Power Plus. We talk about Wind Farm Plus new energy -- so talking about the future growth, I do believe it's going to be a major growth in the near future. So hopefully speaking, has faced high content in the year 2024, no matter from the innovation, from the product quality from the long-term value created to the customers will still be able to further step up our efforts, where for business and adjustments for the risk resistance capacity. We're also going to do more. So you can say that the matter for the sales volume or for the healthy service of the company is going to continue to rise up. Thank you very much. Here we come to the end of the annual results announcement. Thank you very much. And our slides and materials will be uploaded to the official website for your reference. See you next time. Bye-bye.