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

Good afternoon, the investors. Welcome to the 2025, Q3 Earnings Call for Goldwind Science and Technology Company. We are happy to have the management with us, Chairman, Mr. Wu Gang, Deputy Chair and also President and also Ms. Ma, Board Secretary, Mr. Wang Hongyan, Vice President and [ Group's Internal ] Manager Chen. So we have 2 parts of this call. We have Ms. Ma to kick off the Q3 industry and development, and Mr. Wang will take you through the financial results. And the second part, we're going to move on to the Q&A, and I'm going to hand over to Ms. Ma.

Okay. Dear investors, good afternoon. Thank you so much for your interest to the company. So I'm going to take you through the industry and company performance and CFO will talk about the financial highlights. So if you look at the industry review, now on this slide, we're showing you the global wind power market. On the left, this represents 2024, the full year wind power installation. I'm not going to go into great details in the interim results, we have demonstrated this number. And on the right, this is really the pie chart for the 2024 global wind power generation. The 2024 global power generation improved by 4.4% with renewable energy improving by 9.6% to 9,868 terawatt hours accounting for 31.6%. And also the global wind power generation increased by 8% to 2,511 terawatt hours, representing 8% of global power generation. So China is by far their leader, the wind power reaching 997 terawatt hours, which is 40% of the total wind power and followed by U.S. and Germany, even though China is a far leader by absolute amount by 40%. However, in terms of the penetration, we maintain it at about 50% of the share compared with Denmark, they are over 50%. In Europe, they are at 30%. So in China, specifically, now in terms of the grid connection gradually expand and rising power generation from January to September, the new connection was increased by 15.6%. The full year cumulative wind power connection was 572 gigawatt hours, which is a total of 15.7% of total installation and thermal power reduced to 40%. And also, if you could look at, again, from January to June, the total power consumption increased by 3.7% year-on-year in China. So -- and also in terms of the Chinese public tender, so we have seen an incremental 102 gigawatt hours in the 9 months of this year, representing 14% increase year-on-year by different markets. Onshore tender was 97.1 and offshore 5 gigawatts. So you can see the wind power tender price. As you can see, a rising -- a rising trend among stability. Now in Q3, the government has launched many policy to promote renewable energy, wind power, low carbon and green transition, including July, the National Energy Administration released the 2024 China Electricity Market Development Report. In August, the General Office or CPC Central Committee and State Council issued them opinion promoting green and low carbon transformation. In September, NDRC and NEA issued notice on improving price mechanism to promote local consumption of new energy. As well as the guiding principle on promoting high-quality development of energy equipment is all providing support to this sector. Remarkably, on September 24, President Xi Jinping issued a video presentation on the UN Climate Summit, really announcing a new round of contribution targets for the positive contribution to Paris Accord, the overall target, which means China's greenhouse emission will drop again by 7% to 10% by 2030 (sic) [ 2035 ] for promoting the nonfossil fuel consumption mix. We're aiming at 30% non-fossil fuel, wind and solar installed capacity will be 6x as high in that of 2020 and also the forestry stock volume will be 24 cubic meter -- 24 billion cubic meter. So all this is effectively driving the global low carbon transition. So amid the macro background, the company's performance. Now first of all, if you look at the sales from Q1 to Q3, we have made 18.4 terawatt increased by 90% from the first 3 quarters, we have exceeded the total sales of last year. As you can see, particularly, we are seeing like the 4 megawatt and below is only 0.12%. Our 4 to 6 megawatts was 13.8% and 6 megawatts and higher includes 86% to 15 terawatts. In terms of backlog, end of Q3, the backlog was 52.5 gigawatts with external backlog 49.9 gigawatts. And also, we have an external order backlog totaled 49.9 gigawatts, including 11 gigawatts of successful bid and 38.9 gigawatts of signed contracts. As you can see, external order mix, primarily 41 terawatts with 83% coming from the unit above 6 megawatts. Now our international business has been going on well in 41 countries around the world where, we have business presence. And by the end of Q3, the accumulated ex-China installation was 11 gigawatts in China, ex-China -- in Asia ex-China is more than 3 gigawatts. In the Latin America, Oceania, we have more than 2 gigawatts of installation. So right now, our overseas backlog was 7 gigawatts. So for international delivery and sales, this is going to be a strong support with such a volume of backlog. Now from January to September, we added 745 megawatts of attributable grid connection wind power. As of end of September, our attributable grid-connected wind power project totaled 9 gigawatts. And also, we are having an attributable under construction wind capacity at home and abroad total 4 gigawatts. So if you look at the pie chart, you can see the highest is Northwest, which is 67%, followed by North China, 25% East China was 8%. So the 4 megawatts under construction, so most of it was the Northwest and North China. So Jan to September, the utilization rate hours 1,700 hours. So that was the industry background. I'm going to hand over the CFO for the financial results. Thank you.

Thank you. Good afternoon, everyone. I'm Wang Hongyan from Goldwind. Thank you so much for your interest in Wind Power, and thanks for joining this call. And I'd like to take you through the 2025 financial results in Q3. So there are 4 parts of my talk. Like consolidated profitability, operating cash flow. So again, as a rule, the dark was the previous year -- dark one was this year and the gray bar was the previous year. So you can see from this chart, there are 4 metrics on the upper left, revenue in 2024 compared with the 3 quarters in 2025, represented in gray bar and blue bars. As of the September 30, the revenue was CNY 48.1 billion, which is historical high, increased by [ CNY 10.3 billion ]. As in Q1, Q2, Q3, we have seen increase year-on-year. The growth was mainly coming from the wind turbine manufacturing on the upper right, this is the comprehensive profit margin. As of September 30, the comprehensive profit margin was 14.39%, down by 2.04%. It's mainly because revenue mix changes and the turbine manufacturing increase revenue, as you can, manufacturing has a lower margin compared with the other 3. So comprehensive margin was slightly down as of September. Our gross margin was up by CNY 1.39 billion. So higher margin dollar amount coming from the turbine manufacturing. And lower left, this is attributable net profit. Our net profit CNY 2.08 billion, increased by CNY 792 million and is mainly because of the improvement of the profitability. On the lower right, this is the weighted average of ROE as of September 30. The comprehensive ROE was 6.67%, increased by 1.9 percentage points. Again, you can see Q1, Q2, Q3 ROE has all have been improving in a quarter-to-quarter basis. So as of September 30, the revenue, margin, attributable profit and weighted average ROE is really matching to our operational plan, and we have seen further improvement of the profit structure. So now this is about the operating index on the left, this is the account receivables. As of September 30, our AR as a total mix of assets 21%, 1 percentage point higher and the turnover days of 175 days, which is 9 days shorter. This thanks to the increase of revenue and we'll continue to collect in Q4 so that we can reduce the AR days to meet that target. On the right, this is the inventory and contract assets as of September 30, it accounts for 13% of total assets, which is down by 2 percentage points. The average turnover days 130 days. And inventory have been improving as efficiency. So as the inventory -- efficiency, we have seen improvement year-on-year. So -- and now on the 15th slide, this is the solvency metrics. On the left, this is our interest-bearing debt. As of September 30, interest-bearing debt accounts for 41% of total liability, which is down by 7 percentage points. As you can see, compared with last year, we have been lower. We've been lower by CNY 5.3 billion. So we optimized the interest-bearing debt, improving the cost of fund using. On the right, this is the asset liability ratio. At the beginning of the year was 73.96%, which is CNY 1,502 billion as of September 30, it was 71.11%. Total assets, CNY 167 billion in total assets. So asset liability ratio has been lower compared with historical number or compared with the peers, they have all shown the asset liability ratio has been well managed to achieve good results, thanks to 2 measures. First of all, the equity asset improvement, which includes the profit improvement and also the equity financing. And also, we have been managing the -- optimizing the current and noncurrent assets. So when we are controlling the financial risk, we will further enhance our equitable assets to make sure we maintain a reasonable and healthy asset liability ratio. The last slide is the cash flows and cash in stock. On the left, this is our cash and total assets as of September 30. It accounted for 5.65% of cash, total assets. This is actually lower compared with the past. On the right, we are seeing the net operating cash flow with 2 features. First of all, the cash flow is in line with the seasonality. In the last few years, the trend of operating cash flow has been consistent. And the second feature is clearly, you can see the net operating -- net cash outflow has been narrowed. As of September 30, it was CNY 633 million net cash outflow. So narrowed by CNY 58.7 billion compared with last year. So it really helped attributable to improving the management of collection and payment. So we are actually having results in enhancing profitability and also benefiting from better cash flow. So this is the Q3 2025 results. Thank you.

Thank you, management, for that presentation. [Statements in English on this transcript were spoken by an interpreter present on the live call.]