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

Respected investors, good afternoon. Welcome to join Goldwind Science&Technology 2026 Interim Results Announcement Webinar. And joining us are management members, Mr. Cao Zhigang, Board Director and President; VP, Board Secretary, Ma Jinru; and CFO, Wang Hongyan. And today, we're going to have two segments. In segment number one, Madam Ma is going to walk us through the industry development and the company's operation in first half 2026. And then Mr. Wang Hongyan, CFO, will walk us through the financial highlights, and then we'll kick into the Q&A session. Over to you, Madam Ma.

Thank you, moderator, and thank you to all investors. Good afternoon. Welcome to join Goldwind Science&Technology 2026 Interim Results Announcement. Let me walk you through the industry landscape, and then I'll break into our businesses. On this page, you are seeing the global wind power development in our annual [ remote ] we talked about what happened then. And now in our interim results, you are going to see the GWEC and ARENA data. 2025, new installation globally was 164.6 gigawatts. Onshore, 155.3 gigawatts; and offshore, 9.3 gigawatts. By region, APAC accounted for 80% of total installations. China contributed 73% and U.S.A. contributed 4%. On the right side, you can see IRENA's understanding of LCOE. You can see in 2010 to 2025, the global onshore wind power LCOE declined by 71%. And of course, in China, the LCOE for onshore power also dropped by 71%. And you can see that the LCOE in China is much better than global. Meanwhile, the offshore LCOE globally declined by 63%, whereas China declined by 76%. Let's back to China. In first half of 2026, China recorded 38.6 gigawatts of grid connection, net decrease of 24.8% year-on-year, and onshore, 37.8 gigawatts; and offshore, 0.8 gigawatts. By the end of June 2026, cumulative grid connection totaled 679 gigawatts, taking 16.8% China's total power mix where thermal power declined to 38.8%. On the right side, you can see energy generation as well as the penetration rate. In first half of 2026, China has used 5.3% year-on-year more power, and wind power production increased by 1.8% year-on-year, a penetration rate of 11.7%, utilization rate of 90.9% from January to June, if you look at the market, especially on the grid connection totaled 917 hours. If you look at the public tender market, total scale, 51.8 gigawatts, down by 28% year-on-year. But if you look at the interim data, which was much better than the past by region, onshore, now by region, 72.5% originate from Northern parts and 27.5% from South. And onshore totaled 48.9 gigawatts and offshore, 2.9 gigawatts. On the right side, you can see the average monthly bidding price in the last 1 year. You could see a very stable and rising curve with a little bit of fluctuations. In 2026 marks the beginning of a 15th Five Year Plan. And you know that NDRC had released several documents around building unified national electricity market and delivering China's energy neutrality. On March 20, the government has proposed building a more efficient energy system so that by 2030, non-fossil energy could reach 25% out of total energy consumption, and it will certainly assist China's economic development. On May 14, NDRC has issued the notice on matters relating to the orderly promotion of multi-user green power direct supply development. Fast forward to June 13, the NDRC had issued the notice on the 15th Five Year Plan of the construction of the new energy system, setting the goal of initially setting up a clean, low carbon, safe and efficient new energy system. By 2030, the share of installed wind and solar power capacity will exceed 50% and generating more than 30% of the power out of China's total energy mix. In the same time, NEA had released several documents on building China's electricity market, for example, the power generation side subsidy and new mechanisms. State Council, also, on July 5 issued the action plan for carbon peaking under the 15th Five Year Plan, which talked about installed capacity of wind and solar power by 2030. Against this background, our interim results, like usual, will also share with the investors our business development, especially the WTG manufacturing and sales. The sale capacity and revenue have presented very positive momentum. By segment, we can see that our sales capacity for WTG manufacturing sales more than 12 gigawatts, up by 16.2% year-on-year. And in terms of the installed capacity, you could see that there are more and more signs towards the larger capacity below 6 megawatts accounting for 11%, 6 to 10 accounting for 66%, above 10 megawatts, accounting for 23%. Now let's look at the backlog order, which is very high externally. We have -- by backlog order, you could see that total backlog order, 54.1 gigawatts, and external order backlog totaled 50 gigawatts (sic) [ 51 gigawatts ], including 10.4 gigawatts of successful bid and 40.6 gigawatts of signed contracts. And of course, this company has been expanding international market. And today, our business is across 49 countries and six continents. You could see here that we're mostly dominant in Asia, excluding China, which total capacity is more than 4 gigawatts; in South America, more than 3 gigawatts. In Africa and Australia, each more than 2 gigawatts. By June 30, 2026, we have more than 9.5 gigawatts in our backlog order in overseas. Now let's look at grid connection. We have added 541 megawatts for attributable grid connection power in Homeland China, a total of 101.75 megawatts were sold home and abroad. And as of the end of 2026 June, company's attributable grid-connected wind power projects totaled 10,319 megawatts, 39% in Northwestern China and 23% in Eastern China. Now on the right side, you could see the distribution. And let's look at the utilization hours. Our recent hour is 1,106 hours, of course, is much higher than the industry. As I said, the industry is much lower. If you look at the wind power services, the number is growing. And today, we have more than 60 gigawatts under operation capacity, up by 31.3% year-on-year. So over to you, Mr. Wang to walk us through the financial highlights.

Dear shareholders and representatives, investors, good afternoon. First of all, thank you very much for your support in the wind power market as well as your support in Goldwind. And now I'm going to give you our financial results for 2026 interim announcement. As usual, I will share with you five aspects of content, and I will, of course, walk through all the key data. The light gray represents last year and the dark gray represents the reporting period data. Now let's refer to Page 15. Here on this page, you could see the profitability index overview. There are four key indicators here. On left upper corner, you could see revenue from 2025 first quarter to second quarter 2026 in gray and blue. In first half of 2026, our revenue is RMB 33,739 million. Our main revenue increase comes from WTG manufacturing, and you can see that onshore/offshore business also grew exponentially in the reporting period. On the right side, you could see -- on the right upper corner, you could see the comprehensive profit margin from Q1 2025 to Q2 2026. In 2026 first half, our comprehensive profit margin is RMB 16.76 billion (sic) [ 16.76% ], up by 4.1 percentage points. So you can see that both the profit margin and gross profit growth for the company. On the left side, you could see the attributable net profit, which is RMB 1,855 million. The growth comes from two aspects. First, better profitability, especially the increasing GP margin and the declining expenses, which means we're making more money and spending less. On the right side, you could see weighted average return on equity. In first half, our weighted ROE reached 4.15%, increased by 0.66 percentage points. That's a result of our optimized net asset structure and operations. Since 2023, our weighted ROE has been recovering year-by-year. So overall, you could see that in first half 2026, consolidated revenue, comprehensive profit margin, net attributable profit and weighted return on equity all improved. Now let's look at Page 16. On Page 16, you could see the segment results by four segments. The first segment is WTG Manufacturing and Sales. Just now Madam Ma had already walked us through the specific numbers with revenue of RMB 27,256 million. And last year, same period, was RMB 21,852 million. So profit margin is more than 11.6%. And you can see that the gross profit for this segment grow, especially for our onshore and offshore businesses growth. The second segment is Wind Farm Development segment. Revenue, RMB 3,149 million and same period last year, RMB 3,172 million and gross margin, 54.4% and same period last year, 57.5%. The segment's profit margin and revenue declined. Why? Because the price and development cost is very high, coupled with the narrowing tax policy. On Wind Power Services revenue, RMB 2,728 million and same period last year, RMB 2,896 million. Profit margin, 21.8%, whereas the last reporting period, 22.5%. You can see it's almost stable versus same period last year. And on others, I think you could see that the revenue scale and profit margin was practically flat versus first half 2025. So overall, I think first half 2026 performance is aligned with our forecast and expectation. So let's now look at the Page 17. On days of trade receivables, there are three indicators. The first one is RMB 34,898 million trade receivable accounting for 20% of total assets, improving by 1 percentage point. And you can also see that the turnover days was optimized for 13 days. So you can see the trade receivables management has been delivering positive signs. On the right side, you could see that inventory and contract assets by end of June 2026, inventory and contract assets totaled RMB 20,357 million, taking 12% of total assets. And of course, days of inventory and contract assets was 111 days, all reflecting company's optimized operation and management. Now on Page 18, you can see the interest-bearing debt on left side, end of June, company's interest-bearing debt totaled RMB 54,071 million, slightly raising because of dynamic adjustment of company's interest-bearing debt versus non-interest-bearing interest. So the share of non-interest-bearing debt is increasing because we are trying to manage the supply chain and maximize our supply chain. In the same time, you can see that our comprehensive credit has been improving, which reflects very sufficient low-cost supply of credit. On the right side, you could see asset liability ratio. End of June 2026, company's asset liability ratio is down by 1 percentage point, standing at 71.81%. This, of course, reflects our positive prudent and healthy financial policy. In 2026, the company has maintained a very healthy financial management, making sure our asset liability ratio is lower than last year. On the last page, you could see cash and net operating cash flows. On the left side, you could see cash on hand in 2025, Q1 and 2026 Q2. You can see by the end of June 2026, the ratio of cash to total assets was 6.61%, improving versus same period of last year. This is, of course, because of our active application of integrated cash management, SWIFT management and CIPS dual system. On the right side, you could see the net operating cash flow from 2025 to interim 2026. The net operating cash flow was projecting a quarterly sign. The net operating cash in interim 2026 is narrowing, reflecting safety of our cash and improving the utilization and efficiency of our cash. This is because of our better management of our deliveries and receivables. So that's the company's strategy to making sure we have stable, sufficient, healthy net operating cash flows. So that's wrapping up my part. [Statements in English on this transcript were spoken by an interpreter present on the live call.]