Goldwind Science & Technology Co Ltd

XMUN:CXGH

Earnings Call Transcript

[Operator]

Dear investors, good afternoon. I'd like to welcome you to join us for Goldwind Science And Technology 2024 Q3 results announcement.

Joining us here today Board Secretary and the company secretary Madam Ma Jinru; CFO Mr. Wang Hongyan; Group VP and Chairman of [indiscernible] Industrial Company, Mr. Chen Qiuhua. Ladies and gentlemen, the meeting will be divided into 2 parts. First of all, to welcome Madam Ma to walk you through Q3 development and operational. Then we're going to have Mr. Wang Hongyan to walk you through the financials. And then we will guide into the Q&A session. Now let's welcome Madam Ma, please.

[Jinru Ma, executive]

[Interpreted] investors I would like to thank you for joining us for this meeting and thanks for your [indiscernible] support to Goldwind Science and Technology. First of all, please allow me to work you through the industry and our business. Let's take a look at the industry first. Now if you have a slide in your hands, please go to Slide 3.

On Slide 3, on the left side issues [indiscernible] global and new installation which has already been disclosed in the interim results. But on the right side, that is the wind power energy become the fastest economy renewable energy source, especially you can see from 2020, 2023, the legalized cost of global onshore wind partly declined by 70%. [indiscernible] per kilowatt hour to [indiscernible] per kilowatt hour. But in China, the price is already USD 0.027 per kilowatt hour. But at the same time, the [indiscernible] cost of global offshore wind power declined by 53% from USD 0.03 kilowatt hours to USD 0.005 per kilowatt hour. Where China, [indiscernible] was USD 0.07 per kilowatt hour in 2023.

If we take a look at the wind power development in China, in the first 9 months of 2024 and general seeking China record 39.1 gigawatt of the [indiscernible] grid connection, an increase of 16.8%. By the end of September, China's cumulative grid connected wind power accounted for 479.6 gigawatts [indiscernible] of China's power mix power was 44.9%.

On the right side, we show you the electricity production as well as the utilization hours. Majority of the data available in our interim results. I'm not going to elaborate on that further.

Please turn to Slide 5. Slide 5 shows you the public tendering enterprise. [indiscernible] by the end of September, domestic public tender market totaled 190.1 gigawatts grow by 93% on Y-o-Y basis. Onshore 111.5 gigawatts, offshore totaled 7.6 gigawatts. So great momentum has been registered for public tender market.

We are on the right side, by the end of September, the overall average heating price of all [indiscernible] suppliers is around [indiscernible] 5 per kilowatt. We're in [indiscernible] there are also some new policies being rolled out regarding energy and [indiscernible] example, on August 2, 2024, the general office, the State Council issued its work plan for accelerating the construction of the new control system for carbon emission.

And on the August 6, 2024, the National Development Report Commission has already released action plan for accelerating construction of a new power system along with the implementation plan for largest equipment office in 3 energy sectors on 21st of August, along with the new policy rules for the issuance and trading for green power certificate for renewable energy on the 26th of October. All [indiscernible] great commitment and the support in developing new energy industry by the central government.

On the right side, they show you intensive advancement of wind power in rural regions. Following the notice on organizing the wind power actions in rural regions [indiscernible] and other regions [indiscernible] action plans especially in August '24, the general office published the notice regarding the insurance of the outline for the [indiscernible] for the overall plan of the wind power action in rural regions. [indiscernible] indicate national energy regulatory authorities to enhance [indiscernible] mechanism for comprehensively overseas implementation process of the rural wind power project.

Now let's take a look at the business review of the company. On Slide 8, we show you the sales. From January to September, our actual sales capacity totaled [indiscernible] megawatt up by 9%. We have very few [indiscernible] under 4 megawatts where we have more calls regarding the about 4 megawatt already reaching 5,596 megawatts, where for [indiscernible] 4 megawatts to 6 megawatts in the [indiscernible] totaled 4,042 megawatts. Well, let's take a look at the backlog we have, where, by the end of this year, we have a historical high order backlog rating 44.28 gigawatt among which 41.8 gigawatts of [indiscernible] including 1.91 gigawatt for successful bidding and [indiscernible] gigawatts for side contract. And there are also some excellent order mix we can generate your concern for. You can see that around 73% of the [indiscernible] are actually above 6 megawatts.

Well, for our local business, we also registered [indiscernible] where we continue to expand the global market. Especially in Morocco, in Philippines, in Croatia and the Namibia, we expand our business successfully. Our business covers 6 continents and the 42 countries worldwide. By the end Q3 innovative installation in overseas market is already more than 8,000 megawatts. In North America, Australia and South America, the installation already exceed 1 gigawatt.

In Asia excluding China is already more than 2 gigawatts and our order backlog in overseas market is around 5,536 megawatts. Let's now take a look at wind power generation. By the end of Q3, our attributable grid connected wind power projects totaled 8,138 megawatts and around 48% is located in North Sea for China, where the company [indiscernible] another 1,122 megawatts of attributable grid-connected wind power capacity [indiscernible] from January to September this year.

And we also have capacity under construction. So in that way, you can see that P&L and our total reform record 1,784 hours of utilization. Let me welcome Mr. Wang to walk you through the financials.

[Hongyan Wang, executive]

[Interpreted] Dear investors, good afternoon. My name is Wang Hongyan. Goldwind And I'd like to thank you for keeping an eye on the wind farm industry and thanks for supporting Goldwind.

Let me just walk you through the Q3 financials. Well, we have characterized the financials into 4 parts: first, the one-off for profitability index. Second one, our operational index. We are also going to show the solvency position and the final part, and we're going to talk about the cash flow.

For the part I'm going to show you many different color in helping you to understand the performance. The light blue represents the performance of the fourth quarter in 2024, and the dark blue parter represents the first 3 quarters of 2024. Let's take a look at on the [indiscernible] show you the revenue of the company.

Well, for company on general speaking, you see the full year revenue of 2023 and the first 3 quarter revenue in 2024. You can see that in the first 3 quarters, our total revenue totaled CNY 35,839 million were on the right side, I showed you the profit margin. The same as the full year of 2023 and first 3 quarters of 2024, you can see in 2024 for the first 3 quarters the comprehensive profit margin was 16.43%, up by 2.21% on a Y-o-Y basis. But I'd like to make a special announcement of classification given the interim results we have already shared with all the shareholders.

After adjusting the profit improved by 2.21%. So last year, we did the [indiscernible] tables for reference. On the left hand corner, which is the net profit attributable to owners of the company it was increased by CNY 531 million, whereas that [indiscernible] shifting for net profit attributable to the owners it was CNY 1,792 million where at the same time our asset impairment being reduced by CNY 120 million, further improving the equity efficiency where at the same time, the fees being reduced by CNY 260 million continue to optimize our profit structure and the tax structure.

On the right 1 corner, the weighted average return on equity be improved by 1.45%. As we continue to grow the net profit, the ROE is being further optimized. So in the first 3 quarters of the company, our revenue, net profit margin, net profit margin as well as ROE truly performed in line with our growth momentum compared with the same period of last year. We now have a more robust and healthy margin need.

On Slide 14, I show you the operational index. On the left side, we show you the case of the trade receivables [indiscernible] We still have a very stabilized trade receivable ratio. It is around 80%, 90% or 20%, respectively in the 3 quarters of this year. But at the same time, the days of the trade receivable was 184 days still healthy but still fitting a gap compared with our target.

We are trying lethality to improve the receivable management with an aim to hit our internal efficiency improvement plan. Where on the right side, we show the phase of the inventory excluding our new product, that is power station businesses, the actual inventory to total asset ratio was 8.86%. The inventory turnover days was 95 days, they are in par with what we saw last year compared with our inventory management topic, and there's still a gap regarding [indiscernible] delivery circle and the construction circle of the power station. We are trying very hard in including the inventory management and continue to achieve our efficiency optimization target.

On Slide 15, we show you the solvency position along with the structure. How they like the side, we show you the interest [indiscernible] you can see increased [indiscernible] And to the total liability is used to be 55% in Q1, then we optimized to 51% in Q2 and 48% in Q3. So matter from the interest of an that perfective or a structural perspective is much better than the industrial average, which can also help us to further navigate the business and financing capacity.

But at the same time, the interest continue to go on. And our loan interest rate continued to go down starting from 2021 to now. And for the company, we are going to have to bridge [indiscernible] for our future developments regarding interest value results.

On the right side, for asset liability ratio at the beginning of this year, it used to be 71.44%, and the total asset used to be CNY 3.5 billion by the end of Q3, the given ratio was 33%. Total asset was CNY 156.3 billion. The asset lability ratio went up slightly. The recent [indiscernible] model continue to pressure the asset lability ratio where, for sure, the company also took active measures in responding to the ever increasing asset liability ratio.

For example, we continue to optimize business model, accelerate the product delivery and also continue to improve the receivable collection. But at the same time, we further improved the best trading of the power plantation. And we also continue to improve the efficiency for the receivables and inventory management, which I have already mentioned just now.

And we also continue to improve the noncurrent asset efficiency, including the capital expense. So all in all, with the financial rates being well controlled by the end of this year, we do hope we will be able to well control the asset liability ratio to a health level.

For Slide 16, we show you the cash flows. On the left side, we should do the cash to total asset ratio. Cash to total asset ratio was 6.99%, which indicate a great decline. This is because we continue to improve the [indiscernible] and liquidities. We also received the reserves for these principles. But you can see that for each quarter, our financing reserves should be no less than CNY 12 billion. So that's the reason we will be able to always guarantee the reserves, which can help to further reduce the cost.

On the right side, we show our net operating cash flow, you can see Q1, Q2, Q3 as least the trend is in line with what we saw last year. In H1 of this year we have the power station inventories, which leads to more external expenses. But in Q3, we have a single month positive performance. And in Q4, we're also going to register positive performance. And for the full year, our operational cash flow is going to keep the company expectations. That's all for the financials of the Q3 performance. Thank you very much. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]