Xinjiang Goldwind Science & Technology Co Ltd
SZSE:002202
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
6.53
11.43
|
| Price Target |
|
We'll email you a reminder when the closing price reaches CNY.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
Xinjiang Goldwind Science & Technology Co Ltd
You don't have any saved screeners yet
[Foreign Language] Good morning, ladies and gentlemen. Welcome to Goldwind's Third Quarter Results Briefing Conference Call. We are honored to have 3 guests from top-management level joining us today. They are Company President Mr. Haibo Wang; Company Vice President, Ms. Jinru Ma; and Chief Financial Officer, Mr. Chunzhi Liu.
Our schedule today is as follows: We'll start with the industry review, followed by business review and financial results and conclude with a Q&A session.
[Foreign Language] First, let's welcome Ms. Ma to present industrial review for us.
[Foreign Language] Distinguished investors and analysts, thank you for attending our conference call today. Let's first take a look at industrial development during the first 9 months this year.
[Foreign Language] Turning to Slide 3, global wind power market is now expanding with a rapid pace. According to Bloomberg New Energy Finance, global newly installations of wind power will increase by 200.7 gigawatts through 2018 to 2020, among which China's onshore will contribute 33.5%. Onshore wind power new installations in 2018 was estimated to be 54.6 gigawatts, representing an increase of 16.9% year-on-year. The forecast was 66.4 gigawatts for onshore wind power in 2019, an increase of 21.6% year-on-year, and 6.3 gigawatts for offshore wind power in 2019, an increase of 75% year-on-year. Bloomberg New Energy Finance also predicted in report that China's new installed wind capacity through 2018 to 2020 will reach 21.3 gigawatts, 23.1 gigawatts and 22.9 gigawatts, respectively.
[Foreign Language] The data grid on the right presents a research conducted by Lazard regarding levelized cost of energy of different kinds of energy in the group. Data illustrates that global average levelized cost of energy of wind power has dropped to $45 per megawatt in 2017 from $135 per megawatt in 2009, level of decrease as high as 67%. Wind levelized cost of energy is now prominently lower than fossil energy, nuclear, gas combined cycle and solar power. Being the most economical green power, onshore wind will take a leading position in attracting incremental energy investment.
[Foreign Language] From the chart on the top left of Slide 4, you could see global auctioned renewables capacity has been adding up in the recent 15 years, expected to reach 171 gigawatts in 2018, said Bloomberg New Energy Finance. In this context, a company with technological breakthrough and innovation as well as the establishment of a marketed wind power industry, China is now transitioning to an auction mechanism after a few stages of wind power price-setting such as demonstration-projects price, approved bidding price and bidding tarrifs. We firmly believe this will exploit the potential of China's wind power and China will contribute more capacity in the future as it switches to auction.
[Foreign Language] The formula on the right half shows major factors for calculating levelized cost of energy. The change of focus of industrial competition [indiscernible] through the analysis of levelized cost of energy sensitivity to sectors. In a market-based mechanism, the focus is shifted to optimal full life cycle levelized cost of energy of wind farm from initial construction costs. In this case, levelized cost of energy becomes more sensitive to operation and maintenance costs, and energy production. Products and services with higher quality, more production and lower operation and maintenance cost will be more competitive.
[Foreign Language] Slide 5 introduces China's wind power market. Through January to September this year, domestic newly grid-connected capacity was 12.6 gigawatts, representing 29.9% increase year-on-year. And cumulative grid-connected capacity was over 176 gigawatts, which meant 10% in China's power mix. The chart on the right side reveals average domestic wind utilization was 1,565 hours for the first 3 quarters this year, increasing 179 hours year-on-year. In the first half of 2018, domestic wind curtailment was 18.2 billion kilowatt hours, and wind curtailment rate dropped 5.3 percentage points year-on-year to 8.7%, showing progress in slowing curtailment. The increase of utilization and decrease of curtailment are mainly attributed to governmental policies that gave priority to wind grid connection and promoted wind consumption.
[Foreign Language] Slide 6 shows wind power production and penetration. Through January to September 2018, domestic wind production was 267.6 billion kilowatts, an increase of 25.2% year-on-year. In current strong period, domestic power consumption reached 5,106.1 billion kilowatts, an increase of 8.9% year-on-year. In the first 9 months this year, wind penetration rate was 5.2%, representing 0.7 percentage points increase over the same period last year. The National target for non-hydro renewables penetration rate in 2020 is 9% or above, and wind power takes roughly 6%.
[Foreign Language] Please turn to Slide 7. Domestic wind turbine generator public tender market across the first 3 quarters of 2018 was 23.9 gigawatts, increasing 11.7%. Offshore public tender market was 3.1 gigawatts and took 13% out of total. Currently, domestic average bidding price of wind turbine generators has gradually stabilized.
[Foreign Language] Slide 8 displays recent major policies, including Interim Measures for the Development and Construction of Distributed Wind Power, Requirements on the Management of Wind Power Construction in 2018 and the second draft for comment Letter to Solicit Opinions on Renewable Power Quota and Assessment, et cetera. In the meanwhile, as of now, 12 provinces have released their 2018 wind power development plans and notices. 5 provinces have publicized construction proposals regarding distributed wind power. And Inner Mongolia has announced plans building extra-high voltage wind power bases. The above-mentioned construction pipeline comes to a total of 57.73 gigawatts.
[Foreign Language] Next, we will be presenting business review.
[Foreign Language] Please turn to Slide 10. Through the first 3 quarters of 2018, company sales performed distinctively and ultimately drove 4.8% increase of revenue. The company does not disclose all of these of external sales, but we anticipate full year sales to meet the expectation.
[Foreign Language] Slide 11 presents as of September 30, 2018, the company's external order backlog totaled 18.2 gigawatts, an increase of 18.4% year-on-year, reaching a peak level in history. Signed capacity was 13 gigawatts, increasing 34.7% year-on-year. Company's offshore backlog was 1,382 megawatts, accounting for nearly 8% of total external backlog. International backlog was 737.7 megawatts and took 4%. As for constituents of the external order backlog, 2.0-megawatt unit WTG remained its dominant position in public tender market. 2S platform contributed 12 gigawatts and 66% of total backlog, of which 2.0 megawatt captured 41% out of total. 2.5S platform accounted for 22%. 3S and 6S platforms backlog grew stably, capturing 8% and 3%, respectively. In the recent 3 years, 2S platform's compound annual growth rate of order backlog was 60%, and proportion lifted 5 percentage points. 3S platform's compound annual growth rate of order backlog was 132%, and proportion lifted 3 percentage points. Proportion of 6S platform enhanced to 3% from 0%, which illustrated its enormous potential.
[Foreign Language] As of September 30, 2018, Goldwind has 737.7 megawatts of overseas order backlog. Order intake mainly came from emerging markets, including Turkey, Argentina and South Africa. Cattle Hill and Moorabool wind farms in Australia had already commenced construction. As of September 30, 2018, attributable constructing and to-be-developed capacity in foreign markets totaled 1,856 megawatts, building the bedrock for future sustainable development.
[Foreign Language] Slide 13 and 14 display the company's power generation business. As of September 30, 2018, the company's attributable connected wind farm capacity was 4,197 megawatts, of which 38% domiciled in Northwestern region, 34% domiciled in North China and 19% domiciled in East China and the South region. Goldwind added 329 megawatts of attributable connected capacity through January to September 2018, an increase of 149% year-on-year. Incremental capacity mainly domiciled in East and North China. As of September 30, 2018, the company's attributable under-construction capacity was 3,236 megawatts. Domestic under-construction projects have restored in Northwestern region, and more than 58% domiciled in high-penetration-rate regions like South and East China.
[Foreign Language] Company's profitability of wind farm investment is also improving continuously, along with expanded scale. Benefiting from decreased wind curtailment in Northwestern region and successive commencement of incremental projects in South China, standard utilization of Goldwind's self-run wind farms increased 237 hours and reached 1,654 hours in the first 3 quarters of 2018. The graph on the right side shows the group's consolidated power production volume was 5,807.5 gigawatt hours in the first 3 quarters of 2018, an increase of 39.7% year-on-year.
Tianrun, one of Goldwind's subsidies, directly traded 23% of its total power production.
[Foreign Language] Let's welcome Mr. Liu to present financial results for us
[Foreign Language] Thank you, Ms. Ma. Please allow me to present company's financial results. As presented on Slide 16, company's revenue was RMB 17.82 billion for the first 3 quarters this year, 4.8% higher year-on-year, benefiting from major business and sustained optimization of business structure. Gross profit rose 2.6% year-on-year. Recurring net profit increased 7.3%, and recurring net profit margin increased 3 -- 0.3 percentage points year-on-year to 12.9%. Attributable net profit was RMB 2.42 billion, representing 5.4% increase, and net profit margin rose 0.1 percentage point year-on-year to 13.6%.
[Foreign Language] Company's revenue was RMB 6.79 billion in the third quarter of 2018. Quarterly gross profit was RMB 1.83 billion. Quarterly recurring net profit was RMB 876 million, and recurring net profit margin was 12.9%. Quarterly attributable net profit was RMB 889 million, and attributable net profit margin was 13.1%.
[Foreign Language] Slide 18 lists out status quo of company's operating cash flow. Net operating cash outflow in the first 3 quarters of 2018 was RMB 1.05 billion, representing an increase of 2.7%. Net operating cash inflow in the third quarter was RMB 1.63 billion, an increase of 209%. Cash income ratio improved to 0.89 through January to September 2018 from 0.81 in 2017 due to resilient wind turbine generator sales and internal management. The company's cash conversion cycle extended 6 days -- 60 days to 156 days in the first 3 quarters of 2018, with the decrease of operating assets turnover. Inventory cycle shortened 6 days to 104 days. Company's short-term receivables conversion cycle was 254 days due to the expansion of power generation business, excluding notes with high liquidity and circulation.
[Foreign Language] Slide 19 reflects the change of company's debt service indexes, which remained healthy as of September 30, 2018. The chart on the left shows cash and cash equivalents, which is RMB 1.51 billion, and noncurrent assets due within 1 year reduced RMB 261 million. Accounts payable added RMB 2.93 billion relative to the end of last year, and other payables added RMB 410 million. The above changes are the reasons why debt service indexes descended relative to the beginning of this year.
[Foreign Language] Due to the large amount of cash spent on purchasing components, on constructing wind farms in the third quarter as well as enlarged long-term borrowings resulted from continued investments in wind power projects, the company's cash and cash equivalents decreased to RMB 6.23 billion as of September 30, 2018, from RMB 7.72 billion at the end of last year. Net gearing ratio rose to 80%.
[Foreign Language] Now we'll open the floor to questions.
[Foreign Language] Changjiang Securities, [indiscernible].
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language] Citibank, Pierre Lau. [Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language] [indiscernible] Securities, [indiscernible].
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language] [ Thomas Zhu ].
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language] Okay. [Foreign Language]
[Foreign Language]
Okay. [Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language] Morgan Stanley [Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language] UBS, Abigail Sun.
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language] Audio cast and presentation materials are available for download at our official website under Investor Relations column. Should you have any questions, please feel free to contact us. Thank you again for your participation.