Titan Wind(002531) -·2024-07-11 00:28Key Points 1. Half-Year Report and Business Performance - Tower and Blade Business: Continued strategic contraction with reduced deliveries. Tower deliveries of about 40,000 tons, blade deliveries similar to Q1 at over 130 sets of molds. Both segments essentially broke even due to low deliveries. Expected delivery volume for the year not to exceed 300,000 tons due to strict restrictions on orders with poor profitability and cash flow. - Offshore Wind Business: Impacted by project start-ups, with limited revenue recognition. Only 6 piles (about 10,000 tons) from the Hainan Lingao project recognized in Q2, resulting in a near 20 million yuan loss. Multiple projects expected to enter delivery phase in H2, with expected delivery volume of about 250,000 tons. - Zero Carbon Business: Profit from wind power generation decreased by about 500 million yuan year-on-year due to lower wind speeds, but the company continued to expand its generation business. Added grid-connected projects include the Hubei Shaoyang project and the Guangxi 200 MW project, with wind power generation profit reaching 145 million yuan in Q2. 2. Future Outlook and Project Progress - Offshore Wind Business: Multiple projects expected to enter delivery phase in H2, including Qingzhou 6, Hua Nan Lingao, Hua Neng Yuhuan, Guangxi Qinzhou, China Resources Lianjiang, and Rui'an projects. Expected full-year delivery volume of about 250,000 tons. - Future Outlook: Optimistic about the offshore wind industry, with tight supply of jacket piles, high prices, and favorable payment terms. Expected Poland offshore wind project to enter delivery phase next year. - German Factory: Progress normal, bank financing issue resolved, expected to become a major force in the overseas market. 3. Financial Condition and Financing Plans - Debt Ratio: Exceeded 60%, a historical high, due to business transformation and capacity construction. Plans to alleviate financial pressure through subsidiary equity financing, expected to raise 1-1.5 billion yuan, with expected improvement in interest expenses in H2. - Cash Flow: Tense overall, but new energy business has strong profitability. Plans to solve part of the financial issues through subsidiary financing, expected to raise about 1 billion yuan. 4. Wind Power and Onshore Wind Business - Wind Power Generation: Added 200 MW grid-connected project in early 2024, expected to have fewer grid-connected projects this year, with next year expected to be a major year. Plans to continue to obtain indicators in Hubei, Guangxi, Henan, and Jilin to secure more grid-connected projects. - Onshore Wind Business: Expected to recover profitability in H2, but the full-year profit target needs to be reduced to about 100 million yuan. Focus on cash flow, prioritizing orders with good cash flow. 5. Q&A - Offshore Wind Project Delivery and Start-up in H1: Slower delivery and start-up speed in H1, but still high expectations for the full year. Multiple projects in hand, including Qingzhou 6, Qingzhou 5, Longyuan Sheyang, Hainan Hua Neng Lingao, Hua Neng Zhejiang Yuhuan, Guangxi new project, China Resources Lianjiang offshore, and Rui'an No. 1 project, expected to be completed this year. - Profitability of Offshore Wind Projects: Stable in Shenyang and Hainan projects, with individual project profits approaching 20 million yuan. Overall, delivery and cash flow are good, prices are ideal, and supply is tight. - Debt Ratio and Interest Payment Pressure: Group's debt ratio exceeded 60%, a historical high, mainly due to business transformation and policy reasons leading to difficulties in refinancing. Subsidiary equity financing initiated in April and May, expected to be completed in August, with a financing scale of 1-1.5 billion yuan. This will alleviate financial pressure, with expected improvement in interest expenses in H2. - Bidding Situation in Guangdong Province: Mainly involves installation and equipment bidding, not offshore wind resource bidding. Provincial sea area bidding is ongoing, including the Double Eleven and Yangjiang projects. As for the pilot resource bidding of overseas sea areas, there is no clear start time yet. - Certification and Customer Situation of Tongzhou Bay Project: Developers in Japan and South Korea are very active, but offshore wind projects require time. European offshore wind projects started earlier and many projects have entered the implementation stage. Expected to start implementing projects next year. Japan and South Korea are also gradually advancing, but a large number of projects are expected to start in 2027. Europe has started earlier and Japan and South Korea are also gradually advancing. - Order Form of Tongzhou Bay Project: Originally planned to use jacket piles, but after design modification, finally determined to use monopile form. The first project of the Tongzhou Bay project will use monopile form. - Transportation or Ship Bottleneck: Currently unable to determine whether transportation will become a bottleneck, but Tongzhou Bay is not our main overseas market. We have a 500,000-ton monopile factory in Germany, which is reasonably balanced and can respond to various situations. - Progress of German Factory: Progress normal, bank financing issue resolved, overall progress controllable. - Order Form of Poland Project: Originally planned to use jacket piles, but after consultation with customers, finally changed to monopile form. Monopiles can save costs and meet construction conditions. - Expected Time for Signing Poland Project Orders: Expected to be signed within one or two months, but delivery will start next year. - Profitability of Onshore Wind Projects in H2: Profitability may be reduced to about 1 billion yuan. The main reason is that the order volume is not large, resulting in depreciation amortization affecting profits. In addition, we pay more attention to cash flow than profit margin. Under the tight financial situation, we will allocate more resources to the offshore wind and power generation businesses, which will also affect the profitability of the onshore wind projects. - Grid Connection Rhythm of Wind Power Projects:核准的项目还有 600 兆瓦在湖北、2400 兆瓦在河南，这些项目要到明年才能并网。今年并网的可能性较低。今年广西新核准了 200 兆瓦，但最终批复还未完成。我们希望在湖北、广西、河南和吉林继续拿指标，争取今年能动起来，改善明年年底前的并网情况。今年并网量较少，预计明年将是并网大年。 - Consideration of Rolling Development and Transfer of Power Stations: Although financially tight, the group has strong profitability in new energy, especially in the offshore wind business. Plans to solve about 10 billion yuan of financial needs through subsidiary financing, and currently does not need to carry out the rolling development and transfer of power stations. In the future, it may consider this strategy after more power stations are grid-connected.