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

Ladies and gentlemen, welcome to join us for Goldwind 2024 Q3 update. [Operator Instructions] Now let's welcome the moderator, please.

Dear investors, good afternoon. I'd like to welcome you to join us for Goldwind Science&Technology 2024 Q3 results 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 2 parts. First of all, we're going to welcome Madam Ma to walk you through Q3 development and operationals. Then we're going to have Mr. Wang Hongyan to walk you through the financials. And then we will guide you into the Q&A session. Now let's welcome Madam Ma, please.

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 the slides 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 become the best economy renewable energy sources. Especially if you see from 2010 to 2023, the levelized cost of global onshore wind power declined by 70%, decreased from USD 0.111 per kilowatt hour to USD 0.033 per kilowatt hour, while in China, the price is already USD 0.027 per kilowatt hour. Then at the same time, the levelized cost of global offshore wind power declined by 63% from USD 0.203 per kilowatt hour to USD 0.075 per kilowatt hour, while in China, this number was USD 0.07 per kilowatt hour in 2023. If we take a look at the wind power development in China, in the first 9 months of 2024 and generally speaking, China recorded 39.1 gigawatts of the new grid connection, an increase of 16.8%. By the end of September, China's cumulative grid-connected wind power accounted for 479.6 gigawatts, taking 15.2% of China's power mix, while 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 seems available in our interim results. I'm not going to elaborate on that further. Please turn 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 gigawatts, grow by 93% on Y-o-Y basis; onshore, 111.5 gigawatts. Offshore totaled 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 CNY 1,475 per kilowatt, where in Q3 of this year, there are also some new policies being rolled out regarding energies and new development. For example, on August 2, 2024, the General Office of the State Council issued the work plan for accelerating the construction of the new control system for carbon emission. And on the August 6, 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 large-scale equipment upgrades 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 26th of 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 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 on the outline for the preparation for the overall plan of the wind power action in rural regions. The notice indicates the national energy regulatory authority [indiscernible] will establish a regular scheduling mechanism for 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 very few WTG under 4 megawatts, while we have more sales regarding the WTG above 4 megawatts, already reaching 5,596 megawatts, while for WTG between 4 megawatts to 6 megawatts, the sales totaled 4,042 megawatts. 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 41.38 gigawatts are for external orders, including 11.91 gigawatts for successful bidding and 29.47 gigawatts 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 megawatts. Well, for our global business, we also registered very smooth expansion where for this year, we continue to expand the global market. Especially in Morocco, in Philippines, in Georgia and Namibia, we expand our business successfully. Our business covers 6 continents and the 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 projects totaled 8,138 megawatts and around 48% being located in northeastern part of China, where the company added another 1,122 megawatts of attributable grid-connected wind power capacity at home and abroad from January to September this year. And we also have capacity under construction. So in that way, you can see that here now, and our total self-run wind farm record 1,784 hours of utilization. Okay. Next, let me welcome Mr. Wang to walk you through the financials.

Dear investors, good afternoon. My name is Wang Hongyan from Goldwind. I'd like to thank you for keeping an eye on the wind farm industry, and thanks for supporting Goldwind. Let me just walk you through the Q3 financials. Well, we have characterized the financials into 3 part -- 4 parts. First one are for profitability index. Second one are operational index. We are also going to show the solvency position, and the final part, we're going to talk about the cash flow. For the 4 parts, I'm going to show you many different colors in helping you to understand the performance. The light blue represents the performance of the 4 quarters in 2024, and the dark blue color represents the first 3 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 3 quarter revenue in 2024. You can see that in the first 3 quarters, our total revenue totaled CNY 35,839 million. Where on the right side, I show you the profit margin. The same as the full year of 2023 and first 3 quarters of 2024, you can see in 2024, for the first 3 quarters, the comprehensive profit margin was 16.43%, up by 2.21% on a Y-o-Y 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 has been 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 CNY 531 million. Where you can see that general shipping for net profit attributable to the owners, it was CNY 1,792 million, while at the same time, our asset impairment has been reduced by CNY 120 million, further improving the equity efficiency, while at the same time, the fee has been reduced by CNY 260 million continue to optimize our profit structure and the 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 3 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 show you the days 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 3 quarters of this year, while at the same time, the days 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 hit our internal efficiency improvement plan. While on the right side, we show you the days of inventory. Excluding our new product, that is power station business, the actual inventory to total asset ratio was 8.86%. The inventory turnover days was 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 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-bearing 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 continue to go down. And our loan interest rate continue to go down starting from 2021 to now. And for the company, we are going to have a great guarantee for our future developments regarding 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 asset used to be CNY 143.5 billion. By the end of Q3, the updated ratio was 73%. Total asset was CNY 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 for the receivables and inventory management, which I have already mentioned just now. And we also continue to improve the noncurrent 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 asset liability 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 the reserves for these principles. But you can see that for each quarter, our financing reserves should be no less than CNY 12 billion. So that's the reason we will be able to always guarantee the reserves, which can help to further reduce the cost. On the right side, we show you net operating cash flows. You can see Q1, Q2, Q3. At least the trend is in line with what we saw last year. In H1 of this year, we have the power 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 expectations. That's all for the financials of the Q3 performance. Thank you very much. [Statements in English on this transcript were spoken by an interpreter present on the live call.]