Goldwind's wind turbine gross margin recovered strongly in the first half and its overseas business continued to grow, but full-year shipment guidance was lowered and margins may decline in the second half

Overview

This report summarizes the key takeaways following Goldwind's first-half 2026 results call. The core view is that the recovery in wind turbine gross margin was stronger than expected and overseas operations and wind farm disposals retain growth momentum, but full-year wind turbine shipment guidance has been lowered and second-half gross margin may be affected by geography, product mix, logistics, and raw material costs. Morgan Stanley assigns an Equal-weight rating and a target price of HK$16.74.

Core views

First, Goldwind's wind turbine profitability recovered significantly in 1H26. Wind turbine gross margin increased from 7.97% a year earlier to 11.62%, with improvements in domestic onshore and overseas operations, while domestic offshore operations declined year over year. Management maintained its full-year 2026 wind turbine gross margin guidance of 9%-10%, which Morgan Stanley believes has upside risk. However, the company expects gross margin to decline somewhat in the second half: delivery regions will shift from South Africa, South America, Japan, and South Korea in the first half toward the more competitive markets of Central Asia, North Africa, and the Middle East; tensions in the Middle East may raise logistics costs; raw material costs may increase; and overseas and offshore products, which carried higher gross margins, accounted for more than 30% of first-half deliveries, while the share of domestic onshore products is expected to rise in the second half. Second, the company lowered its 2026 wind turbine shipment target, but the report believes Chinese demand remains resilient. Guidance for external wind turbine sales in 2026 was lowered to 32GW, with approximately 3GW additionally designated for self-developed wind farms, compared with previous guidance of approximately 40GW. The company expects China's wind power installations to reach 100-110GW in 2026 and remain broadly stable or grow slightly in 2027. Therefore, the guidance reduction is not equivalent to a collapse in industry demand, and subsequent performance will still depend on project delivery and the realization of domestic demand. Overseas markets are still regarded as the principal growth driver. Goldwind set a 2026 overseas shipment target of approximately 7GW, above 3-4GW in 2025, and an overseas new order target of approximately 8GW, above approximately 6GW in 2025. Overseas backlog increased from 9.2GW at the end of 2025 to 9.5GW at the end of 1H26. The report further notes that the company's overseas wind turbine orders and shipments are expected to continue increasing in 2027, although competitive intensity, transportation costs, and project mix across different regions will affect the extent to which growth translates into profits. The pace of wind farm disposals is also accelerating. The company disposed of ten wind farms in 1H26, compared with five in 1H25, and set an annual disposal target of more than 1GW. Progress in this business is another key operating theme highlighted by the report, with outcomes depending on the pace of disposals, cost control, and wind farm utilization rates. Management also regards "Wind+" as a potential new growth avenue, including using wind power to support the production of green hydrogen and green methanol and developing green industrial parks through integrated wind, solar, and energy storage solutions. The company believes that approximately 90% of the electricity demand of green hydrogen and methanol projects can be supplied by wind power. The key technical challenge for green industrial parks is maintaining stable 50Hz power quality, so technological stability and commercial implementation still need to be monitored. Financial forecasts indicate improving profitability and valuation metrics over time. The report lists net revenue from 2025 to 2028 at RMB72,782 million, RMB98,235 million, RMB101,844 million, and RMB105,633 million, respectively; EBITDA at RMB9,072 million, RMB10,773 million, RMB12,544 million, and RMB14,123 million, respectively; and ModelWare net profit at RMB2,774 million, RMB4,077 million, RMB4,966 million, and RMB5,935 million, respectively. Over the same period, ROE rises from 7.2% to 9.4%, 10.6%, and 11.8%; P/E declines from 18.4x to 8.9x, 7.3x, and 6.1x; EV/EBITDA declines from 12.0x to 10.1x, 8.7x, and 7.4x; and dividend yield rises from 1.7% to 3.4%, 4.2%, and 5.0%. In terms of valuation, the H-share target price of HK$16.74 represents Morgan Stanley's base-case valuation and is derived using a 10-year DCF model. The model uses an 8.8% WACC, a 10.0% cost of equity, a 4.9% after-tax cost of debt, a 30.0% long-term debt-to-capital ratio, and a zero perpetual growth rate. The cost of equity is further based on a 2.1% risk-free rate, a Bloomberg-adjusted beta of 1.3, a 4.5% risk premium, and a 2.0% China premium. Relative to the August 26, 2026 closing price of HK$10.04, the target price implies 67% upside, although the stock rating remains Equal-weight and the industry view is Attractive.

Analysis framework

The report first uses information from the results call to break down the year-over-year change in wind turbine gross margin and the geographic, product, and cost structures expected in the second half. It then combines shipment guidance, Chinese installation demand, overseas orders, and backlog to assess the business growth trajectory; subsequently examines wind farm disposals and the new Wind+ business; and finally derives the target price using ModelWare financial forecasts and a 10-year DCF model, with upside and downside scenarios based on installations, gross margin, cost control, and wind farm utilization rates.

Methodology notes

• Valuation MethodDCF Discounted Cash Flow

  10-year DCF valuation

  The report discounts future cash flows to present value to derive the H-share base-case target price of HK$16.74; key assumptions include an 8.8% WACC, a 30.0% long-term debt-to-capital ratio, and a zero perpetual growth rate.

• Company Fundamentals and Financial Framework

  Morgan Stanley ModelWare framework

  The report uses Morgan Stanley's ModelWare framework to forecast revenue, EBITDA, net profit, returns, and valuation metrics, and uses these forecasts as the basis for analyzing earnings trends and valuation.

• Industry/Sector Analysis FrameworkSupply-demand framework

  Analysis of installation demand, shipments, orders, and backlog

  The report assesses demand resilience and future delivery growth through Chinese wind power installation demand, company shipment guidance, overseas new orders, and backlog.

• Industry/Sector Analysis FrameworkVolume-price decomposition

  Decomposition of shipment volume and wind turbine gross margin

  The report separately examines wind turbine shipment volume and unit profitability and further decomposes changes in gross margin into the effects of geographic mix, product mix, logistics, and raw material costs.

Asset mapping & comparison

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

• Goldwind (2208.HK)

  The report primarily analyzes its wind turbine generator, wind farm disposal, and Wind+ businesses and uses the H-shares as the subject of its valuation and rating.

  Strengths

  Wind turbine gross margin recovered significantly in 1H26; overseas shipments, orders, and backlog grew; wind farm disposals accelerated; and Wind+ may become a new growth avenue.

  Weaknesses

  2026 external wind turbine sales guidance was lowered to 32GW, while the second-half delivery mix is expected to be more heavily weighted toward domestic onshore products, potentially slowing gross margin from the first-half level.

  Comparison

  The 2026 overseas shipment target of approximately 7GW is above 3-4GW in 2025; the new order target of approximately 8GW is above approximately 6GW in 2025.

  Risks

  Slower installations, declining wind turbine gross margin, weaker-than-expected cost control, and low wind farm utilization rates.

Key data

• 1H26 wind turbine gross margin11.62%7.97% a year earlier; domestic onshore and overseas operations improved, while domestic offshore operations declined year over year
• 2026 wind turbine gross margin guidance9%-10%Management maintained the guidance, while Morgan Stanley believes there is upside risk
• 2026 external wind turbine sales guidance32GWApproximately 3GW is additionally designated for self-developed wind farms, versus previous guidance of approximately 40GW
• Expected Chinese wind power installations in 2026100-110GWExpected to remain broadly stable or grow slightly in 2027
• 2026 overseas shipment targetApproximately 7GW3-4GW in 2025
• 2026 overseas new order targetApproximately 8GWApproximately 6GW in 2025
• Overseas backlog9.5GWAs of the end of 1H26, versus 9.2GW at the end of 2025
• Number of wind farms disposed of in 1H2610Five in 1H25; annual disposal target exceeds 1GW
• Wind+ wind power supply shareApproximately 90%Management believes wind power can meet approximately 90% of the electricity demand of green hydrogen and green methanol projects
• Target priceHK$16.74Implies 67% upside from the August 26, 2026 closing price of HK$10.04
• 52-week share price rangeHK$18.49-8.44Range listed in the report table
• 2025-2028 net revenueRMB72,782/98,235/101,844/105,633 millionCorresponding to 2025 and the 2026-2028 forecasts
• 2025-2028 ModelWare net profitRMB2,774/4,077/4,966/5,935 millionThe report forecasts profit growth in each year
• 2025-2028 ROE7.2%/9.4%/10.6%/11.8%The report expects returns on equity to increase each year
• DCF discount rateWACC 8.8%Cost of equity 10.0%, after-tax cost of debt 4.9%, and long-term debt-to-capital ratio 30.0%
• DCF perpetual growth rate0%The 10-year DCF model assumes zero terminal growth

Impact & implications

The report believes Goldwind's operating improvement is not attributable to a single source: the recovery in first-half wind turbine gross margin, growth in overseas orders and shipments, accelerated wind farm disposals, and exploration of Wind+ collectively provide support. At the same time, the reduction in full-year shipment guidance and a weaker geographic and product mix in the second half mean that revenue growth will not necessarily translate into higher margins. The target price indicates 67% upside in the base-case valuation relative to the current price, but the Equal-weight rating shows that the report continues to assess the stock within a relative industry performance framework.

Risks

• The upside scenario includes faster wind power installations.
• The upside scenario includes a further recovery in wind turbine gross margin.
• The upside scenario includes better-than-expected cost control.
• The upside scenario includes improved wind farm capacity utilization rates.
• The downside scenario includes slower wind power installations.
• The downside scenario includes a decline in wind turbine gross margin, particularly due to pressure from more competitive delivery regions, higher logistics costs, rising raw material prices, and changes in product mix.
• The downside scenario includes worse-than-expected cost control.
• The downside scenario includes insufficient wind farm capacity utilization efficiency.

What to watch

• Monitor delivery progress toward 32GW of external wind turbine sales and approximately 3GW for self-developed wind farms in 2026.
• Monitor the 2026 targets of approximately 7GW in overseas shipments and approximately 8GW in new orders, as well as whether overseas growth materializes in 2027.
• Monitor the impact of changes in geographic and product mix, logistics expenses, and raw material costs on wind turbine gross margin in the second half.
• Monitor China's expected 100-110GW of installations in 2026 and whether demand can remain stable or grow slightly in 2027.
• Monitor the annual wind farm disposal target of more than 1GW and project capacity utilization rates.
• Monitor the commercialization progress of Wind+ projects and technical progress in maintaining stable 50Hz power quality at green industrial parks.