Goldwind Science & Technology Co Ltd
XMUN:CXGH
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Earnings Call Analysis
Q3-2023 Analysis
Goldwind Science & Technology Co Ltd
In the 2023 Q3 earnings call for Goldwind, executives, including Chairman Cao Zhigang and CFO Hongyan Wang, shared updates on the company's performance and financials. The agenda was structured to first walk through Q3 operational results, followed by a deep dive into financials, concluding with a question and answer session.
Goldwind reported substantial growth in wind turbine manufacturing and sales, with external sales capacity jumping to 8,904 megawatts, a 26.7% increase. The wind power service and other business lines also contributed positively. The order backlog stood at 31.51 gigawatts, indicating strong future activity. Goldwind's global presence has expanded to over 30 countries across 6 continents, with international installations exceeding 6,358 megawatts, showcasing the company's successful expansion and diversification efforts.
The financial results of Goldwind reflected an increase in revenue to CNY 29.3 billion, correlating with the mentioned capacity growth. Despite this increase, the gross profit margin decreased slightly to 17.58% due to a downward trend in turbine gross profit (GP) margin. Active optimization helped stabilize the GP margin quarter over quarter. Net profit attributable to shareholders was CNY 1.26 billion, affected by lower GP margin and increased research and development expenses. However, the weighted average return on equity decreased minimally by 0.06% to 3.32%.
Goldwind improved its net current assets to CNY 4.48 billion, recovering from negative figures previously. The asset-liability ratio increased to 72.25%, primarily due to increased liabilities from dividends and growth in wind farm development and operational assets. The net operating cash flow experienced an outflow of CNY 4.72 billion, which is expected to improve in the latter quarters, aligning with the industry's practice of more deliveries and business in Q3 and Q4. The cash to total assets ratio was a healthy 9.79%.
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Distinguished investors, ladies and gentlemen, good afternoon. I'd like to welcome you to join us for Goldwind 2023 Q3 results release. Today, meeting us here are Chairman of the company; Mr. Cao Zhigang; VP Board Secretary and Company Secretary, Madam Jinru Ma; CFO, Mr. Hongyan Wang, Group VP and GM of Wind Power Industrial Company; Mr. Xue Naichuan, Group VP and the Deputy Chair of Wind Power Industry Company, Mr. Chen Qiuhua.
Today, our meeting will be divided into two parts. First, we're going to have Madam Jinru Ma to walk you through the Q3 performance and operations. And then we're going to have Mr. Hongyan Wang to walk you through the financials of the first 3 quarters of 2023, and then we get into Q&A session.
Madam Ma, please.
Distinguished investors, ladies and gentlemen. Thank you very much. Thanks for keeping an eye on Goldwind, the wind farm industry and wind power industry. Please allow me to walk you through the industrial landscape and our business operation.
Please go to Slide 3. On Slide 3, we show you the global annual new installation of the wind power market. I would just [indiscernible] global annual new installation. We have already showed it in our annual results release. We're on the right side of Slide 3, which shows you the wind power is becoming the most economic renewable energy technology. We find out levelized cost of global onshore wind power declined by 69%, which is USD 0.107 per kilowatt hour. And for the offshore wind power, the levelized cost is down by 59%.
Please go to Slide 4. On the left side, in the first 9 months of this year, China recorded 33.5 gigawatts of the newly grid connection grew by 74% on a Y-o-Y basis. It's the first time for the grid-connected wind power capacity of more than 400 gigawatts, taking 14.3% of the power mix where thermal power declined to 49.2%.
On the right side, you show the electricity production and consumption. From January to September, as wind consumption up by [ 5.6% ], wind power production increased by 13.4%, reaching 583.7 billion kilowatt hours representing a penetration ratio of 8.5%. The average utilization was 1,665 hours, up by 49 hours.
Next slide, on the left slide, we show your public tender market. Domestic public tender market stood at 61.7 gigawatts in first 9 months of this year, representing 19.1% annual decrease. Onshore public tender 55.6 gigawatts, offshore totaled 6.1 gigawatts. On the right side, it shows your average bidding price. Starting from January to September this year, we also see continuous rollout of the policies including the NEA, the Revising and Printing Quality Supervision and also the circular of the doing good jobs in the full coverage of renewable energy. Those are the policies that are going to positively guide the industrial growth, especially for NDRC, NEA, they jointly issued the notice regarding the green license of this industry.
On the right side, I show you the green electricity certificate, and we also show you the trading platform number of the trades, trading methods and trading process highlights. So with such an industrial [ mindset ], let me just walk you through our business review. We're talking about our business. We have Wind Turbine Manufacturing & Sales, Wind Farm Investment & Development, Wind Power Service and Other Businesses.
Regarding the highlights of each business line, please allow me to share it with you one by one. First, talk about the Wind Power Manufacturing & Sales. And altogether, in the first 9 months of this year, the capacity -- external sales capacity totaled 8,504 (sic) [ 8,904 ] megawatts, increased by 26.7%. The capacity of WTG under 4 megawatts totaled 64 megawatts, taking 0.7% of the total sales. From 4-megawatt to 6 megawatts totaled 5,587 megawatts, taking 62.8% of the total and more than 6 megawatts totaled 3,253 megawatts, taking 36.5% of the total.
Let's now take a look at the order backlog. By the end of Q3, our total order backlog was 31.51 gigawatts and for -- including 7.9 gigawatts of successful bid and 22.04 gigawatts of the signed contract. So the external order backlog totaled 29.94 gigawatts. On the right side, you can also see that the 6-megawatt unit also continued to grow.
Let us also talk about the global business expansion. After many years of the business development worldwide, now we have already successfully expanded our business in 6 continents in more than 30 countries. By the end of Q3, our total installation in overseas market is more than 6,358 megawatts, of which installation in North America, Australia, Asia and South America exceed 1 gigawatt. By the end of Q3, the total backlog in overseas market is 3,805 megawatts, operating capacity totaled 463 megawatts.
Let's also talk about our wind power generation. By the end of September, our attributable grid-connected wind power projects totaled 7,256 megawatts and newly added 1,000 megawatts. And we also started to have external sales of 822 megawatts. By the end of Q3, we have attributable under-construction wind capacity at home and abroad totaled 2,920 megawatt. Where for our company, our self-run wind farms, in the first 9 months of this year, recorded 1,867 hours of utilization, 200 hours ahead of our industrial peers.
Well, on the right side, we show you the geolocation of our grid-connected wind farms, majority of them are in Southern China, northeast part of China and overseas. Now let me welcome Mr. Wang to walk you through the financials.
Distinguished investors, ladies and gentlemen, please allow me to report to you on the financials of our Q3 performance ended first 3 months (sic) [ quarters ] of 2023. This is a slide that shows you our revenue and profit. By the end of September, our total revenue stood at CNY 29,319 million, as my colleague has already mentioned, and we also continue to further improve our performance, where our capacity has grown by 26.7%. Well, of course, the growth is starting to show capacity growth, we deliver 3.3 gigawatts -- 6 megahertz above units.
So our revenue continued to grow. And it can also say by the end of September, -- and -- the gross profit margin was 17.58%, down by a few [indiscernible]. This is because of the turbine GP margin was on the down trend. You can see our GP margin in Q3 was 18.17%, stabilized compared with the same period of last year, but still improved compared with previous quarter. We continue to optimize our GP margin and continue to seek for upward [ development ]. And we also consider to deliver to the overseas market by improving the GP margin. So that the reason in Q3, our GP margin continued to improve.
Next slide, let me show you the net profit attributable to the owners of the company and average weighted return on equity. Net profit attributable to the owner of the company stood at CNY 1,261 million. There are two reasons. The turbine business was going down. So the GP margin was down by CNY 780 million where at the same time, we also have the expenses, especially expenses on R&D, so that's the reason. Based upon such an operational backdrop, we are not meeting our operational expectations.
Weighted average return on equity was 3.32%, down by 0.06%. It's also because of our revenues being continuing to go down and the return to the shareholder reason.
Next slide. Let me show you the solvency position, including net current assets and asset-liability ratio. On the left side, by the end of September, net current assets was [ CNY 4,481 million ]. So you can say that from mid of last year to this year, we have a negative net current assets. And then we continue to see a positive growth number of the net current assets starting from Q2 of 2022 and continue to improve.
On the right side, by the end of September, our asset-liability ratio was 72.25%, grew by 1.74%. There are two reasons. First of all, the dividends actually lead to the increased liability ratio, where from the trend perspective for the company, our wind farm development Business and the wind farm construction continued to go up and we have more operational assets at our wind farms. This is also a reason why our asset-liability ratio continue to go up.
Here is the final slide, as I show you our cash to total asset number and the net operating cash flow. By the end of this year, the ratio of the cash to total assets stood at a healthy level. And the company's net operating cash flow -- outflow was CNY 4,722 million, continue to guarantee our liquidity and [indiscernible] position.
On the right side, I show you the numbers of our net operating cash flow by the end of this year, our ratio of the cash to total asset was 9.79% and the net operating cash flow with outflows totaled CNY 4,722 million. Generally speaking, we built more business or build -- more delivery will be done in Q3 and Q4 and starting from Q3 to Q4, we're going to have a more turbine delivery business.
So generally speaking, in Q1 to Q2, we have a negative net operating cash flow, it is going to be leveled and starting to become a positive number in Q3 and a positive number in Q4. Our net operating cash flow also echoes with the industrial practice. We're going to continue to improve our net operating cash flow, making sure we have a healthy and good level and fair level of the net operating cash flow. That's all for the financials of our performance for the first 3 quarters 2029 -- 2023.
Thank you. Thank you very much.