- BUY Entry – 10.8 Target – 12.5 Stop Loss – 10.0
- Xinjiang Goldwind Science & Tech Co Ltd is a China-based company, principally engaged in the manufacture and distribution of wind turbine generator sets and spare parts. The company is also engaged in the provision of wind power services, as well as the investment and development of wind farms. The company distributes its products within domestic and overseas markets.
- Expecting bottom-out after the headwinds. China’s economy will hit a speed bump in 2Q22 due to a surge in Covid infection in major cities and ensuing lockdowns. Domestic supply chains are disrupted, and manufacturing activities are halted. PBOC lowered the required reserve rate a week ago. To revive the economy, Chia will probably resort to infrastructure expansion, and clean energy projects will be one of key propellants. According to BloombergNEF, prices for turbines in China plummeted from about US$700,000 per megawatt in early 2020 to about US$470,000 at the end of 2021. Currently, the bid for new projects averages at about US$370,000. Xinjiang Goldwind’s Chairman commented that the price of wind turbines had reached the bottom, and there was no room for further price declines.
- FY21 financials and operations review. FY21 operating revenue dropped by 10.2% YoY to RMB50.4bn. Net profit attributable to owners of the company grew by 16.7% YoY to RMB3.4bn. The decline in revenue was due mainly to the offshore wind sector experiencing rush-to-installation and onshore wind sector entering the era of grid-parity. The company will announce its 1Q22 earnings on 26th April Tuesday.
Revenue breakdown
Operation breakdown
The updated market consensus of the EPS growth in FY22/23 is 18.9%/9.4% YoY respectively, which translates to 10.3x/9.4x forward PE. The current PER is 12.4x. Bloomberg consensus average 12-month target price is HK$16.08.
Xinjiang Goldwind Science & Tech Co Ltd (2208 HK) (Source: Bloomberg)