Goldwind Technology: Fans Continue to Increase Order Structure Optimization

Goldwind (002202) today announced the first quarter of 2010: total operating revenue of 1.855 billion yuan, an increase of 62%; a net profit of 248 million yuan, an increase of 27%; basic earnings per share of 0.11 yuan. The company expects the half-year net profit growth in 2010 to be less than 50% year-on-year.

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Goldwind Technology (002202)'s revenue growth was mainly driven by wind turbine sales, and its profit growth was less than the increase in revenue. The main reasons were: (1) Sales expenses increased by 193% year-on-year, mainly due to increased sales of the company's wind turbine projects and related freight charges. The insurance premium, Devi fee, project site material consumption, spare parts for maintenance, etc. increased correspondingly; (2) Financial expenses decreased by 129% year-on-year, mainly due to the decrease in the exchange rate of Euro against RMB at the end of the period compared to the end of the previous year, resulting in a large amount of exchange gains; (3 ) Assets impairment losses increased by 43.35 million yuan over the same period of last year, an increase of 129% over the same period of the previous year, mainly due to the increase in bad debt provision for accrued accounts receivable of the company; (4) Investment income of -99 million yuan, compared with the same period of last year The decrease of RMB 22,150,000 was mainly due to the transfer of 48% of the shares of its holding subsidiary, Keshiketengqi Huifeng New Energy Co., Ltd., from Beijing Tianrun Xinneng Investment Co., Ltd., a wholly-owned subsidiary of the company during the same period last year, to gains from equity transfer. 22.35 million yuan.

As of March 31, 2010, the total number of orders to be executed by the company was 3349.5 MW, including 117 MW for 750 kW units, 3,225 MW for 1.5 MW units, and 7.5 MW for 2.5 MW units. The order structure was mainly driven by 750 kW units to 1.5 MW units, and Open up the 2.5MW unit market. In addition to the above orders, there are still 1483.5MW of orders that have been awarded but not formally signed.

As wind power technology gradually matures and costs are reduced, and national policies strongly support such multiple factors, the installed capacity of wind power in China will continue to grow in the future, and the fan market is still promising. However, the current market competition in the wind power machine industry has become increasingly fierce, and the price of wind turbines has dropped further. In 2009, China abolished the requirement that "the localization rate of wind power equipment exceeds 70%." International wind power equipment manufacturers will also speed up competition for the Chinese wind power market. Therefore, there is still great uncertainty in the profitability of the wind turbine industry in the future.

In addition, the company is currently actively promoting the issuance and listing of H shares in Hong Kong. The funds raised will be used for international business development, new product and new technology R&D, marketing, business chain optimization, and high-power wind turbine capacity building projects.

We expect Goldwind 2010 and 2011 EPS to be 0.96 and 1.21 yuan, respectively, and the dynamic price-to-earnings ratio will be 25 and 20 times, respectively. Taking into account the company's industry leading position and high growth, as well as the concept of new energy, maintain the "overweight" investment rating.