Goldwind turbine business profitability re-rates; H shares upgraded to Overweight
AI summary card
Goldwind turbine business profitability re-rates; H shares upgraded to Overweight
JPMorgan believes Goldwind's FY25 core turbine profitability and overseas orders were better than expected, prompting a valuation switch from P/BV to PER and a substantial increase in target prices for both H shares and A shares.
- FY25 core profitability was stronger than expected, and turbine business PBT improved from Rmb61mn in FY24 to Rmb2.5bn.
- Overseas orders rose from about 7.2GW in 9M25 to 9.3GW in FY25, lifting FY26 overseas sales expectations from 4GW to 7GW.
- H-share target price was raised 39% to HK$19.40, with the rating upgraded from Neutral to Overweight; A-share target price was raised 41% to Rmb26.10, with the rating upgraded from Underweight to Neutral.
- The wind farm business remains under pressure, with lower power prices, fewer disposals, and impairments limiting overall earnings flexibility.
Report interpretation
Overview
This report is JPMorgan's rating adjustment note for Goldwind's H shares and A shares. The core view is that Goldwind's FY25 results and earnings call conveyed positive signals, and that turbine business profitability, overseas orders, and operating leverage were all stronger than previously expected; therefore, the turbine business should be valued using PER rather than the previous P/BV framework.
Core views
Goldwind is one of China's largest wind turbine manufacturers, with market share broadly stable at 20-25% from 2020 to 2025. The report believes the turbine business has shifted from losses before 2023, to near break-even in 2024, and then to a profitable business with double-digit ROE and around 20% growth, making it the main driver of valuation. By contrast, the wind farm business continues to create earnings volatility due to lower power prices, fewer project disposals, the impact of Doc 136-related policies, and impairments.
Analysis framework
The report uses a segmented SOTP valuation: the turbine business is re-valued using PER, while the wind farm business continues to be valued using P/BV. The H-share turbine business uses 11x PER, and the A-share turbine business uses 14.5x PER; for the wind farm business, the H share uses 0.65x P/BV and the A share uses 1.4x P/BV. Earnings forecasts are adjusted based on company results, orders, sales guidance, gross margin, policy, and commodity risks.
Methodology notes
Sum-of-the-parts valuation
The turbine, wind farm, other businesses, and LandSpace value segments are valued separately and then summed to reflect differences in profitability quality and valuation multiples across businesses.
Price-to-earnings valuation
The report believes the turbine business has re-entered a profitable growth path, so it shifts from P/BV valuation to PER valuation.
Price-to-book valuation
The wind farm business remains in a cyclical downturn and has more volatile earnings, so it continues to be valued using P/BV.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- Goldwind-H / 2208.HKCore covered name, rating upgraded to Overweight
- Strengths
- Turbine profitability beat expectations, overseas orders grew, and there is still about 30% upside after the target price increase.
- Weaknesses
- The wind farm business is affected by lower power prices and impairments.
- Comparison
- Compared with the A share, the H share valuation is more attractive.
- Risks
- The market may not accept the PER re-rating, turbine sales or gross margin may miss expectations, and power prices and utilization hours may decline.
- Goldwind-A / 002202.SZCore covered name, rating upgraded to Neutral
- Strengths
- Also benefits from improved turbine profitability and higher target price.
- Weaknesses
- The current price is above the target price, and valuation is considered rich.
- Comparison
- The A-share turbine business uses 14.5x PER, higher than the H-share 11x PER.
- Risks
- Limited upside due to rich valuation, and pressure may increase if profitability or sales miss expectations.
- Turbine businessMain driver of valuation and earnings
- Strengths
- FY25 PBT improved significantly, overseas sales gross margin was strong, and FY26 overseas sales expectations have risen to 7GW.
- Weaknesses
- International logistics, price competition, and raw material costs may squeeze gross margin.
- Comparison
- The report's H-share and A-share valuation breakdown shows the turbine business accounts for most of the valuation.
- Risks
- Overseas price competition, higher transportation costs, and rising commodity prices such as resin and copper.
- Wind farm businessSource of earnings volatility and valuation discount
- Strengths
- Equity installed capacity reached 9.5GW by the end of FY25, still contributing asset value.
- Weaknesses
- Lower power prices, fewer disposals, policy impacts, and impairment pressure remain significant.
- Comparison
- Unlike the turbine business, it is still valued using P/BV.
- Risks
- Declining utilization hours, lower power prices, buyer delays or termination of acquisitions, and irreversible impairments.
Key data
- FY25 net profitRmb2.77bn, +49% yoyBelow Bloomberg consensus of Rmb3.3bn, but the report sees this as unsurprising.
- FY25 turbine gross margin9%, up 4 percentage points yoyHigher than management's 8% target.
- FY25 external turbine shipments26.6GW, +66% yoyBroadly in line with the company's 27.5GW target.
- FY25 turbine PBTRmb2.5bnA significant improvement from Rmb61mn in FY24.
- FY25 total orders50.5GWContinued to increase from 49.9GW in 9M25.
- FY25 overseas orders9.3GWUp from 7.2GW in 9M25.
- FY26 external sales plan40GWIncluding 32GW domestic onshore, 2.7GW domestic offshore, and 7GW overseas.
- H-share target priceHK$19.40Up 39% from the previous HK$14.00.
- A-share target priceRmb26.10Up 41% from the previous Rmb18.50.
Impact & implications
The investment implication is that if the market accepts re-rating the turbine business as an earnings-growth asset, Goldwind H shares have significant valuation upside; however, for A shares, because the current valuation is already higher, there is still limited upside even after the target price increase. The key upside drivers are overseas orders, overseas gross margin, domestic cost declines, and operating leverage in the turbine business, while power prices, utilization hours, disposals, and impairments in the wind farm business remain the main drags.
Risks
- The market may not accept switching the valuation framework for the turbine business from P/BV to PER.
- Turbine sales may come in below expectations.
- Turbine sales gross margin may be below expectations.
- Utilization hours may be below expectations.
- Power prices may be below expectations.
- International logistics, geopolitical conflicts, and container shipping costs may rise.
- Rising prices for commodities such as resin and copper may compress profit.
- More Chinese wind OEMs expanding overseas could intensify overseas price competition.
- Wind farm disposals may fall short of expectations, and Doc 136-related impacts may increase impairment pressure.
What to watch
- Whether FY26 overseas turbine sales can reach 7GW.
- Whether overseas orders continue to grow and whether overseas project gross margins remain strong.
- The divergence in gross margins between domestic onshore, domestic offshore, and overseas turbines.
- Wind farm power prices, utilization hours, and project disposal progress.
- The impact of Doc 136 implementation on wind farm cash flow and impairments.
- Whether the market accepts the PER valuation framework for the turbine business.
- Changes in commodity prices and international transportation costs.