Investment Highlights

Inheriting the genes of the manufacturing industry and highlighting the advantages of the industrial chain: The company was founded in 2008 and successfully listed on the Science and Technology Innovation Board in 2022, and has now formed an integrated industry of wind turbine blades, generators, and complete machine manufacturing + power station construction and operation. The company seized the opportunity of rushing to install in 19-20 years, and the net profit attributable to the parent company in 20 years was 9.311/1.372 billion yuan, a year-on-year increase of 529/993%. After the national subsidy was withdrawn, the company relied on Sany's manufacturing genes to bring good cost control and innovative scientific research capabilities, and still maintained revenue growth, achieving revenue/net profit attributable to the parent company of 14.9/2 billion yuan in 23 years, an increase of 21/22% year-on-year. In addition, in the context of intensified competition in the industry, the company's asset-liability ratio is at a low level in the industry, and the relative advantage of cash flow is obvious, and it is expected to continuously improve its industry status through the expansion of Shuanghai business.

Steady growth in revenue and profitability entering an inflection point: the company's revenue in 24Q1-3 was 9.07 billion yuan, a year-on-year increase of 21.1%, a net profit attributable to the parent company of 680 million yuan, a year-on-year increase of -33.5%, a gross profit margin of 15.5%, a year-on-year increase of -4.1pct, a year-on-year net profit margin of 7.6%, a year-on-year increase of -6.2pct, of which 24Q3 revenue was 3.79 billion yuan, a year-on-year increase of 5.9%/6.6%, and a net profit attributable to the parent company was 250 million yuan, a year-on-year increase of 17.6%/49.8%, and a gross profit margin of 14.9% , 0/0.6 pct year-on-year, net profit margin attributable to the parent company was 6.6%, 0.7/1.9 pct year-on-year.

Started construction of Kazakhstan's Zhambyl wind power equipment plant, and continued to expand its overseas territory: On November 29, Kazakhstan's Samruk Kazyna Sovereign Wealth Fund and Sany Renewable Energy held a groundbreaking ceremony for a wind turbine component production plant with a total investment of US$114 million in Zhambyl Oblast, Kazakhstan. Scheduled for completion by the end of '25, the plant will produce nacelles, hubs, towers and other critical components for wind power projects. In addition, in order to increase the degree of localization of unit production to 30%, the company plans to build another R&D center. The Samruk Kazyna Sovereign Wealth Fund plans to build around 6GW of wind power capacity by 2030 in partnership with Sany Renewable Energy to meet the growing demand for electricity.

Proper cost reduction and cost control, the expense ratio decreased significantly: the company's expenses during the 24Q1-3 period were 1.24 billion yuan, a year-on-year increase of -17.1%, an expense rate of 13.7%, and a year-on-year increase of -6.3pct, of which the expenses during the Q3 period were 440 million yuan, a year-on-year increase of -25.3%/17.2%, and an expense rate of 11.5%, a year-on-year increase of -4.8/1pct; 24Q1-3 net operating cash flow was -3.21 billion yuan, -386.5% year-on-year, of which Q3 operating cash flow was -400 million yuan, -129.5%/-70.1% year-on-year; 24Q1-3 capital expenditure was 1.46 billion yuan, -42.5% year-on-year, of which Q3 capital expenditure was 510 million yuan, -38.2%/80.9% year-on-year; The inventory at the end of 24Q3 was 6.34 billion yuan, 105.4% from the beginning of the year.

Profit Forecast and Investment Rating: Considering that the pace of wind farm construction has slowed down and the scale of wind farm transfer is lower than expected, we have lowered the net profit attributable to the parent company in 24~26 years to 20.9/27.4/3.26 billion yuan (the original value was 24.2/28.8/3.29 billion yuan), a year-on-year increase of +4.4%/+31.0%/19.0%, and the corresponding PE is 18.4/14.1/11,8X. There is a lot of upside and we maintain a "buy" rating.

Risk warning: intensification of competition, risk of changes in industry policies, risk of declining profitability of power station business, etc.