FAST NEWS: Xinjiang Goldwind’s Profits Plummet, Sending Shares to New Low

The latest: Wind power equipment maker Xinjiang Goldwind Science & Technology Co. Ltd. (2208.HK; 002202.SZ) said Wednesday its net profit plunged 63% year-on-year to 445 million yuan ($62 million) in the third quarter, leading to a 27.1% decline in its net profit for the first three quarters of the year to 2.37 billion yuan.

Looking up: Xinjiang Goldwind’s impairment related to losses in the value of its assets totaled 17.98 million yuan for the period, a significant decrease of 88.2% compared to the same period last year, mainly due to a decrease in provisions for inventory devaluation.

Take Note: The company’s third-quarter revenue fell 39.5% year-on-year to 9.5 billion yuan, a bigger drop than the 8.7% decline in the first half of the year, showing its business is rapidly slowing.

Digging Deeper: Xinjiang Goldwind is one of the world’s leading makers of wind power generation equipment, making it a favorite of big global investors like BlackRock, Citigroup and JPMorgan. The company has focused on more profitable large wind turbines in recent years, allowing it to boost its gross margin significantly last year, boosting its net profit by 18% to 3.5 billion yuan, even as its revenue dropped by nearly 10%. With the arrival of an era of offshore wind power price parity this year, the company’s offshore wind turbine sales capacity declined, resulting in lower revenue from the sale of wind turbines and components, its core business. At the same time, a lack of significant reduction in the company’s cost of sales is dragging down its performance.

Market Reaction: Xinjiang Goldwind’s shares plunged on Thursday, closing down 10.6% at HK$7.78 at the midday break, a new 52-week low.

Translation by Jony Ho

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