Goldwind: Lower shipment guidance reduces earnings forecasts, but the wind power demand recovery and service business growth theses remain unchanged

Overview

Following Goldwind’s 1H26 results and discussions with management, the report reassesses wind turbine shipments, margins, overseas operations, wind power services, wind farm transfers, and progress in green methanol. BofA believes policy developments and project schedules have lowered near-term shipment expectations, but recovering wind turbine margins, a rising contribution from high-margin businesses, and growing global wind power demand continue to support the H-shares; the A-shares, however, are constrained by an excessively high A/H premium.

Core views

First, the report lowers its near-term earnings and valuation assumptions but does not change its core view on the wind power recovery. Management reduced its 2026 wind turbine shipment target from 40GW to 35GW, mainly because market-based electricity tariffs and contract-for-difference tariffs have reduced developers’ project returns, prompting the reassessment of some projects, while ultra-high-voltage transmission lines supporting large northern bases and some tender processes have progressed more slowly than expected. Consequently, the industry’s 2026 installation forecast was reduced from 130—140GW to 100—110GW. The company still expects to achieve 35GW for the full year, implying shipments of approximately 22GW in 2H26, including approximately 1.9—2.0GW of offshore wind turbines and 7—8GW of overseas shipments. The year-over-year decline in 2Q26 shipments mainly reflected a high base in the prior year, and management expects growth to resume in the second half. Accordingly, BofA cut its 2026—2028 earnings forecasts by approximately 10% on average. The forecast revisions specifically incorporated four changes: 2026 offshore wind turbine deliveries were reduced from 2.9GW to 1.9GW, onshore wind turbine deliveries from 33GW to 30GW, wind turbine gross margin from 10.9% to 9.6%, and the assumed wind farm transfer target from 1.2GW to 1GW. EPS for 2026, 2027, and 2028 was cut from RMB0.99, RMB1.36, and RMB1.38 to RMB0.81, RMB1.19, and RMB1.22, respectively; revenue forecasts for the same periods were reduced by 19.3%, 14.1%, and 12.8% to RMB82.711 billion, RMB98.265 billion, and RMB90.770 billion, respectively, while net profit attributable to the parent forecasts were cut by 13.0%, 8.8%, and 8.5% to RMB3.584 billion, RMB5.192 billion, and RMB5.297 billion, respectively. 1H26 operating performance indicates that the profit recovery has not been interrupted. First-half revenue grew 18.3% year over year to RMB33.695 billion, wind turbine sales volume rose 16.2% to 12,364MW, and average selling price increased 7.3% to RMB2,204/kW. The table shows wind turbine gross margin rising from 7.9% to 9.5%, an increase of 1.6 percentage points, while the company’s disclosed first-half wind turbine gross margin reached 11.6%, above its previous full-year guidance of 9%—10%. Net profit after perpetual bond deductions increased 25% year over year to RMB1.86 billion, but 2Q26 net profit grew only 3%, significantly below the 60% growth in 1Q26, reflecting quarterly pressure from slower wind turbine sales. Management continues to maintain its 2026 wind turbine gross margin guidance at 9%—10% and considers the target relatively conservative, although 2H26 margins may be weaker than in the first half. Pressure stems from a higher share of low-margin overseas projects, logistics and insurance costs, raw-material price volatility, and the fact that domestic raw-material hedging covers only 1H26; overseas procurement costs, by contrast, have largely been locked in for full-year 2026. Domestic onshore wind turbine tender prices have stabilized over the past two years and are currently stable to slightly rising. Management believes onshore wind turbine margins are still recovering rather than declining again, while offshore wind turbine prices may continue to fall. The overseas business is both a source of growth and high margins and an area of pronounced regional divergence. The overseas business achieved a gross margin of 17.8% in 1H26, mainly driven by wind turbines, while its scope also includes operations and maintenance, EPC, and wind power generation. South Africa, South America, and offshore projects in Japan and South Korea have fewer competitors, higher barriers to entry, relatively moderate price competition, and higher margins. The Middle East and Central Asia have more Chinese suppliers, fiercer price competition, and lower margins, while geopolitical conflicts have increased logistics and insurance costs. Offshore wind turbine shipments were approximately 1.2GW in 1H26, representing approximately 10% of total company shipments, with overseas offshore projects mainly located in Japan and South Korea. Overseas backlog increased from 9.2GW at the end of 2025 to 9.5GW at the end of June 2026, following 6GW of new orders in 2025. Policy and project execution are the main uncertainties surrounding overseas expansion. Management identified four categories of risk: US legislation and tariffs, the EU foreign subsidies investigation, geopolitical conditions in the Middle East, and international carbon-related tariffs. The EU investigation remains in a lengthy investigative phase, and management expects it will take at least another 18 months before a preliminary substantive conclusion may emerge. It has not yet had a material impact on European sales. Some regions are also affected by developers’ execution schedules, military restrictions, and restrictions on maritime routes. The service business provides a relatively stable source of growth. 1H26 wind power service capacity grew 31% year over year to 60GW, with gross margin stable at approximately 20%. As more turbines exit their warranty periods over the next 3—5 years, management expects the business to sustain double-digit growth in scale. The company’s cumulative grid-connected attributable wind farm capacity increased 20.1% year over year to 10,390MW, but utilization hours declined 11.9% year over year to 1,106 hours in the first half, indicating that wind farm operations remain affected by curtailment and the electricity pricing environment. The wind farm transfer market remains weak. Market-based electricity trading has reduced both generation volumes and tariffs, while higher development costs, increased compliance requirements, changes to value-added tax rebate policies, and lower contract-for-difference tariffs have further impaired project economics. Management expects industry fundamentals to require another 12—18 months before factors such as electricity tariffs and wind curtailment improve. The company sold only approximately 100MW of grid-connected projects in 1H26, while its 2026 transfer target remains 1GW. Long-term responses include pursuing load-side opportunities in central and eastern regions with strong green power demand, such as Liaoning, Hebei, Shandong, Henan, Anhui, and Hubei, and strengthening power trading and electricity market capabilities. Non-power businesses such as green methanol and direct green power supply are viewed as potential growth drivers, but management believes it is still too early to assess their long-term earnings contribution. The green methanol project is progressing in three phases: Phase I has been completed, with deliveries expected to begin in 4Q26; Phase II is expected to be completed in September 2026; and Phase III has just begun construction. The 2027 supply target is approximately 500 kilotonnes, with meaningful shipment volumes expected in 2Q—3Q27. Margins during the current ramp-up period are not representative, and management recommends evaluating project economics only after operations stabilize and annual utilization exceeds approximately 8,000 hours. On valuation, BofA lowered its H-share target price from HKD18.5 to HKD15.6, based on 1.4 times 2027E price-to-book value, down from 1.55 times previously, corresponding to a 2027E ROE of 11.6%, down from 12.5% previously. The report notes that the H-shares’ approximately 11 times P/E is below the long-term average of approximately 13 times and close to 1 standard deviation below the historical mean valuation. It therefore maintains its “Buy” rating based on global wind power demand growth, improving wind turbine margins, and a rising contribution from high-margin businesses. The A-share target price was reduced from RMB26 to RMB21.9 by applying a 60% A/H premium to the H-share target price, consistent with the historical premium over the past 3 months. As the current A/H premium is approximately 120%, BofA considers it unsustainable and maintains its “Underperform” rating on the A-shares, viewing them as among the least attractive A-share wind power supply chain stocks under its coverage.

Analysis framework

The report first combines 1H26 results and management discussions to assess the impact of policies, electricity pricing mechanisms, and transmission project progress on industry installations and company shipments. It then resets delivery volumes and gross margins by onshore, offshore, and overseas region to revise its 2026—2028 revenue, profit, and EPS forecasts. It subsequently evaluates regional profitability differences overseas, the service business, wind farm transfers, and the growth and risks of green methanol. Finally, it determines the H-share target price based on the relationship between ROE and historical price-to-book ratios and derives the A-share target price using the historical A/H premium.

Methodology notes

• Valuation methodologyPB valuation

  Target price-to-book valuation based on the relationship between ROE and historical price-to-book ratios

  Based on a forecast 2027 ROE of 11.6% and Goldwind’s historical relationship between PBV and ROE, the report assigns the H-shares a 2027E price-to-book ratio of 1.4 times, resulting in a target price of HKD15.6.

• Valuation methodologyPE/PEG valuation

  Comparison of forward P/E with the long-term historical average

  The report compares the H-shares’ approximately 11 times P/E with the long-term average of approximately 13 times and notes that the valuation is close to 1 standard deviation below the historical mean, supporting its view that the H-shares offer attractive relative valuation.

• Industry analysis frameworkVolume-price decomposition

  Decomposing wind turbine earnings by shipment volume, average selling price, and gross margin

  The report separately tracks wind turbine sales volume, average selling price, onshore and offshore delivery volumes, and regional gross margins to explain the 1H26 earnings improvement and revalue 2026—2028 performance.

• Valuation methodology

  Historical A/H share premium valuation

  The A-share target price applies a 60% premium to the H-share target price, based on the historical A/H premium over the past 3 months. The report then compares this with the current actual premium of approximately 120% to assess the A-shares’ relative attractiveness.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Goldwind H-shares (02208.HK)

  The report maintains a “Buy” rating, believing that global wind power demand growth, recovering wind turbine margins, and a rising contribution from high-margin businesses can support an earnings recovery.

  Strengths

  The H-shares’ approximately 11 times P/E is below the long-term average of approximately 13 times; wind power service capacity is growing rapidly; and margins are higher in certain overseas markets.

  Weaknesses

  2026 shipment guidance was cut, while 2H26 margins face pressure from the regional mix, logistics, and raw-material costs.

  Comparison

  The valuation is close to 1 standard deviation below the historical average; unlike the A-shares, the H-shares do not carry an approximately 120% A/H premium.

  Risks

  Wind power installations below expectations, lower-than-expected penetration of large wind turbines, overseas trade barriers, and project execution delays.

• Goldwind A-shares (002202.SZ)

  The report maintains an “Underperform” rating, mainly because the current approximately 120% A/H premium is considered unsustainable.

  Strengths

  The A-shares represent the same company fundamentals as the H-shares and benefit from recovering wind turbine margins, service growth, and global wind power demand.

  Weaknesses

  The valuation premium is significantly above the report’s target A/H premium of 60%.

  Comparison

  The report considers the stock one of the least attractive A-share wind power supply chain names under its coverage; the target price applies a 60% premium to the H-share target price, near the historical level over the past 3 months.

  Risks

  A narrowing A/H premium may create medium-term downside pressure, while the shares also face installation, margin, and overseas policy risks.

Key data

• 2026 wind turbine shipment guidance35GWCut from 40GW; includes approximately 1.9—2.0GW offshore and 7—8GW overseas, with approximately 22GW of shipments required in 2H26
• 2026 industry installation forecast100—110GWPrevious forecast was 130—140GW
• 2026 wind turbine gross margin guidance9%—10%Unchanged; management expects 2H26 may be weaker than 1H26
• 1H26 revenueRMB33.695 billionUp 18.3% year over year
• 1H26 wind turbine sales volume12,364MWUp 16.2% year over year
• 1H26 average wind turbine selling priceRMB2,204/kWUp 7.3% year over year
• 1H26 net profit after perpetual bond deductionsRMB1.86 billionUp 25% year over year
• 1H26 wind power service capacity60GWUp 31% year over year, with gross margin of approximately 20%
• 1H26 overseas business gross margin17.8%Mainly contributed by the wind turbine business
• Overseas backlog9.5GWAs of the end of June 2026, up from 9.2GW at the end of 2025
• 2026 wind farm transfer target1GWApproximately 100MW of grid-connected projects were sold in 1H26
• Earnings forecast revisionsCut by approximately 10% on average for 2026—20282026E, 2027E, and 2028E EPS reduced to RMB0.81, RMB1.19, and RMB1.22
• H-share target priceHKD15.60Cut from HKD18.50, based on 1.4 times 2027E PBV and 2027E ROE of 11.6%
• A-share target priceRMB21.90Cut from RMB26.00, applying a 60% A/H premium to the H-share target price
• Foreign exchange and interest rate hedgingRMB2 billion in foreign exchange hedges and RMB1 billion in interest rate hedgesUsed to enhance earnings stability

Impact & implications

The report believes the cuts to shipment guidance and earnings forecasts reflect near-term pressure caused by electricity pricing mechanisms, transmission construction, and project delays rather than the end of the wind power recovery thesis. The H-shares’ lower valuation, recovering onshore wind turbine margins, high-margin overseas projects, and service business growth continue to provide support. The A-shares, however, face medium-term valuation pressure because their approximately 120% A/H premium is significantly above the report’s target premium of 60%. Wind farm transfers and green methanol are unlikely to become reliable sources of incremental earnings in the near term.

Risks

• Wind power installations may fall below expectations, reducing demand for wind turbine equipment.
• The penetration rate of large wind turbine generators may be lower than expected.
• A higher share of low-margin overseas projects, logistics and insurance costs, and the expiration of domestic raw-material price locks in 2H26 may reduce wind turbine gross margins.
• US legislation and tariffs, the EU foreign subsidies investigation, and international carbon-related tariffs may affect overseas operations.
• Geopolitical tensions in the Middle East, military restrictions, and restrictions on maritime routes may increase costs or delay projects.
• Market-based electricity tariffs, wind curtailment, rising development costs, and policy changes may continue to constrain wind farm transfers.
• Upside risks include an unexpected increase in government wind and solar installation targets or policy support, stronger-than-expected onshore wind turbine sales, and an earlier-than-expected recovery in offshore wind turbine demand.

What to watch

• Monitor whether approximately 22GW of shipments in 2H26 can enable achievement of the full-year 35GW target.
• Monitor whether 2026 wind turbine gross margin can remain at 9%—10% and how costs change after domestic raw-material price locks expire.
• Monitor the 7—8GW overseas shipment target and the contribution of projects in South Africa, South America, Japan, and South Korea to regional margins.
• Monitor progress in the EU foreign subsidies investigation; management expects it may take at least 18 months before a preliminary substantive conclusion emerges.
• Monitor whether wind power services can sustain double-digit growth as a large number of turbines exit warranty over the next 3—5 years.
• Monitor the 2026 wind farm transfer target of 1GW and whether electricity tariffs, wind curtailment, and the project transaction environment improve over the next 12—18 months.
• Monitor Phase I green methanol deliveries in 4Q26, completion of Phase II in September 2026, and whether meaningful shipments in 2Q—3Q27 materialize.
• Monitor whether the A/H premium converges from the current approximately 120% toward the report’s historical reference level of 60%.