Heavy Chinese Exposure Will Undermine Wind Revenue Prospects

Key Takeaways

• Overdependence on the Chinese market and government policies creates significant risk and earnings volatility amid rising local competition and shifting regulatory incentives.
  
• Intensifying price pressures, policy uncertainty, and potential for technological disruption threaten profitability, international expansion, and sustained long-term growth.
  
• Strong demand and policy support, improved profitability, and rapid international expansion are driving growth and enhancing Goldwind's financial stability and global competitiveness.

Catalysts

Provides wind power solutions in China and internationally.

• The company's heavy reliance on the Chinese market-where 68% of all global new wind installations and nearly 16% of the national power mix are wind-leaves Goldwind extremely exposed to policy reversals, market saturation, and increased local competition, which could sharply curtail future revenue growth if domestic demand peaks or incentives are reduced.
  
• Mounting global protectionism and policy uncertainty threaten Goldwind's ability to expand internationally, especially as overseas backlog remains small relative to total order book, risking the company's long-term revenue diversification and leaving earnings highly vulnerable to shifts in Chinese and international trade policies.
  
• The industry-wide decline in the levelized cost of energy for both onshore and offshore wind-offshore LCOE down by more than 70% over the past decade in China-signals intensifying price pressures and commoditization, which is likely to compress gross and net margins even as volumes grow, jeopardizing sustained profitability.
  
• Goldwind's continued dependence on government-led tenders, direct policy support, and sector-boosting measures makes future earnings extremely volatile, particularly if fiscal incentives, green financing, or grid reforms are delayed or discontinued, resulting in more variable cash flow and potential net profit declines.
  
• Technological disruption from alternative renewables or energy storage solutions, such as advanced battery systems or emergent power generation technologies, could erode the addressable wind market and curb long-term demand for Goldwind's core offerings, negatively impacting top-line growth and lowering future earnings potential.

Goldwind Science&Technology Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more pessimistic perspective on Goldwind Science&Technology compared to the consensus, based on a Fair Value that aligns with the bearish cohort of analysts.
• The bearish analysts are assuming Goldwind Science&Technology's revenue will grow by 8.6% annually over the next 3 years.
• The bearish analysts assume that profit margins will increase from 2.9% today to 4.6% in 3 years time.
• The bearish analysts expect earnings to reach CN¥3.8 billion (and earnings per share of CN¥0.91) by about August 2028, up from CN¥1.9 billion today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bearish analyst cohort, the company would need to trade at a PE ratio of 14.4x on those 2028 earnings, down from 26.2x today. This future PE is lower than the current PE for the CN Electrical industry at 49.5x.
• Analysts expect the number of shares outstanding to grow by 0.21% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 12.08%, as per the Simply Wall St company report.

Goldwind Science&Technology Future Earnings Per Share Growth

Risks

• Strong policy tailwinds and multiple new government initiatives in China are providing explicit long-term support for renewables, especially wind power, which should underpin demand and support Goldwind's revenues and order pipeline well into the future.
  
• Goldwind's external sales capacity and order backlog have seen record growth, with external sales capacity rising over 100 percent year-on-year and order backlog totaling 54.8 gigawatts, which indicates significant future revenue visibility and stability.
  
• Ongoing declines in the levelized cost of energy for both onshore and offshore wind have made wind more economically attractive, improving Goldwind's competitive positioning and likely supporting sustained net margin improvement as volumes increase.
  
• Improved operating metrics-including historically high revenues, rising gross profit, higher net attributable profits, and increasing return on equity-highlight successful execution, business mix optimization, and enhanced earnings quality, contradicting expectations of decreasing financial performance.
  
• Goldwind's overseas expansion is gathering momentum, with a growing backlog in international markets and increasing contributions from global sales, diversifying its revenue base and reducing reliance on the domestic Chinese market, ultimately strengthening earnings prospects.

Valuation

• The assumed bearish price target for Goldwind Science&Technology is CN¥9.14, which represents two standard deviations below the consensus price target of CN¥12.27. This valuation is based on what can be assumed as the expectations of Goldwind Science&Technology's future earnings growth, profit margins and other risk factors from analysts on the more bearish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of CN¥14.6, and the most bearish reporting a price target of just CN¥9.14.
  
• In order for you to agree with the bearish analysts, you'd need to believe that by 2028, revenues will be CN¥83.3 billion, earnings will come to CN¥3.8 billion, and it would be trading on a PE ratio of 14.4x, assuming you use a discount rate of 12.1%.
  
• Given the current share price of CN¥11.52, the bearish analyst price target of CN¥9.14 is 26.0% lower. Despite analysts expecting the underlying buisness to improve, they seem to believe the market's expectations are too high.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.