As one of the leading wind turbines in China, Mingyang Intelligent (SH601615, share price 9.13 yuan, market value 20.74 billion yuan), operating income and net profit in 2023 will both decline year-on-year, of which the net profit attributable to the parent company will decline by 89.19% year-on-year, from 3.445 billion yuan (adjusted) in 2022 to 372 million yuan. More than a month after the disclosure of the annual report, Mingyang Intelligent received a regulatory work letter from the Shanghai Stock Exchange on the disclosure of the annual report. On the evening of July 11, the company issued a reply announcement.

The reporter of "Daily Economic News" noticed that in addition to paying attention to the changes in revenue, gross profit margin, large customers and large suppliers of different business segments of Mingyang Intelligence, the regulatory work letter also paid attention to the changes in accounts receivable and prepaid accounts at the end of 2023, as well as changes in specific financial data such as related party procurement transactions.

Despite the poor performance and the regulatory work letter, in the 2023 ESG report, Mingyang Intelligent mentioned that it would create "extraordinary achievements of three hundred billion yuan in output value, market value, and net assets". However, in 2023, the share price of Mingyang Intelligent will be in a downward channel as a whole, and the price per share will fluctuate around 27 yuan at the beginning of last year, only about 12 yuan at the end of last year, and it will fall below 9 yuan by February this year, as of the close of July 15, Mingyang Intelligent will close with a total market value of 20.74 billion yuan, which is still far from the goal of 100 billion yuan.

Last year, gross profit margin fell sharply year-on-year

The regulatory work letter mentioned that Mingyang Intelligent will achieve a total operating income of 27.859 billion yuan in 2023, a year-on-year decrease of 9.39%, and a net profit attributable to the parent company of 372 million yuan, a year-on-year decrease of 89.19%. The decline in the gross profit margin of the company's main products is one of the main reasons for the decline in net profit. In terms of business segments, the revenue of fans and related accessories was 23.517 billion yuan, a year-on-year increase of 3.11%, and the gross profit margin was 6.35%, a year-on-year decrease of 11.42 percentage points, while the income of other businesses was 298 million yuan, a year-on-year decrease of 39.04%, and the gross profit margin was -24.05%, a year-on-year decrease of 25.22 percentage points. In addition, the company's R&D expenses in 2023 will be 585 million yuan, a year-on-year decrease of 30.67%.

In the reply announcement, Mingyang Intelligent disclosed the top five customers in the wind turbine sector last year, including customers who have cooperated with China Energy Construction Group Guangdong Electric Power Design and Research Institute Co., Ltd. and China Datang Group International Trade Co., Ltd. for many years, as well as new customers such as Huaneng (Longkou) New Energy Technology Development Co., Ltd. The total transaction volume of Mingyang Intelligent to the top five customers reached 10.617 billion yuan.

As for the decline in the gross profit margin of the wind power sector, Mingyang Intelligent said that the continuous progress and cost optimization of wind turbine technology are one of the important reasons for the reduction of bidding prices. With the continuous development of technology, the efficiency of wind turbines is increasing, and at the same time, the cost of wind farm construction is gradually decreasing. In addition, with the gradual maturity of the domestic wind power market and the intensification of competition, wind power companies have to adopt more preferential price strategies in order to gain more market share, so the wind turbine bidding price in the wind power industry continues to decline.

The reporter of "Daily Economic News" noticed that in the gross profit margin data of wind turbines and related accessories in 2023 listed by Mingyang Intelligence, Electric Wind Power (SH688660, share price 2.85 yuan, market value 3.8 billion yuan) is 5.74%, and Goldwind Technology (SZ002202, stock price 6.86 yuan, market value 28.984 billion yuan) is 6.41%, which is close to Mingyang Intelligence. However, the company also mentioned that the gross profit margin of Yunda shares (SZ300772, share price 9.22 yuan, market value 6.47 billion yuan) reached 12.51%, and Sany Renewable Energy (SH688349, stock price 24.79 yuan, market value 30.403 billion yuan) was 15.45%.

In other business segments, the revenue of photovoltaic modules was 189 million yuan, and the gross profit margin was -38.31%. Mingyang Intelligent explained that the main reason why the gross profit margin of photovoltaic is lower than that of the same industry is that the company's photovoltaic product business is in the early stage of production and capacity ramp-up, the overall capacity utilization rate is low, and the fixed amortization cost of product sharing is high. In addition, in 2023, the construction revenue of Mingyang Smart Wind Farm will be 108 million yuan, with a gross profit margin of 0.62%, and the revenue from electricity sales will be 453,500 yuan, with a gross profit margin of 37.13%.

Accounts receivable diverge from revenue

In the 2023 annual report, Mingyang Intelligent's accounts receivable, prepaid accounts, monetary funds and other data have also attracted market attention.

The regulatory work letter mentioned that as of the end of 2023, the balance of accounts receivable of Mingyang Intelligent was 15.051 billion yuan, a year-on-year increase of 31.73%, which deviated from the trend of revenue, in addition, a credit impairment loss of 514 million yuan was also provided for in 2023, a year-on-year increase of 116.88%. The regulatory work letter requires Mingyang to provide additional explanations, including the top five customers of accounts receivable, transaction amount, transaction content, accounts receivable formation time, aging analysis, etc.

The reporter of "Daily Economic News" noticed that the age of the top five accounts receivable customers of Mingyang Intelligent is less than 6 months, but the company also disclosed that the accounts receivable of the customer CGN Engineering Co., Ltd. is about 1.11 billion yuan, but 959 million yuan of accounts receivable are aged in 1~2 years.

In terms of prepaid accounts, the annual report shows that the book balance of Mingyang Intelligent prepayment is 765 million yuan, and the provision for bad debts is 4.0043 million yuan, of which 1 debtor has not settled in time for more than 1 year corresponding to the prepayment of 25.3603 million yuan, and among other non-current assets, 200 million yuan of prepaid project funds, 62.1793 million yuan of prepaid equipment funds, and 4.6226 million yuan of bad debt provisions.

For the above-mentioned 25.3603 million yuan that has not been settled in time for more than one year, Mingyang Intelligent said that this is an advance payment from Liebherr (China) Co., Ltd. (hereinafter referred to as Liebherr), mainly because after the company paid 40 million yuan in advance to Liebherr, due to the change in the company's project demand, the delivery progress was slower than planned. As of December 31, 2023, the advance payment of 14.6397 million yuan has been offset by the arrival of goods (the contract stipulates that the advance payment will be offset by 20% of the arrival amount), resulting in the balance of the prepaid account of 25.3603 million yuan exceeding the contract settlement period. At the end of 2023, the company has re-negotiated with Liebherr on the amount of the above-mentioned advance payment, and agreed that the full amount of the advance payment can be deducted when the order is placed and picked up in 2024, so there is no indication of impairment of the advance payment.

In addition, in 2023, Mingyang Intelligent will have related purchases of 984 million yuan, a year-on-year increase of 30.48%. The reporter of "Daily Economic News" noticed that last year, Mingyang Intelligent's related party transaction objects included Mingyang Electric (SZ301291, share price of 31.7 yuan, market value of 9.897 billion yuan), Zhongshan Taiyang Kehui Industrial Co., Ltd., Beijing Boyang Huiyuan Power Technology Co., Ltd., etc. Mingyang Intelligent said that the purchase of products from these related parties is in line with the company's normal business interests, is necessary and reasonable, and compares similar products, its pricing is fair, the payment arrangement is reasonable, and there is no situation of tilting interests to related parties.