Analysis of Mingyang Smart Energy's Offshore Wind Advantages and Deep-Sea Policy Dividends

Mingyang Smart Energy (601615.SH) is a leading enterprise in China’s offshore wind turbine manufacturing sector. Currently, it is facing significant operational pressure. According to the latest financial data, the company’s current market capitalization is 32.43 billion yuan, and its share price is 14.48 yuan per share [0]. From a valuation perspective, the company’s current P/E ratio is as high as 102.55 times, and its P/B ratio is 1.18 times, which deviates significantly from the valuation range of traditional manufacturing industries [0].

The company’s ROE (Return on Equity) is only 1.15%, and its net profit margin is 0.91%, indicating weak overall profitability. The cash flow situation is particularly worrying: the latest annual free cash flow is -8.05 billion yuan, and the EV/OCF ratio is -12.08 times, indicating that the company’s operating cash flow has been continuously negative, with significant cash consumption pressure [0]. Financial analysis shows that the company adopts conservative accounting policies; the high depreciation/capital expenditure ratio means that profits may be underestimated to some extent, but investments have not yet been fully converted into returns [0].

From the share price performance, the company’s share price has risen by 21.48% in the past year, but has fallen by 45.56% in the past three years and 27.60% in the past five years, showing an obvious volatile trend [0]. This long-term decline reflects the market’s concerns about the company’s fundamentals and industry prospects.

Mingyang Smart Energy has the following core competitive advantages in the offshore wind sector:

Mingyang Smart Energy is a major promoter of large-scale offshore wind turbines in China. The company continues to invest in R&D and maintains technological leadership in 8MW, 10MW, 12MW and above ultra-large offshore wind turbines. Large-scale turbines can effectively reduce the levelized cost of electricity (LCOE) of offshore wind power and improve project economics, which is the company’s core competitive barrier.

According to industry statistics, Mingyang Smart Energy occupies an important position in China’s offshore wind turbine market. Together with Goldwind Technology and Envision Energy, it forms the first echelon of offshore wind turbine manufacturers, maintaining a high market share in new offshore wind installations and outstanding orders.

The company has the entire industry chain capability of offshore wind farm development, whole turbine design and manufacturing, and engineering construction services. This integrated layout helps to improve overall project efficiency, enhance customer stickiness, and capture more value in the industry chain.

As the scale of existing offshore wind farms expands, after-market operation and maintenance services have become an important profit source. Relying on its first-mover advantage, the company has established a relatively complete service network in offshore wind operation and maintenance.

Deep-sea wind power development is becoming a key direction supported by policies, and relevant policy dividends are expected to bring positive impacts to the company:

China’s offshore wind resource development is extending from nearshore to deep-sea areas. According to national plans, deep-sea wind power will become the main direction of offshore wind power development in the future. Deep-sea areas have higher and more stable wind speeds, and the number of power generation hours is significantly better than nearshore areas, but the development difficulty and investment threshold are also higher.

The policy proposes a target of reducing the LCOE of deep-sea wind power to 0.4-0.5 yuan per kWh, and offshore wind power strives to achieve full grid parity by 2024. The rapid cost reduction will support large-scale development of deep-sea wind power and create market space for enterprises with technological advantages.

Deep-sea areas have more abundant wind energy resources, and the developable scale is far larger than nearshore areas. With the maturity of floating offshore wind power technology, the commercial feasibility of deep-sea wind power development is improving.

Policy support for deep-sea wind power development will promote a new round of offshore wind project approval and construction, releasing demand for whole turbine equipment. For Mingyang Smart Energy, which is technologically leading and has the ability to supply large-scale turbines, this will be an important market opportunity.

Although deep-sea policy dividends bring positive expectations, comprehensive analysis shows that policy dividends may not be able to completely reverse the company’s current decline in the short term:

• The launch of deep-sea wind power development will bring incremental market demand
• The increase in demand for large-scale turbines aligns with the company’s technological advantages
• Under the trend of offshore wind grid parity, suppliers with cost advantages will obtain more orders
• Industry integration may increase the market share of leading enterprises

• The problem of overcapacity in the industry still exists; competition in the whole turbine segment is fierce, and prices are under pressure
• The company’s cash flow situation is poor, restricting its expansion capacity
• The wind power industry as a whole has entered a mature stage, with slowing growth
• Valuation level is high and needs time to digest
• Free cash flow continues to be negative, with significant financial pressure

Deep-sea policy dividends provide development opportunities for Mingyang Smart Energy, and the company’s offshore wind technological advantages are expected to be better leveraged in deep-sea development. However, given the industry competition pattern, cash flow pressure, and valuation level, policy dividends are unlikely to completely reverse the company’s fundamental decline in the short term.

Need to pay attention to the risks of intensified competition in the offshore wind industry, decline in whole turbine prices, deterioration of cash flow, policy implementation falling short of expectations, and the impact of macroeconomic fluctuations on new energy investment.

If the progress of deep-sea wind power development exceeds expectations, the company’s cash flow situation improves, and industry integration accelerates, the company’s fundamentals are expected to gradually stabilize. However, in the current environment, investors should maintain a cautious attitude and pay attention to the actual improvement of the company’s fundamentals.

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[0] Jinling AI Financial Database - Company Overview and Financial Analysis Data of Mingyang Smart Energy (601615.SH)