Xinjiang Goldwind Science & Technology Co., Ltd. (XJNGF) Q1 2023 Earnings Call Transcript

Xinjiang Goldwind Science & Technology Co., Ltd. (OTCPK:XJNGF) Q1 2023 Results Conference Call April 27, 2023 4:00 AM ET

Company Participants

Ma Jinru - Vice President and Board Secretary

Wang Hongyan - CFO

Xue Naichuan - Vice President

Chen Qiuhua - Vice President

Operator

Distinguished investors, a very good afternoon. Welcome to Goldwind Science & Technology Co., Ltd. First Quarter Results of 2023.

Today, we have the management here today with us. President, Zhigang Cao; Vice President and Board Secretary, Madam Ma Jinru; CFO, Wang Hongyan; Vice President, Xue Naichuan; Vice President, Chen Qiuhua.

Today, the meeting will be consisted of two parts. First, we will Madam Ma Jinru talk to us about the first quarter industry review -- business review. And followed by Mr. Wang, Hongyan to talk to us about the financial results. And then we will have a question-and-answer session.

Now first of all, we'll give the floor to Madam Ma Jinru.

Ma Jinru

Dear, investors, very good afternoon to everybody. Welcome to our first quarter results announcement of Goldwind Science & Technology Co. First of all, I'm going to talk about the industry review and business review of our company.

If you go to the Page number 3, you can have a look at the global wind power market, especially the new installations and their geographical locations. I'll skip the details of what I'm speaking. There was a decrease of 15% of global new installations. The main reason is because of the installation decrease in China and the wind tower company -- wind power. This is about -- [69%] of them are in China.

And if you look at the China domestic market, you will realize that in the first quarter, we registered an increase in the whole country with 10.4 gigawatts of new grid connection, with an increase of 31.6% year-over-year. And the total accumulated grid-connected wind power capacity was 375 gigawatts, taking 14% of the China's total power mix.

And on the right-hand side, you will realize the overall electricity production in China for the year 2022 and also for the first quarter. So you can see that utilization hours was 615 hours in the first quarter. The utilization on the national average, with an increase of 60 hours relatively to the first quarter.

Public tender market. There's a total market of 26.5 gigawatts in the first quarter, representing 7.3% year-over-year growth. Onshore public tender totaled 24.9 gigawatts and offshore totaled 1.6 gigawatts. And then you can see the bidding price of all WTG suppliers in the market recorded another decrease down to RMB1,607 per kilowatt.

And the next slide is about the state policies and projects update. That basically covers the 3-base development path where the new energy, including the regulation over the power generation and power market as well as our transactions. And then they also issued policies about the rural area development when it comes to power and transformation as well as green development.

And among them,you can see that there are programs on the rural areas when it comes to energy generation based on the county level. And by 2025, the renewable power will account for about 30% of the total power and over 60% of the incremental power generation in the rural areas. And there are also encouraging policies to support local generation and local consumption and also to further push forward the development of wind power.

And on the right-hand side, you can see the guideline on energy development for 2023. For instance, pushing forward the proportion of non-fossil energy in total energy consumption to about 18%. And non-fossil energy power generation installed capacity will increase to about 51.9%. And wind power and PV power generation accounted for 15.3% of the total electricity consumption.

And then we also have the third phase of the projects related PV and wind power development. And then it has also been mentioned that there will be a total installation target of wind power and PV power to about 160 million kilowatts. So this gives us a big room for development.

Against this policy backdrop, I'd like to talk about our business review. So the sales capacity, we have about 1,100 megawatts, amongst which you can see that we have 32.7% of that for 3S/4S series. And then the MSPM totaled 717 megawatts.

And when it comes to order backlogging, you can see that we have 29.6 gigawatts of total backlog of order, and externally, 28.9%. And then we also have 25.7 gigawatts of signed contract. So you can see that our contract order backlog is a very sustainable one.

On the right-hand side, you can see the mix for MSPM. You can see that it has accounted for 73.3% of our total mix. And with the rest accounted for about 20% to 17% of the total order mix.

Now our overseas backlog is about 5.29 gigawatts. And you can see that there was an increase of 65.7%, mainly in Vietnam, Chile, Uzbekistan, South Africa, Australia and so forth.

Now wind power generation. As of the end of the first quarter, our attributable grid-connected power project says 6,500 megawatts, 28% of that in Northwestern area, 26% in the East China and 23% in North China.

And for the first quarter, we added 171 megawatts of attributable grid-connected wind power capacity at home and abroad, with the sale of 744 megawatts. And other construction wind capacity at home and abroad, 2,747 megawatts. And the self-run wind farms recorded 637 hours of utilization, with 22 hours higher than the national average.

Now I'll give the floor to our CFO, Mr. Wang.

Wang Hongyan

Thank you very much. A very good afternoon. This is the CFO. I'm going to talk about the financial numbers of our company. So in this slide, you can see that our revenue and our profit margin. So you can see -- so in the first quarter, we have a revenue of RMB 5.56 billion, with a decrease.

Main reason was because of the WTG sale capacity as well as the price went down. And we have a 1.1 gigawatts of deliveries, decreased by 21.34% in terms of price. The WTG price, on average, is still decreasing, on decline, and that is another reason for a decline in revenue.

And on the right-hand side, you can see our profit margin. We had 25.23% of gross margin -- of profit margin for the first quarter. This is mainly because of the sales price dropped at the biggest percentage compared with the drop in our costs. However, it still has a quarter-over-quarter increase.

The other three sectors of our business remained stable, except the WTG one. The net profit attributable to the owner of the Company in the first quarter was 1.235 billion, which is quite flattish versus the same period last year, but there's a mix change because the gross margin for the WTG drop versus the previous period. And we will continue to control the price and try to improve the margin level.

And on the right-hand side, you see the weighted average return on equity. We had 3.38%, with a drop of 0%. This is mainly due to the weighted average calculation on the return of equity.

And next slide, you can see the solvency position of the Company that we have. The current ratio, 1.08, and quick ratio was 0.72. And if you refer to the numbers, you would realize that we have a -- current assets, 41.76. And in the year of 2022, we can start into a positive. Meaning, that we are better in our solvency position.

On the right-hand side, you can see the asset liability ratio that we have. As of the end of March, the asset liability ratio was 67.93%, improved from 70% in the fourth quarter of 2022. So you can see that we had returned some loans -- interest-bearing loans. And then we also had disposed some assets that are liquid. And then basically has improved our overall solvency position.

And next slide is the cash flow of our company. So as you can see that in the next quarter, the net cash outflows from operating activities for the first quarter was RMB7.5 billion. This is a result of our proactive management of the cash flow as well as the fact that the business and economy overall has emerged out of the corporate stress.

And you can see that we're pretty much at the same pace as we did seasonality -- in terms of seasonality with the previous year. And on the right-hand side, you can see that the ratio of cash to total assets was 7.95%. And we had a slide dedicated to balance between the liquidity and the safety of our cash versus the total assets. So you could see that 7.95% asset ratio is pretty much in line with the requirements of the management.

We are in a safe and healthy condition when it comes to the cash flow and finance-wise. Thank you.

Question-and-Answer Session

End of Q&A