Results continued to high growth

The company reported revenue of RMB18.544 billion in the first three quarters, representing a growth of 74.61% yoy. Net profit attributable to shareholders grew by 76.4% yoy to RMB2.108 billion. In 2015, the company reported a significant increase in both its revenue and net profit. Its reported revenue in Q3 was RMB9.115 while its net profit attributable to shareholders was RMB862 million. Both were mostly flat compared with the same period of last year. The company's results started to rebound since the second half of last year and it is still maintaining a relatively high growth rate. The company expects that its annual profit will grow by 50-100% to approximately RMB2.745 billion to RMB3.659 billion.

2016 sales volume expected to growth

As the grid price will gradually decline in future, each wind power operator may speed up its power installation so that it can achieve a higher grid price for the newly installed capacity. In the near term, the sales volume of the company's wind turbine and components is expected to grow but is expected to decrease in the long run. However, the company will search for new opportunities of the industry in the coming years.

Valuation

Being one of industry leaders in the wind turbine manufacturing and sales, the company is still able to deliver a high profit growth in 2015. It is expected that the sales volume of wind turbines will continue to grow at a steady pace in the coming two years. However, the gross margin may be under pressure. In future, investors may focus on the operation of the company's wind farms and the development of energy internet. The company's share price has tumbled due to the impact from the policy on wind power tariffs. We think that the impact of the policy on the company may not be as significant as market expected. We downgrade the target price to HKD16.7 but remain our “BUY” rating. (Closing price as at 7 Dec 2015)

Financials

Click Here for PDF format...