Goldwind Science & Technology Co Ltd

XMUN:CXGH

Q1-2025 Earnings Call

[Operator]

Distinguished investors, good afternoon. I'd like to welcome you to join us for Goldwind Science and Technology 2025 Q1 Results. The management team joining us here today are President of the company, Mr. Zhigang Cao; Madam Jinru Ma, VP, Board Secretary and Company Secretary; Mr. Hongyan Wang, CFO; and Mr. Chen Qiuhua, Group VP and GM of the Wind Power Industry Group.

The meeting will be divided into 2 parts. First of all, we will invite Madam Ma to walk you through the Q1 industrial trends and the company's operations. Then we will have the CFO, Mr. Hongyan Wang, to walk you through the Q1 financials, and then we will get into the Q&A session. Madam Ma, please.

[Jinru Ma, executive]

Okay. Great. Thank you very much. Dear investors, good afternoon. I'd like to welcome you to join us for the Q1 performance release. Please allow me to walk you through the industry and the business review. Let's first go to Slide 3. The global new installation in 2024 was 121.6 gigawatts, grew by 3.9%, with onshore wind power of 109.9 gigawatts, grew by 3.7%. Offshore wind totaling 11.7 gigawatts increased by 6%.

On the right side, you can also see the new installation country distribution. You can see that in China, China new installation accounted for 70% of the global new build. Let's go back to China. In Q1 of 2025, China record 40.6 gigawatts of the new grid connection, down by 5.7%. At the end of 2025 Q1, cumulative grid-connected grid power capacity was 535.4 gigawatts, taking 15.6% of the power mix. Thermal power declined to 42.3%.

We also see that the power generation and the production continue to go up. On the right side, we show you the 2024 data. But let me just share with you in Q1 of 2024, total power consumption in China reached 2,384.6 billion kilowatt hour, but we don't have any new data regarding Q1 as a whole. Let's also take a look at the public tendering in Q1 of this year, totaled 28.6 gigawatts, grew by 22.7%.

So we can see the public tendering market was booming, still growing significantly compared with the high baseline last year. Onshore public tendering 27.8 gigawatts, an offshore of 0.8 gigawatts.

On the right side, we also show you the monthly public bidding price. You can see that in March, the price was RMB 1,590 per kilowatt. Starting from January of the year, the government continued to roll out the policies for low carbon and green development. First of all, Energy Law of the People's Republic of China came into force, supporting the renewable energy development.

And secondly, the new energy grid tariff and promoting high-quality development of new energy, where at the same time, in February of this year, the NEA also issued the guiding opinion of 2025 energy work, proposing by the end of 2025, you can see that the non-fossil fuel power generation going to improve to 60%. The non-fossil energy in total power consumption needs to be increased to 20%. At the same time, the sale of the new energy power generation device will grow by 200 million kilowatts. All those policies are going to improve the overall development of the industry.

Then let's take a look at our business review of the company. Let's first take a look at our turbine business or WTG. You can see in Q1 of this year, the total external sales was 2,587.65 megawatts, grew by 80.16%. WTG 6 megawatts was more than 1,823.7 megawatts, taking 70.47% of the total. WTG 4 to 6 megawatts was 760 megawatts. We don't have too much for the WTG lower than 4 megawatts.

So taking a look at the wind turbine order backlog. In Q1 of this year, we recorded a new historical high, 51.09 gigawatts; external one 48.6 gigawatts, including 9.42 gigawatts for successful bidding and 39.19 gigawatts for signed contract. Where at the same time, we have 2.47 gigawatts for company-owned wind farm development projects. By the end of Q1, our external order for the overseas market was 6,909 megawatts, grew by 26.1% on a Y-o-Y basis.

And you can also see that we do see very nice growth momentum for the international market order growth. On the right side, we show you the external order mix, especially for WTG more than 6 megawatts is already more than 70% of the total external order. Let's also take a look at the wind farm business. By the end of March, grid-connected wind power projects totaled 8,043 megawatts. In Q1 of this year, our attributable under construction wind capacity at home and abroad was 4,117 megawatts.

In Q1 of this year, the self-run wind farm recorded 635 hours of utilization, 57 hours higher than the national average. On the right side, we show you the grid connection by region. And you can also see that still the Northwest China, North China and East China be the key contributor, okay? That's all about the industry and the business.

Coming next, let's welcome our CFO to walk you through the financials.

[Hongyan Wang, executive]

Distinguished shareholders and investors, good afternoon. I come from Goldwind. My name is Hongyan Wang. Thank you very much for joining us here for the Q1 results release. Please allow me to walk you through the financials of Q1 of 2025. In Q1, there are 4 parts of the financials we are happy to present to you. The first one is the profitability index and then the liquidity debt as well as the capital monetary funds and operational cash flow. So let me just follow the practice. The light color represents the previous years and the dark color represents the performance we made in this year.

On Slide 12, the slide actually shows you the profitability index on the group level and still it involves 4 indicators. On the left upper corner, that is our revenue. In 2024 Q4 and in 2025 Q1, the different color bars represent the performance from different quarters from 2024 to 2025. In Q1, the revenue was CNY 9.47 billion, grew by CNY 2.49 billion on a Y-o-Y basis. The incremental revenue growth are coming from the WTG segment, where on the upper right corner, you can also see the profit margin showcasing the 4 quarters in 2024 and Q1 of 2025. So we can see that the comprehensive profit margin for Q1 2025 was 21.78%, down by 3.11%.

But we clearly noticed in Q1 of 2025, our total GP margin was growing by CNY 326 million, reaching CNY 2.063 billion. Majority of the GP margin increase are coming from WTG business. On the left down corner, we also show you net profit attributable to the owners of the company. And in Q1 of 2025, net profit was CNY 1.568 billion (sic) [ CNY 568 million ], grown by 17%. The reason is because we see the minor growth in gross profit. So the profitability over further improved.

On the right-down corner, we show you the weighted average return on equity. In Q1 of this year, weighted average return on equity was 1.48%, grown by 0.2%, grew by more than 70%. The key contributor are still because of our grow net profit. And for this year, we surely believe our weighted average return on equity will continue to register strong growth momentum.

On Slide 12, you can clearly see that in Q1 of 2025, no matter for revenue or for our GP margin or the GP margin rate or the weighted average return on equity, they are indeed in line with our forecast. In other words, profitability continued to be improved.

Let's now go to Slide 13. Slide 13 shows you the operational index, indeed, the liquid asset indicators. On the left side, we show you the days of the trade receivables. In Q1 of this year, trade receivables accounted for 20% of our total assets grew by 2%. And the trade receivable days was 174 days, grew by 2 days again, which failed to achieve our receivable performance target. In 2025, we will continue to improve our receivable collections, especially including the shorten the delivery time of the offshore and overseas projects and continue to improve the receivable performance in 2025.

On the right side, we show you the days of the inventory and the contract assets. You can see that in Q1, actually, we see nice improvement, no matter for days of inventories or the contract assets. But for sure, for the company, we have a very special business model that is the power plant business. If we're deducting the power plant or the wind farm business, the power plant business once we excluded then we believe inventory to the total asset ratio would be further improved.

Okay. Please help to go to Slide 14. Slide 14 showcasing the solvency positions of the company. On the left side, you see interest-bearing debt. In Q1, of this year, interest-bearing debt was 43% of the total liability, actually a flat growth compared with the same period of last year. But altogether, we downsized the interest-bearing debt by CNY 5 billion. In other words, the interest-bearing debt has been further optimized. So at the same time, the use of the proceeds and the funds has been further optimized.

On the right side, we show you the asset liability ratio. By the beginning of this year, it used to be 73.96%, and the total asset was CNY 155.2 billion. But by the end of Q1, both reached 73.05% and CNY 159 billion of the total assets. Asset liability ratio continued to go down, and we were able to well control the debt ratio. In 2025, well managing the debt ratio would be a key task of the company.

On one side, we hope that we can continue to improve the delivery circle, well control our expenses and also control the size of the interest-bearing liabilities, continue to improving the structure of the debt, while at the same time, for the equity assets, especially long-term equity assets of the parent and the subsidiary companies, we hope that we will be able to take the measures to continue to further improve the asset liability ratio. So in one word, in 2025, we will continue to optimize and downsize the asset liability ratio.

And the final slide, we also would like to show you the cash flow. On the left side, we show you the cash to total asset situation. By the end of Q1 of 2025, the cash to total asset ratio was 8.75%, improved a lot on a Y-o-Y basis. The key reason is because in Q1, we have the prepayment of the wind turbine due to the rush to build, while at the same time, there are some operational funds preparations for Q2 as well as the reserves be made for capital expenditures. So that's the reason you see monetary funds holding continue to go up, where on the right side, that is the net operating cash flows. In China, because of the central government regulation, the rush to build in China continue to go up with significant improvement. So that's the reason, in Q1 of this year, the economic cash flow, especially the inflow continue to go up dramatically. That is our financials in Q1 of 2025.