September 23, 2025 02:47 PM GMT China – Wind | Asia Pacific Segment Turnaround after Anti- involution Effort We expect robust demand and ongoing margin recovery along the value chain to follow years of anti-involution. We reiterate our preference for key WTG component suppliers and submarine cable plays compared to WTG OEMs. Key Takeaways After a down-cycle of almost three years, China's wind value chain countered involution from within: It achieved price and broad profitability turnaround entering 2025, wi ...

Core Viewpoint - Jiangsu Zhongtian Technology Co., Ltd. (ZTT) emphasizes its commitment to Environmental, Social, and Governance (ESG) principles, integrating them into corporate strategy and operations to promote sustainable development and social progress [1][11]. Environmental Initiatives - ZTT has launched the Green Low Carbon Manufacturing (GLCM) action plan, adding 5 new national green factories, totaling 13, and aims to reduce carbon dioxide emissions by approximately 130,000 tons through the use of over 190 million kWh of renewable electricity [3][4]. - The company has achieved a compliance rate of 100% for ISO 14001 environmental management system certification across its operational manufacturing companies [3]. Social Responsibility - ZTT focuses on employee well-being, providing employment opportunities for people with disabilities, and promoting diversity and inclusion within the workforce [1][3]. - The company has a 100% signing rate for collective contracts and has organized 278 safety drills, emphasizing its commitment to employee rights and safety [3][4]. Governance and Compliance - ZTT adheres to principles of transparency, compliance, and efficiency, optimizing its corporate governance structure and strengthening risk management to build trust with shareholders and investors [1][3]. - The company has joined the Science-Based Carbon Target Initiative (SBTi) to establish scientifically grounded emission reduction paths, demonstrating its commitment to climate action [3][5]. Financial Performance - In 2024, ZTT reported revenues of approximately RMB 48.05 billion, with operating costs of about RMB 45.27 billion, and employee wages and benefits totaling around RMB 2.86 billion [14]. - The company has maintained steady growth in revenue and controlled operating costs while increasing investments in R&D and environmental protection [12][14]. Technological Innovation - ZTT has established an "Energy and Carbon Cloud Platform" to enhance its green management system, integrating energy monitoring and carbon footprint accounting [3][4]. - The company has pioneered the "Intellectual Property Bank" platform, attracting over 11,000 participants and fostering a culture of innovation [3][4]. Global Strategy - ZTT has expanded its global footprint with 14 overseas marketing centers and 5 factories in countries such as India and Brazil, enhancing its international competitiveness [8][9]. - The company aims to achieve carbon neutrality by 2055, aligning its strategic goals with China's national targets for carbon peaking by 2030 [4][5].

Summary of Key Points from the Conference Call Industry Overview - **Industry Focus**: China Utilities and Renewables [2][46] - **Event**: Global China Summit 2025, involving discussions with over 20 companies in the sector [2] Core Insights 1. **Offshore Wind and Smart Grid**: - Offshore wind development is expected to see significant growth due to low penetration in China, with projected earnings growth of over 30% for Orient Cable from 2025 to 2027 [3] - Domestic demand for power grids is anticipated to grow by at least 8-10% this year, despite uncertainties in commercial and industrial demand [3] - Huaming's products are competitively priced at one-third or less than foreign products, with over 80% of components self-manufactured, enhancing capacity expansion efficiency [3] 2. **Emerging Market Growth**: - Companies like Arctech and Deye are optimistic about demand growth from Emerging Markets, particularly in the Middle East, with expected order increases of over 25-30% for Arctech [4] - Chinese manufacturers have increased their market share in non-China markets from 5% in 2020 to 39% in 2024 [4] 3. **Earnings Visibility and Power Reforms**: - Earnings visibility for renewable energy operators is diverging due to power reforms, with Yangtze Power benefiting from stable tariffs and potential price increases due to market liberalization [5] - Weak coal prices are expected to benefit thermal Independent Power Producers (IPPs) [5] 4. **Gas Utilities and Solar Sector**: - Gas utilities are showing signs of recovery, but there are concerns about tariff impacts affecting industrial volume growth [9] - The solar value chain is facing challenges due to overcapacity, with a negative outlook for companies like LONGi and Tongwei [9] Investment Recommendations - **Top Picks**: - Orient Cable: Benefiting from offshore wind demand and submarine cable market [10] - Goldwind: Expected profitability improvement from rising exports [10] - Huaming Equipment: Key beneficiary of global transformer capacity expansion [10] - ENN Energy: Anticipated strong growth and potential privatization support [10] - **Avoid**: - LONGi Green: Facing deteriorating profitability due to increased competition [10] - Tongwei: High exposure to a multi-year poly downcycle [10] Additional Insights - The report emphasizes the importance of selective investment in gas utilities and cautions against the solar value chain due to ongoing challenges [9] - The overall trends in the utilities and renewables sector are seen as positive, with specific companies highlighted for their growth potential and market positioning [2][4][5][9]