Earnings Call: Q2 2021

Aug 23, 2021

Now let's welcome the moderator, please. Distinguished investors, good afternoon. I would like to welcome you to attend the Pingtan Gold Wind Science and Technology 2021 Interim Results Announcement. Once again, we are very happy to welcome our management team to join you guys for the discussion. Let me introduce them 1 by 1. They are President and Mr. Huang Zhui Bang Weiwei and the Board Secretary, Ms. Martin Wu and also Weiqi, Mr. Li Qi and our CFO, Mr. Li Kuo. First of all, we're going to have Ms. Ma Lin Hu to work you through the 2021 interim results, the financials, operations and industrial development. And then we have Mr. Li Chen to introduce the financials. And then we're guiding to the QA session. I'd like to remind all the audience that please pay attention how to press the button to raise a question, so that you can queue for the QA. Coming next, let's welcome Mr. Ma Li. Okay. Distinguished investors, good afternoon. It's my turn to introduce you the 2021 interim results. As we go to the slide 3, over the past 10 years, we hit the milestone events. The average annual rate of the global wind power accumulated installation was 15.3%. By the end of 2020, global installation wind power reached 733.3 gigawatts. China represented 38.5 percent, U. S. 61.1 percent and Germany 8.5% followed by Sand U. K. And one of the driving force for the global wind power to flourish is the cost reduction. Please take a look at the right side. According to Arena statistics in the past 10 years, the RCOE was down by 56% from a RCOE per kilowatt hour in 2020 to RCOE 0.039 per kilowatt hour in 2020. Meanwhile, the RCOE OE of the offshore wind power declined by 48 percent from USD 0.16 per kilowatt hour in 2010 to USD 0.08 per kilowatt hour in 2020. And on the left side, you can see in the first half of twenty twenty one, China reached a 10.84 gigawatts new grid connection increased by 71.5 percent yoy. By the end of June, cumulated grid connections of the wind power totaled 291.9 gigawatts, up by 34.7 percent ROI. Wind power took 12.9% in China's power mix. And from the parts in H1, China total power consumption was 3,930,930,900,000,000 kilowatt hour and increased by 16.2 percent yy. 244,200,000,000 kilowatt hour wind power production represent an increase of 44.6 percent and the penetration ratio is 8.7%. And in each one of this year, the wind average utilization rate is 12 12 hours increased by 89 hours. On slide 5, it shows you the Chinese public tender market. In H1 of Asia domestic public tender market totaled 31.5 gigawatts, up by 168% YY who were onshore public tenders and 69% of the public tender from in northern part of China, up by 90ppx and which tells that the public tender is coming back to the south of China. On the right side, the average gearing price for 2 exterior turbines was RMB 2616 kilowatts in June and the 4 exterior turbines was RMB 2473 per kilowatts. On the left side, we show you the policy review. Some of them are the Reform and Commission notice the Financial Solutions issued a subsidized bad debt and also the penetration ratio increased number and also the greater connection price and also the subsidies and the market reform policies and regulations. In one way, it will help to promote the healthy environment and to promote the green consumption of electricity. On the right side, it shows the non hydro renewable power consumption electricity quota by the NDA Among the 30 provinces, in 2020, 4 provinces' penetration ratio of the non hydro renewable power exceed more than 20%, of which 50 provinces reached 10% to 50 20%, 9 provinces reached 5% to 10% and the 2 provinces under 5%. And in 2022 and you can see that 31.4% is a maximum increase where the minimum target in 21% exceeding capital allocation value. There are 5 provinces where the minimal target value in 2022 increased by more than 20% of the 2021, which shows the determination and confidence of improving the penetration ratio. So let me just review the business of the company. Please go to slide 8. It shows our segmental results. According to accounting rules in H1 of this year and for the WTTG manufacturing sales, the revenue is RMB12,872,000,000,000 and the intensity for the 1 power surges is RMB1645 1,000,000. And on the right side, the wind power investment and the development was also picking up. And for the other business, you can see wind power service, the profitability has also become a positive comp, where other business represents 3.1%. On slide 9, it shows you the self capacity of wind power. From January to July and the total WPGS is 2,966,000,000,000 watts and megawatts. It's actually 2S represents 10 17 megawatts and 3S and 4S projects totaled 1152 Megawatts, up by 360.8 percent taking 38.8% of the total sales capacity, up by 32 PPPS, 68 as sales and booked a sale of 7 95 megawatts, up by 379.4%, accounting 26.8% of the total sales capacity, up by 22.8 ppts. On slide 10, we show you the order backlog. By the end of June, company's order backlog totaled 60.4 gigawatts and around 50 gigawatts are the external order including 2.1 gigawatts of successful bids and 30 gigawatts of side contracts. Addition overseas backlog take 12% of its order mix. Offshore turbine took 6% of the accident order mix. You can see that the rest of the OS sales of turbines record 8.6 gigawatts from 33% to 58% of the total accident order. 2S sales of 13% to 36% of the total external order, 6% and ALAS sales to 8% of the total external order. On the next slide, we show you a full on business extension. By the end of June, company's overseas Epsilon order backlog is 1871 Megawatts, mainly scattered in Vietnam, Chile, Kazakhstan, Pakistan and Philippines with an increase of 80% worldwide. Overseas on the use consumption and pipeline capacity totaled 893 megawatts scheduling in Australia. Let me also share with you the power generation business. By the end of the first H1, company's attributable grid connected wind tower projects totaled 5,690 megawatts, 31% are in Northeast part of China, 30% are in East and South China. Company aided 4 0 4 megawatts attributable grid connected wind power capacity and homeland growth in H1, on which 199 megawatts in domestic China and disposed of 2 73 megawatts. By the end of H1 of this year, our contributor on the construction wind power capacity at H1 of growth totaled 2,501 megawatts of which 29 are in North China and the Southern region, 29 are in North China, 11 are in North Eastern China, 8 in North Eastern and 23 are in overseas market. On the right side, you can see that generally speaking the growth connected by Weijao also improved greatly. And in H1 of this year, company's self run wind farms recorded 19 32 hour utilization increase by 80.700 and yoyo, 180 hour higher than the national average. And by the end of July 30, the company's under operation capacity in China and abroad totaled 17.2 gigawatts, up by 69.4%. In the near future, the company will further expand the wind power service. Calling us, let's welcome Mr. Li to work you through financials please. Good afternoon investors. Please allow me to introduce you the financial performance of the company. On the slide, we'll show you some key indicators. Revenue compared to the same period last year was down by 7.8% and GP margin was up by 80.2%. Net portfolio was up by 45% worldwide. And because you can see that our onshore business was improving and you can see that the net attributable product was also improving, but you can see that because our offshore wind power installation was improved by more than 300%, it also contributed to the GPU margin. And also it also provided us more profitability from the generics. So our GP margin was up by 48%. Even if within the reporting period, our revenue was down by 30% ROI. And also we have a credit empowerment and asset empowerment, which are already improved compared with last year. So the net profit was up by 45% compared with the same period of last year. Net profit was up by 3% compared with last year. Coming next, let's talk about the quarterly financial results. Within this reporting period and we are compelled with the big reporting period last year and there is already steady organic growth. I'm not going to elaborate on that at all. Go to the next page, we show you the operating cash flow and the working capital. Let's take a look at operating cash flow. In our interim results, we say that and the net operating cash flow of the 1st year was RMB4.088 billion and because of the rush to build and the company's operating cash flow was being further improved. And we also see some great improvement. For example, our turnover and payables and receivable turnovers are all being shortened compared with the same period of last year. So to the next page, showing you the financial indicators. There are some very important financial indexes. You can see the corporate ratio, the quick ratio and asset value ratio all be stabilized compared with the same period of last year. Let's take a look at the capital structure and the leverage. Within the reporting period, you can see for loans and liabilities and net debt. Net year on ratio net gain ratio is 63%, up by 20% and which show a robust financial performance. Now let's take a look at the outlook of the wind power industry. Please go to page 27. As of 23rd April 2021, 44 countries in the European Union have pledged to meet net zero emission targets. In total, they accounted around 70% of global carbon dioxide emissions and GDP. 10 countries already countries already meet their net zero target and legal obligation. 8 countries proposing to make its legal application and they remind us of making their pledge to offer the official policy documents. So according to the United States Energy Task Force and they already promote that 1.5 degree pathway, IRENA launched the global carbon reduction way and which means that for all countries we're going to leverage the renewable energy through direct supply of transportation, energy efficiency, green hydrogen and power energy combined for carbon capture and storage. And we can say that by having those new strategies, we will be able to make sure that arena analysis means that by quantity. And because of the 1.5 degree arena set by the year of 2,050, electricity will be net energy carriers increased from 21% of the share in the total final energy consumption in 20.80 to over 60% in 2,250. IEA predicted that by 2,030, the share of the renewables in total global penetration from 29 in 2020 to over 60 in 2030 and nearly 90 in 2,050. So third party and it wins has become a leading source of electricity worldwide and it's going to lead to at least $390,000,000 annual installations between 2021 to 2030. We're also going to proactively take care of the new policies and technologies. And in 2020, we already proposed and completed the 1st wind turbine environmental product declaration and also we're working with our international peers. The data shows and by using our product GW-one hundred and fifty five-4.5 Megawatts turbine. The result demonstrates a carbon emission of 7.25 grams per kilowatt hour of electricity generated. And we also finished the 1st carbon neutral demonstration part in China for Yijuan Smart Park in 2020 and completed the China Carbon Neutralization Demonstration Park in Xianfeng Park in Zhengzhou Province providing a suitable model for the future market as a carbon neutral economy. And because of our good performance in ESG, the company is also being constituted of the ISSG ESG Index, the Suntao Grain Finance and the China Alliance of Social Value Investment and also be included in the LSAI ESG Leader Index, the Hong Kong Corporate System Index and SPSG for a good index 0 rates as well as positive ESG ratings. And that's all for our H1 interim results announcement.