“Investors Network” Ding Wanping

At the end of October, the three-quarter report released by Yunda Energy Technology Group Co., Ltd. (hereinafter referred to as “Yunda Shares”, 300772.SZ) stated that while the company's receivables for the first three quarters increased slightly, net profit declined sharply.

According to the Third Quarterly Report, the revenue of Yunda Co., Ltd. for the first three quarters of 2023 was about 11.232 billion yuan, up 5.74% year on year; net profit was about 251 million yuan, down 45.38% year on year; and basic earnings per share were 0.3,577 yuan, down 53.59% year on year.

At the same time, the company issued an announcement on the transfer of 60% of the shares in the holding subsidiary.

There was no increase in revenue or profit in the first three quarters

The main business of Yunda Co., Ltd. is R&D, production and sales of large-scale wind turbines. The company's products are mainly onshore and offshore wind turbines, new energy power plant power generation, smart services, energy storage and general contracting services (EPC) for new energy projects.

On October 28, Yunda Co., Ltd. announced its third quarter results announcement, stating that revenue for the first three quarters of 2023 was about 11.232 billion yuan, up 5.74% year on year; net profit was about 251 million yuan, down 45.38% year on year; and basic earnings per share of 0.3,577 yuan, down 53.59% year on year.

In fact, looking at a single quarter, the company's net profit has declined for four consecutive quarters.

According to the data, Yunda Co., Ltd. achieved net profit of 103 million yuan in the third quarter of this year, a year-on-year decrease of 37.54%. The year-on-year growth rates of net profit in the last four quarters were -37.54%, -59.33%, -34.05%, and -32.32%, respectively. Corresponding to this, the company's year-on-year growth rates of non-net profit in the past four quarters were -68.95%, -66.01%, -52.52%, and -36.01%, respectively.

The reason behind the sharp decline in net profit is related to its large asset impairment preparations.

In the first three quarters of this year, Yunda Co., Ltd.'s total amount of notes receivable, accounts receivable, other receivables, inventory accrued credit impairment preparations and asset impairment preparations was 320 million yuan, credit impairment preparations of 70.9914 million yuan, and resale asset impairment preparations of 954.693 million yuan, reducing the company's net profit for the reporting period by 128 million yuan.

The 70.9914 million yuan of credit impairment plans mentioned above was mainly due to China Machinery Guoneng Electric Power Engineering Co., Ltd.'s previous failure to pay the purchase price on time. Yunda Co., Ltd. applied for arbitration and submitted a property preservation application to the Shanghai International Arbitration Center on September 16, 2021, and fully calculated impairment preparations for this amount in 2021. During the reporting period of this year's three-quarter report, the company received 12 million yuan in payment on behalf of CGN International Financial Leasing Co., Ltd.; at the same time, according to the ruling of the Shanghai International Economic and Trade Arbitration Commission, the company applied for execution and received a frozen account of 58.9914 million yuan from China Machinery Guoneng Electric Power Engineering Co., Ltd.

Overall, the asset impairment reserve amount calculated by Yunda Co., Ltd. is still huge.

Financial reports show that by the end of the third quarter of this year, the company's credit impairment preparations and asset impairment preparations had risen from 795 million yuan at the beginning of the year to 948 million yuan. The company achieved a total net profit of 251 million yuan in the first three quarters of this year, and the net profit of the entire year of last year was 620 million yuan. That is, the impairment preparations calculated by the company for the first three quarters of this year were 1.53 times the net profit of the whole of last year.

Some investors are concerned about the asset impairment plan of up to 950 million dollars in the third quarter (see chart below).

Name change, stock transfer, overseas expansion

According to the “Investor Relations Activity Record Form” released on November 8, Yunda Co., Ltd. mentioned that China's onshore wind power is at a world-class level in terms of both technical level and supply chain guarantee capabilities. The cost side advantage is becoming more and more obvious, international competitiveness continues to increase, and the share of Chinese wind turbines in many regions of the world will continue to increase in the future.

The company has received orders in Southeast Asia, Eastern Europe, Central Asia, South America and other regions. In 2023, the company achieved a breakthrough in the European market, delivered Serbia's first wind power project, and became the first Chinese wind turbine brand to land in Serbia: it won bids for several Serbian wind power projects. Among them, the 852.8MW Maestrale Ring project will become the largest single onshore wind power project in Europe after completion.

However, judging from the first half of this year, Yunda Co., Ltd.'s share of overseas business revenue is still low. The semi-annual report shows that in the first half of this year, the company achieved foreign revenue of 89.89 million yuan, accounting for only 1.29% of revenue.

According to the data, from January to June 2023, the operating income composition of Yunda Co., Ltd. was: the wind power industry accounted for 100.0%.

In October of this year, Yunda Co., Ltd. announced that according to the company's own development status and future strategic plans, the company's Chinese name was changed from “Zhejiang Yunda Wind Power Co., Ltd.” to “Yunda Energy Technology Group Co., Ltd.”, and the changed company name matched the company's main business. In response, Chen Qi, general manager of Yunda Co., Ltd., said that energy is a broad concept, and the name change is based on the company's business needs.

On November 10, Yunda Co., Ltd. issued an announcement on the transfer of 60% of the shares of the holding subsidiary.

According to the announcement, Yunda Co., Ltd. plans to transfer 60% of the shares of Zhangbei Ertai Wind Power Co., Ltd. through a public listing on the Zhejiang Property Exchange. It is proposed to determine the listing price based on the equity value corresponding to the equity value (202.98 million yuan) of assets registered by state-owned assets, and handle matters relating to this equity transfer within the scope stipulated in the “Measures for the Supervision and Administration of Enterprise State-owned Assets Transactions”.

Regarding this transfer, Yunda Co., Ltd. stated that if the equity transfer is successfully completed, the company will no longer hold shares in Company A and will no longer include them in the scope of consolidated statements, which is conducive to improving the liquidity and efficiency of the use of the company's assets and optimizing the company's asset structure.

Opportunities and challenges coexist in the wind power industry

Since 2020, domestic wind turbine bidding prices have entered a downward channel. The price per kilowatt for onshore fans has dropped from over 3,000 yuan/kilowatt to around 1,500 yuan/kilowatt, while the price per kilowatt for offshore fan tenders has plummeted from 8,000 yuan/kilowatt to around 3,500 yuan/kilowatt. The decline in fan sales prices has directly squeezed the profits of wind turbines.

In addition to complete wind power units, major wind power component suppliers have also disclosed their latest performance reports. Overall, the revenue of parts suppliers in the wind power industry chain is also showing an upward trend due to increased market demand, but gross margin has generally declined.

Faced with continued competition in the wind power market, a number of wind power manufacturer executives recently publicly stated that the healthy development of the industry should be maintained rationally. An executive of a wind power machine company publicly stated that the core support brought by the wind power supply chain to the development of the industry is still product innovation, technological innovation, and technological progress.

At the same time, the industry still has positive expectations about the future potential of the wind power market. Judging from the latest data released by the National Energy Administration, in the first three quarters of 2023, the country added 33.48 million kilowatts of installed capacity to wind power, including 3.05 million kilowatts of onshore wind power and 1.43 million kilowatts of offshore wind power. By the end of September, the country's total installed wind power capacity had exceeded 400 million kilowatts, an increase of 15% over the previous year, including 368 million kilowatts of onshore wind power and 31.89 million kilowatts of offshore wind power.

According to some industry research, judging from the installed capacity situation, onshore wind power in China has maintained prosperity, and the recent development of offshore wind power is improving. According to the “14th Five-Year Plan” plan goals and the installed capacity already achieved, offshore wind power is expected to add a total of 27.9 gigawatts of installed capacity in 2023-2025, returning to a period of high growth. As the price of wind power units stopped falling in the first three quarters of this year, the profitability of the industrial chain is expected to pick up.

Due to price advantages and other factors, Chinese wind power companies performed well in exports this year. Companies including Goldwind Technology, Yunda, and Mingyang Intelligence all won bids for overseas projects. An analysis by Zheshang Securities shows that the low domestic inflation rate, relatively stable raw material prices, and stable domestic market size help it maintain stable cash flow and achieve higher profitability than its overseas peers. Domestic wind power has begun the “year going overseas,” and wind power manufacturers are expected to achieve a sharp increase in volume and profit.

Currently, European and American wind power manufacturers are struggling with factors such as inflation, rising raw material prices, and rising labor costs. Coupled with supply chain instability and delivery delays, wind power manufacturing businesses in Europe and the US are facing great cost pressure. According to data released by the National Energy Administration, in the first half of this year, the installed capacity of wind power increased by 22.99 million kilowatts, accounting for about 21.1% of the new installed capacity of renewable energy power generation.

Many organizations believe that the wind power industry is expected to experience rapid development in the second half of 2023, driven by demand such as large-scale fans, offshore wind power, and exports. The China Wind Energy Association (CWEA) predicts that in 2023, the scale of new domestic wind power installations is expected to reach 70-80 GW.

Focusing on new energy and smart grids, energy storage, photovoltaics, hydrogen production and integrated energy development, Yunda Co., Ltd. continues to explore innovation and focus on high-quality development.

In 2023, Yunda Co., Ltd. actively participated in bidding in overseas markets. Currently, it has initiated cooperation with large foreign energy groups. In the future, it will accelerate the global strategic layout, increase the development of new overseas owners, and increase the scale of overseas orders; it has also obtained orders in Southeast Asia, Eastern Europe, Central Asia, South America and other regions. In 2023, the company achieved a breakthrough in the European market and delivered Serbia's first wind power project. (Produced by Thinking Finance) ■