JINLEI TECHNOLOGY(300443)INITIATION：GLOBAL WIND TURBINE MAIN SHAFT LEADER FORAYING INTO CASTING PART SEGMENT

　　Core views:
　　As a global leader in wind turbine main shafts/spindles, Jinlei Technology has been deeply engaged in shaft forging for 16 years, boasting core technologies, a high-quality customer base, and strong cost competitiveness. Benefiting from the increase in offshore wind power generation and the trend of larger wind turbines, the Company is well-poised to further increase its market shares and embrace stronger growth visibility as it expands its presence in integrated casting and ramps up production. We forecast its 2022E/23E/24E EPS to be Rmb1.37/2.49/3.44 and initiate coverage with a “BUY” rating and a target price of Rmb60 (implying 24x 2023E PE).
　　Abstract:
　　Leading the industry and focusing on wind turbine main shafts.
　　Jinlei Technology has deeply cultivated in wind power industry for more than ten years, and has fully mastered the core technologies in wind turbine main shaft productions, ranking first in the global wind turbine main shaft market by market share. The Company enjoys widely acceptance by customers backed by its high-quality products and sound after-sales services, and has become a domestic pioneer and global leader in wind turbine main shaft field. The Company is an industry leader with its wind turbine main shaft products cover a variety of mainstream models from 1.5MW to 16MW. It has also established the long-term and stable partnership with the top 15 machine manufacturers in the world.
　　Affordable on-grid electricity price driving accelerated cost cuts of wind turbines, and the trend of larger and lighter turbines promoting the castings development.
　　With the impact of the Covid pandemic gradually easing, the effectiveness of the wind power improves dramatically. Coupled with some delayed carry-over projects in 2022, China’s wind power installed capacity growth is likely to accelerate significantly in 2023. Wind turbine main shaft as one of the parts that realizes imports substitution will take the lead to benefit from the ramp-up of the wind capacity. With the raw material prices falling since May 2022, the profitability of castings, main shafts and other components will likely usher in marginal improvement. In addition, driven by the trend of larger and lighter turbines and the rapid growth of the installed capacity of offshore wind power facilities, the demand for castings has increased. We predict that the requirements of wind power castings in China/around the world will reach Rmb23.37bn/36.92bn, respectively, in 2025, corresponding to a CAGR of 12.6%/8.9% in 2021-25. As a leader of wind power main shafts, Jinlei is likely to fully benefit from downstream demand and open up long-term growth room by virtue of its leading position in the industry.
　　Building a leading position with multiple advantages and a presence of integrated casting.
　　Jinlei Technology has the triple advantages of high-quality customers, self-supply of raw materials and capacity resources. As one of the few wind turbine main shaft manufacturer exporting products to Europe and the US, it has established strategic cooperative relationship with the global mainstream players. The Company also masters core forging technologies with outstanding cost advantages backed by its hollow forging technology and self-supply capabilities. In addition, riding the trend of larger and lighter turbines, Jinlei consolidates its leading position, realizes the expansion of integrated one-piece casting business and capacity, and achieves category expansion and competition upgrades by leveraging its platform advantages. The Company’s digital manufacturing project of offshore wind power core components will achieve a casting capacity of 400kt per year after its completion, providing a broad platform for the Company’s casting business. At present, the phase I of its Dongying (Shandong) project is progressing smoothly, which will likely to be put into operation in mid-2023 according to the Company. With the capacity gradually increasing, its market share will likely further increase, and it may usher in new growth in earnings.
　　Potential risks: Less-than-expected wind power installed capacity in China; greatly fluctuated raw material prices; continuous price falls in wind power components; disappointing promotion and verification of the casting products; casting capacity release not up to expectations; less-than-expected market expansion due to intensified market competition.
　　Investment strategy: As a global leader in wind turbine main shafts, Jinlei Technology will likely benefit from the increase in offshore wind power generation and the trend of larger wind turbines, the Company is well-poised to further increase its market share. Coupled with its strong growth visibility as it expands its presence in integrated casting, we forecast its 2022E/23E/24E attributable net profit (ANP) to be Rmb357mn/651mn/901mn, corresponding to EPS of Rmb1.37/2.49/3.44 and 32x/18x/13x PE at the current price. Combined the PE and discounted cashflow (DCF) valuation methods, we initiate coverage with a "BUY" rating and a target price of Rmb60 (implying 24x 2023E PE).
【免责声明】本文仅代表第三方观点，不代表和讯网立场。投资者据此操作，风险请自担。

   【免责声明】本文仅代表第三方观点，不代表和讯网立场。投资者据此操作，风险请自担。