Overall, the demand side of the wind power equipment industry is expected to improve markedly in 2025, and drive the industry to switch from passive inventory removal to active inventory replenishment, which is expected to usher in a big year of delivery.
The Zhitong Finance App learned that Caixin Securities released a research report saying that overall, the demand side of the wind power equipment industry is expected to improve markedly in 2025, and drive the industry to switch from passive inventory removal to active inventory replenishment, which is expected to usher in a major delivery year. Currently, the introduction of hierarchical maritime authority and subsequent far-reaching ocean wind management measures is expected to completely resolve the issue of seabreeze use rights and institutionally guarantee the sustainable development of deep ocean breezes; judging from the performance of stock prices, compared with the diversified strategic performance of the “two seas” strategic components, it is recommended to continue the “two seas” strategy and diversification strategy.
The main views of Caixin Securities are as follows:
Installed capacity was stable in the first three quarters of 2024, but tenders reached a record high.
In the first three quarters of 2024, the country added 39.12 million kilowatts of grid-connected wind capacity, +16.8% year-on-year, including 36.65 million kilowatts of land wind and 2.47 million kilowatts of sea wind, +14.4% and +73%, respectively. From January to September 2024, 119.1GW of new domestic wind power tenders were added, up 93% compared with 61.7 GW in the same period last year. According to market classification, land wind was 111.5 GW and sea wind 7.6 GW, respectively, +100.5% and +24.6% year-on-year.
The seabreeze “tender-connected” weir lake built up in the past few years is expected to be cleared, compounded by massive tenders in 2024, which is optimistic about demand-side improvements in 2025 and ushered in a big year of delivery.
On the one hand, most of the massive tenders in 2024 are expected to reach the performance level of listed companies in 2025. In addition, the bank also sorted out that more than 20 GW of ocean wind projects are expected to be fully or partially connected to the grid by 2025, which will help reverse the market's perception that wind power, especially ocean wind, has fallen short of expectations for several years. On the other hand, starting in the second half of 2024, the tender price of fans began to gradually stabilize, and non-lowest bid wins also began to occur frequently. Against the backdrop of a new wave of rush for equipment next year, it is expected to help stabilize, moderate and improve prices throughout the entire industry chain. Finally, starting with the 2024 semi-annual report, the wind power equipment industry's revenue growth rate began to rise, and the inventory growth rate continued to decline, showing the characteristics of passive storage.
Considering that most of the massive tenders in 2024 are expected to be connected to the grid in 2025, there is a tendency to think that the subsequent revenue side growth rate is expected to continue to rise and that the inventory growth rate is expected to turn upward after continuing to decline. Overall, the demand side of the wind power equipment industry is expected to improve markedly in 2025, and drive the industry to switch from passive inventory removal to active inventory replenishment.
The stratification of marine areas is progressing steadily, and systems are being used to guarantee the healthy development of deep sea breezes.
Pre-assessment of sea use and approval of sea area use rights are key prerequisites for seabreeze projects, but with the gradual maturity of offshore wind development, conflicts with military, waterways, and fishery over the remaining offshore sea wind projects have also begun to intensify, causing seabreeze installations to fall short of expectations for several consecutive years.
In order to avoid similar problems in subsequent development due to deep ocean winds, state ministries and local governments have begun to study the issue of hierarchical maritime authority in advance. The introduction of hierarchical maritime authority and subsequent far-reaching ocean wind management measures is expected to completely resolve the issue of ocean breezes. It will also institutionally guarantee the sustainable development of deep ocean breezes, and avoid the phenomenon of falling short of expectations for several consecutive years after rushing to install.
Compared to the “two seas” strategy, the stock price performance brought about by the diversification strategy in the parts sector was even more impressive.
Although the “two seas” strategy has become the consensus of the wind power industry, domestic offshore wind installations have indeed fallen short of expectations in recent years. However, judging from actual stock price performance, component manufacturers represented by Chuanrun, Jinwo, Shuangyi, and Shuangfei clearly had the highest gains in 2024. Not only did they outperform the wind power equipment index by a large margin, but they were also clearly superior to the main industry chains such as mainframes, submarine cables, and towers, or manufacturers with high “massive content.”
This is mainly a “small ship” for parts manufacturers. In a situation where the growth rate of wind power installations is slowing down and products are plagued by price wars, parts manufacturers can quickly adjust the direction of development based on the same underlying technology, such as choosing to extend the upstream and downstream wind power industry chains, or diversify into other industries such as automotive parts, low-altitude economy, and humanoid robots. Judging from the performance of stock prices, parts manufacturers have entered some booming industries other than wind power, and indeed brought significant excess profits in 2024.
Investment advice: Continuing the “two seas” strategy and diversification strategy.
2025 is a big year for the delivery of wind power, especially ocean wind, and we continue to be optimistic about companies that are highly relevant to domestic offshore wind installations; in addition, breakthroughs in overseas markets are still an important investment logic. Finally, continuing the views in the 2024 strategy, it is recommended to focus on component manufacturers in other industries such as NEV parts, humanoid robots, machine tools, and low-altitude economy/flying vehicles through the same underlying technology.
After comprehensive consideration, the recommended targets are: Oriental Cable (603606.SH), Jinlei (300443.SZ), Haili Wind Power (301155.SZ), Zhongji Union (605305.SH), Chongde Technology (301548.SZ), Goldwind Technology (02208,002202.SZ), Taisheng Wind Energy (300129.SZ), Changsheng Bearing (300718.SZ), Zhenjiang (603507.SH), Daikin Heavy Industries (002487.SZ), Sany Heavy Energy (634889. SH), Lixing Co., Ltd. (300421.SZ).
Risk warning: The introduction of a far-reaching ocean wind policy fell short of expectations; the cost reduction of floating ocean winds fell short of expectations; the impact of other non-economic factors that may be encountered during the implementation of the deep sea breeze, especially in the Bohai Rim and East China Sea areas, which may involve the risk of overlapping development with neighboring countries' exclusive economic zones; the risk of fluctuations in raw material prices; safety risks that may be brought about by the rapid development of large megawatts; the risk of anti-dumping sanctions that may be encountered when going overseas for complete machines and components.