Zhitong Financial APP learned that Bank of China Securities released a research report saying that although the overall performance of the wind power sector is weak recently due to the influence of sea breeze approval, slow release of bidding demand and other factors, from the perspective of industry fundamentals, under the background of last year's high standard quantity and low installed capacity, this year's sea and land wind capacity demand is still strong, so with the gradual resolution of policies and other obstacles. In the second half of the year, the demand for wind power projects is expected to be gradually released, and the performance of spare parts is expected to continue to improve, so we continue to be optimistic about the future prospects of the wind power equipment sector and continue to maintain the industry's "stronger than the market" rating.

Events:On July 3, Daijin heavy Industries released a half-year performance forecast for 2023, and its net profit is expected to increase by 45-60% in the first half of the year compared with the same period last year, further verifying the inflection point of wind power sector performance. Stimulated by the performance forecast of Daijin heavy Industry, the wind power equipment (Shenwan) plate rose 2.73%. In terms of individual stocks, Daijin heavy Industry rose by the daily limit, while the shares of Hai Li Wind Power, New Power Alliance, Oriental Cable, Tianshun Wind Energy and Jinlei all rose more than 6%.

The main points of BOC Securities are as follows:

Daijin heavy Industry is expected to increase its performance in the first half of the year, further verifying the inflection point of wind power sector performance.

According to the half-year performance forecast released by Daijin heavy Industry in 2023, the net profit in the first half of the year was RMB2.55-281 million, an increase of 45-60% over the same period last year, and the deduction of non-net profit was RMB2.43-268 million, an increase of 45-60% over the same period last year. In the quarterly reports of listed wind power companies, signs of repair have emerged in the delivery of front towers, castings and forgings in the industrial chain, and the announcement of Daijin's semi-annual results further validates the bank's judgment on the upturn of the industry boom. In the future, with the gradual release of installed demand, this trend is expected to continue to spread to other links of the industrial chain.

Sea breeze competitive bidding restart, hindering factors may have been resolved, boosting the confidence of the industry.

The previous sea breeze project left behind problems such as unclear division of responsibility for examination and approval of the sea area under state control and military examination and approval, resulting in slow progress of the sea breeze project in the past 23 years. However, with the announcement of the sea breeze competition scheme of 23GW in Guangdong Province and 2GW in Fujian Province, and the restart of bidding for the Dafeng 800MW project in Jiangsu Province, it indicates that the problems hindering the development of sea breeze may have been solved, boosting the confidence of all parties in the development of the sea breeze industry. The marginal improvement of the sea breeze industry is expected to enter a new round of growth cycle.

Under the background of high bidding and low installation, the demand for installed capacity is strong, and the industry with high installed capacity throughout the year is expected to meet the volume.

According to the bank's incomplete statistics, the amount of new public bidding for wind power (excluding framework agreements) 81.98GW reached a record high in 2022, while according to the data of the National Bureau of Statistics, only 37.63GW was installed in 2022, and there is still a large number of installed demand. In 2023, new wind power 16.36GW will be installed from January to May, an increase of 51.2% over the same period last year. With the resolution of various obstacles, demand is expected to be further released in the second half of the year, and the sector is expected to see improvement in both the revenue side and the profit side.

Investment advice:

It is suggested to focus on the high-quality wind power components with greater performance flexibility around the three main investment lines:

1) Offshore wind power + tower tube / pile foundation and submarine cable links benefiting from overseas markets, Hai Li Wind Power (301155.SZ), Taisheng Wind Energy (300129.SZ), Daijin heavy Industry (002487.SZ), Oriental Cable (603606.SH), Tianshun Wind Energy (002531.SZ), Sail Cable (605222.SH) are recommended.

2) spare parts companies that carry out domestic substitution and category expansion, recommend Hengrun shares (603985.SH), Jinlei shares (300443.SZ), New strong Alliance (300850.SZ), and suggest paying attention to Tongyu heavy Industry (300185.SZ).

3) Sea breeze new technology floating wind power related links, it is recommended to pay attention to the sub-satellite anchor chain (601890.SH).

Risk Tips:Wind power installation is not as expected; the risk of policy adjustment in the wind power industry; the risk of raw material price fluctuations; price competition is higher than expected.