According to Haitong Sec, the research report states that from January to September 2024, new domestic wind power bidding reached 119.1GW, a year-on-year increase of 93.0%. Among these, onshore was 111.5GW, a year-on-year increase of 100.5%, and offshore was 7.6GW, a year-on-year increase of 24.6%. The turbine bidding remains strong, with sustained high demand. It is expected that new onshore wind power installations in 2024 and 2025 will be 80GW and 110GW respectively, year-on-year increases of 10.8% and 37.5%, while offshore wind installations will be 7.5GW and 12GW respectively, year-on-year increases of 4.2% and 60%, indicating further acceleration in wind power installation growth by 2025.

From the winning bid prices, the price reduction for onshore turbines has decreased compared to the reduction from 2021 to 2023, and the price for onshore turbines may have bottomed out in August 2024, but the volume still maintains growth. Coupled with the future increase in offshore wind and overseas proportions, the profitability of the onshore wind sector is expected to continue to recover. Due to the decline in prices of steel raw materials for wind power compared to the beginning of the year, the profitability of companies in Q4 dealing with forged parts, bearings, etc., is expected to increase compared to the previous quarter.

Regarding offshore wind, new competitions and matching are being introduced sequentially in Guangdong, Fujian, and other places since the second half of 2023. Currently, there are still more than 40GW of offshore wind projects with owners who haven't yet bid for turbines. Thus, during the early stage of the 14th Five-Year Plan, there are still ample development foundations for offshore wind projects, indicating strong growth sustainability. The auction volumes of European offshore wind from 2020 to 2023 were 0.76GW, 1.96GW, 9.53GW, and 13.57GW, with continuous high growth. Furthermore, it is predicted by 4C offshore that 40GW of European offshore wind (47.5GW global offshore wind) will be auctioned in 2024, with a significant increase in offshore wind auction volume in 2024 as well. Haitong Sec believes that as global offshore wind capacity begins to rise, the gross margins related to piles and subsea cables are expected to significantly recover due to increased demand, improved capacity utilization, and enhanced product structure.

In Q3 2024, the performance of turbines, gearboxes, offshore cables, transformers, and power station segments saw a year-on-year growth.

In Q3 2024, the year-on-year growth in net income attributable to turbines was the highest, mainly due to the low base of Goldwind Science & Technology in Q3 2023. Specifically, in terms of income, all segments except for the towers saw year-on-year increases in Q3 income, which aligns with the growth of wind power installations from January to September. The inconsistent growth rates of income in other segments are related to the dilution of usage caused by the increase in size, variations in the degree of price competition, and whether there are other non-wind power businesses involved.

From the perspective of gross margin, in Q3 2024, only the transformer and power station segments saw a year-on-year increase in gross margin, while all other segments experienced declines. This was mainly due to insufficient demand for wind power installations in the domestic market, leading to price competition and low capacity utilization. In terms of expense ratios, the expense ratios for turbines, blades, offshore cables, gearboxes, and power stations decreased year-on-year, while other segments saw year-on-year increases. In terms of net margin, turbines, offshore cables, gearboxes, transformers, and power stations all showed year-on-year increases in net margin.

In summary, except for the tower sections, the revenue of other links increased. The gross margin of transformers and power stations improved, resulting in an increase in net income attributable to shareholders; the gross margins of gearboxes, submarine cables, and wind turbines declined, and the expense ratio also decreased, which led to an improvement in net margin, while net income maintains positive growth.

In Q3 2024, the number of companies with positive year-on-year growth in net income attributable to shareholders significantly increased compared to Q2, with a notable improvement in the gross margin of the bearing sector.

Among specific companies, those with notable year-on-year growth in net income attributable to shareholders in the third quarter include goldwind science& technology (+4195.25%), zhuzhou times new material technology (+15.72%), wav axle (+57.44%), zhangjiagang guangda special material (+52.03%), hai li wind power (+70.19%), ningbo orient wires & cables (+40.28%), hangzhou advance gearbox group (+35.80%), jinpan technology (+27.54%), jiangsu new energy development (+215.88%). Companies that saw a year-on-year increase in gross margin include electrical wind power (+11.07pct), windey energy technology group (+2.44pct), titan wind energy (+2.50pct), hai li wind power (+1.58pct), dajin heavy industry (+0.64pct), wav axle (+4.50pct), zhangjiagang guangda special material (+3.55pct), ningbo orient wires & cables (+0.85pct), jinpan technology (+2.74pct), ning xia yin xing energy (+1.55pct), three gorges energy (+1.89pct), and jiangsu new energy development (+11.18pct).

Recommend paying attention to,

The companies include ningbo orient wires & cables (603606.SH), jiangsu zhongtian technology (600522.SH), dajin heavy industry (002487.SZ), hengtong optic-electric (600487.SH), ming yang smart energy (301291.SZ), ming yang smart energy (601615.SH), jinpan technology (688676.SH), riyue heavy industry (603218.SH), goldwind science& technology (002202.SZ), shanghai taisheng wind power equipment (300129.SZ), hai li wind power (301155.SZ), windey energy technology group (300772.SZ), titan wind energy (002531.SZ), jinlei technology (300443.SZ), qingdao tianneng heavy industries (300569.SZ), zhejiang xcc group (603667.SH), zhejiang changsheng sliding bearings (300718.SZ), panggu intelligent (301456.SZ), zhuzhou times new material technology (600458.SH), sinoma science & technology (002080.SZ), sany renewable energy (688349.SH), and chongde technology (301548.SZ).

Risk warning

Risks include fluctuations in industry policies; risks of intensified competition; risks related to global offshore wind installations being below expectations; risks of international trade friction; and risks from fluctuations in the prices of raw materials for csi commodity equity index.