Goldwind Science & Technology Co Ltd
XMUN:CXGH
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Earnings Call Analysis
Q2-2023 Analysis
Goldwind Science & Technology Co Ltd
The company's management team, including the Vice President, gathered to present the interim results for the first half of 2023, focusing on the industry and business review. This comes along with a commitment to walk through the financial details vital for understanding the company's position.
An impressive growth in global wind power installations was observed in 2022, with 77.6 gigawatts commissioned—68.8 gigawatts onshore and 8.8 offshore. The Asia-Pacific region dominated with 56% of installations, and China alone contributed an astounding 49%. As wind power's global footprint expands, renewable generation now accounts for 50.1% of global renewable energy output, signifying wind power's increasing importance in the world's energy mix.
China showcased a remarkable surge in new grid connections, growing by 77.7% in the first half of 2023, resulting in an aggregated capacity of 389.2 gigawatts. Despite a minor year-over-year decrease of 7.5% in the domestic public tender market, the Chinese government's aggressive green energy policies favor wind power's growth and integration into the national grid, which bodes well for the industry's future.
The company's external sales capacity climbed a robust 41.6% to 5,784 megawatts, with considerable growth in wind turbine generators (WTG) above 6 megawatts. Moreover, the total order backlog hit 30.0 gigawatts, suggesting a healthy pipeline for future revenues. Expansion into global markets hints at strategic diversification, with installations exceeding one gigawatt in North America, Australia, Asia, and South America.
A strong revenue increase marked the first half of 2023, with revenue hitting RMB90 billion, powered by 41.7% growth in WTG sales. However, challenges persist, evident from the decline in profit margin to 17.27%, a reduction of 7.87% from last year. Net profit followed suit, decreasing due to the dip in WTG market prices and less effective cost reductions. Yet, the company's solvency position remained robust with a healthy current ratio of 1.11 and a stable asset-liability ratio at 69.96%, indicating a sound financial structure. Ensuring liquidity, the cash to total assets ratio stood at 7.91%, with a focus on improving net operating cash flow, which was RMB8,071 million for the reporting period.
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Ladies and gentlemen, I'd like to welcome you to join us for Goldwind 2023 Results Release for the Interim period. And now let's welcome the moderator to chair the session. Ladies and gentlemen, I'd like to welcome you to join us for the Goldwind 2023 Interim results of release. We have the management team joining us here, including both Director [indiscernible] and Mr. Cao and Vice President and Board Secretary and the Company Secretary Madam Ma and also Mr. Xue Naichuan, Group VP and the GM of the Wind Power Industrial Company and the Group VP and the Deputy GM of the Wind Power Industrial Company, Mr. Chen Qiuhua.
Ladies and gentlemen, first of all, we're going to have Madam Ma walk you through the financials and also the business review and the data we're also going to have Mr. Wang working us through the financial results and then working regard into the QA session. Madam Ma, please.
Ladies and judgment, good afternoon. And then actually we have another management team member who joins us for this call. And Xue Naichuan our VP and we're all here as a whole management team to present to you our 2023 interim results, especially for 2023 H1. I think you have the deck in your hands. So, let me just report to you on three points, including the Industrial Review, and Business Review, I will cover both parts and later we're going to have Mr. Wang of working you through financial results.
Please go to Slide 3. If we take a look at slide three and according to Bloomberg, and the word wind power committee started to update the data. So that's the reason I'd like to show you the data from GWEC. The global new installation in 2022 was 77.6 gigawatts onshore accounted for 68.8 gigawatts, offshore totaling 8.8 gigawatts. By region, APAC accounted for 56% of the total installation Europe represent 25%. North America attribute 12% and China represent 49% of the total new installation, U.S. 11%.
On the right side, you can see global wind power generation. In 2022, the total global power generation reached 29,165 TWh of wage, renewable energy generated 4,204 TWh counted for 40.4%. At the world's highest generating renewable energy and wind power generation increased 13.5% worldwide reaching 2,105 TWh in 2022 accounted for 50.1% of the global renewable energy generation and 7.2% of the global total electricity generation.
And it can also say that China has accounted for 36% of the global wind power generation. U.S., Germany were ranking second and third. Well, let's also say in H1 of 2023, China recorded 23.0 gigawatts of the new grade connection grow by 77.7%, which is a high number of which 21.9 gigawatts of onshore and 1.1 gigawatts for offshore. By the end of June of 2023, accumulated grid-connected wind power capacity totaled 389.2 gigawatts taking 14.4% of the China power mix. And the thermal power declined to 50.1%.
On the right side, the total power consumption in H1 bases was 4307.6 billion kWh with 5% Y-o-Y increase. The wind power production increased by 20%, and also the penetration ratio rate 10.7%, utilization rate of the wind power rate 96.7%. The average utilization rate hour is 1,237 hours in H1 of this year, increased by 83 hours Y-o-Y also take a look at the public tender market.
The domestic public tender market totaled 47.3 gigawatts, representing 7.5% Y-o-Y decrease. Onshore public tender totaled 41.5 gigawatts, offshore 5.8 gigawatts. By region, 69% in northern part of China, 31% in southern parts of China. The majority of the tenders are actually in northern parts of China for the big industrial-based project. On the right side, we show you your average bid price in June of this year. The average biding price is already RMB1,681 per kilowatt. And let's also take a look at the next slide regarding policy support. We further promoted the transformation of the energy structure and promote the green and the low carbon development energy. And China also released further policies to provide good policy support to the renewable energy development in China.
First of all, Chinese government further promotes the transformation of the urban structure and also the promotion of the green and low-carbon development strategy. We also started to say that starting China's green development in the new era and [indiscernible] also started to propose that we're going to construct the new power system and deepen the reform of the electricity market. And we also started to see that the non-fossil energy power generation increased to 51.9% and the wind power and for the voltage power generation accounted for 15.3% of the total social electricity consumption. And the government also promoted the first batch of the larger scale wind power and PB based projects focusing on a desert. And we also started to promote the distributed PB projects.
And for the whole year, actually, the wind power and the photovoltaic power installation capacity will increase by 160 million kilowatts throughout the year. While at the same time, the government also accelerate the construction of the new power system and deepen the reform of the electricity market. The NDRC, MOF, and NEA jointly release the notice on matter related to the participation of the green power projects Enjoying Central Government Subsidies in green power trading. Proposing expanding the scale of the grain power participation, where at the same time and we also issued that the blue cover print continue to show the three steps to go system and actually further talking about how we can accelerate the construction of the new power system.
And another point the government has been taken is promoting the development of the distributed wind power and encourage the renovation upgrading of the old wind farms. Especially it mentioned that upgrading the wind farms then to continue to upgrade its facility if its unique capacity, less than 1.5 megawatts. All that going to lead to the efficiency improvement for the wind farms and the wind farm industry. Based upon that please allow me to work you through our business. We have a full business line as being shown on the slide in creating four segments, WTG manufacturing sales, wind farm development, wind power cities, and other business.
Please go to Slide 9. Slide 9 shows you one of the biggest business one doing. They can see in H1 of 2023, our external sales capacity was 5,784 megawatts up by 41.6%. And you can see the sales capacity of WTG below four megawatts total of 29 megawatt taking 0.5% of the total sales capacity. The WTG, four megawatts include to six megawatts totaled 4,222 megawatts taking 73% of the total sales capacity.
And also, the WTG above six megawatts has already taken 26.5% of the total sales capacity. You'll see on Slide 10, show you the order backlog. By the end of June, the total order backlog was 30.0 gigawatts of external orders, 28.2 gigawatts and including 6.6 gigawatts of a successful bid, and the 21.6 gigawatts of the site contract. On the right side, we showed you the external order mix, 57% of the order are actually for the WTG between four megawatts to six megawatts.
We are also expanding our global footprint. You can see that our installations in North America, Australia, Asia, and South America has already exceed one gigawatt. By the end of June, the older black log in overseas market has already totaled more than 4,601 megawatts upgrading capacity totaled of 554 megawatts as of the end of June, the company's attributable grade connected wind power project totaled 6,922 megawatts, of which 28 are in Northeast part region, 25 in Eastern China, 25% in Southern China, 10% in Southern region, 4% in Northeast region, 8% in overseas market. The company aided 585 megawatts to attributable grade connected wind power and you can see at the end of the June company's attributable under-construction wind capacity at home total 3,203 megawatts, 48% are in Northeast part of China, 23 in Eastern China, 21% in Northern China and 8% in Southern parts region.
On the right side, we actually show you the data, and if we are taking a look at the utilization hours in H1 of based year and actually our utilization is 1,344 hours and 107 hours higher than the national average. We also maintain very high-quality growth. You can see by the end of June for our installed fleet and actually, the under-upgraded capacity totaled 29.6 gigawatts by 6.5%.
Coming next, I'm going to welcome Mr. Wang to work you through the financials.
Dear investors, ladies, and gentlemen, good afternoon. Please allow me to work you through the 2023 interim results, and I'm going to direct you through four financial indicators. First of all, let's talk about the overall financials and then the financial indicators. Then I will talk about solvency along with cash flows. You can see this is actually the first part of our financial performance increasing profitability index.
On the left side, that is our revenue, you can see revenue in H1 of 2023 was RMB90,000 billion and other [indiscernible]. And a big reason is because we have very good sales for WTG and run the RMB432 million increase for other businesses. But you can see WTG revenue increase if the course will continue to improve the capacity it was being grown by 41.7%. But from the price perspective, WTG's price still being truly distressed. And you can also see in Q2 for a single quarter performance, no matter from a Y-o-Y or M-o-M perspective, we do see upward movement. The reason is that for the wind turbine, actually, the semi line of drive product started to go up.
On the left side, we show you the profit margin of the group. As you can see in H1 of 2023, the profit margin was 17.27% down by 7.87%. So, that's the region. Our total profit margins being down by RMB900 million. And I think the key reason is because the WTG price actually reduced much higher than the cost reduction. And actually, for the, especially the price of the WTG continues to go down, and talking about the Q2 performance, the price was going down. The reason still because the WTG price go down and the delivery period also being somewhat impacted. This is actually showing you the revenue and the profit margin of the group.
Coming next, I'm going to show you the net profit attributable to the owners of the company. In H1 of 2023, this number stood at RMB1,251 million and down by RMB696 million. The reason is because the WTG business because the market price went down a lot. The cost reduction is not as what we expected. So, that's the reason the GP margin was down by RMB900 million, where at the same time we actually started to see the narrow down the losses, which can help us to further improve our financial postponements.
On the right side, that is our weighted average return on equity. It was 8.83%, and 3.38%. The first point is because of the return changes and also net asset changes. And you can also see that in H1 of these we have left and the assets being somewhat impacted. This is actually showing you the result.
And let's also take a look at the next slide, regarding the segment results. You can see WTG manufacturing and the south; the GP margin was 3.51%. That used to be 12.43% in last year. It was done by more than 9%. Where for the other three businesses, they are actually by with our expectations. For example, like wind farm development and we have more utilization hours and which will actually help to meet the criteria for revenue and profit growth. On the left down corner will show you the wind power service. Just now Ma shows you that actually, we continue to further improve our capacity.
So, that's the reason our wind power service being further extended. The GP margin has been done due to a special reason. And you see that the global EPC projects, we do have some disputes with the project owner and that's the reason we made the promotions over those projects. And if we just deduct this special reason actually when the power service, the GAAP margin was actually 23.98% in line with our expectation.
On the right side, I show you the other business. Other business including environmental protection business revenue and is in line with our expectations. The gross margin was being reduced and we are in the hydropower plant validation stage. Some facilitators already being certified by the local authority. We're still waiting for the government to show us further notice, so the gross margin would be further improved for other business.
Well, let me also show you the solvency position. On the left side. I show you the current and quick ratio you can see by the end of June of 2023. Our current ratio was 1.11, it's being activated. The quick ratio was 0.72 is provided in line with our expectations, and you can also see that by the end of June and actually our assets actually, close to RMB6 billion from 2019 to now. We used to have an active number, but starting from 2022 H2 actually the net, assets started to be seeing some positive movement. In other words, our short-term debt solvency capacity has been further improved.
On the right side, it shows you an asset-liability ratio of 69.96%, which is very stabilized. In other words, we are safe. The final part shows you cash flows. On the left side, you can see this is our cash flow status. So, for Goldwind, we are continuing to actually take care of our liquidities and continue to leverage our total cash to total assets. And then you can see actual cash to total assets would be stabilized.
By the end of June of this year, the ratio of the cash to total assets was 7.91% in line with our expectations. On the right-side ratio, is the net operating cash flow from January to June of this year. The total operating cash flow was RMB8,071 million and we need to make further improvements on this number. We have already formulated multiple measures, making sure that for the full year actually our operating -- net operating cash flow should be no less than the profit attributable to the owner of the company. Thank you.
Thank you very much. Thank you for your nice presentation.