Jinlei Co., Ltd., as a global leader in the wind power spindle industry, is actively increasing the production capacity of large megawatt castings through the fixed increase strategy, and strives to create a second growth curve. According to the 2023 interim report, thanks to the ** of raw materials, the company's gross profit margin has increased to 35%, a year-on-year increase of 8 percentage points. At the same time, its large megawatt casting capacity in Dongying has initially obtained small batch orders, indicating that the rapid growth of the casting business is coming.
In the context of global carbon neutrality, the demand for wind power continues to be optimistic, especially in the field of offshore wind power, both domestic and foreign markets have ushered in a period of upswing, and it is expected that the installed capacity of wind power will usher in explosive growth in the next few years. Based on this, we expect the spindle market to reach 6.5 billion, 7.5 billion, and 8.3 billion respectively from 2023 to 2025, with a CAGR of up to 16%. Among them, the market share of forging spindles and casting spindles will also grow steadily.
Jinlei has a solid market position in the forging business, and its wind power spindle products enjoy a premium due to excellent quality and high-quality customer resources. Through the innovation of raw material self-supply and hollow forging process, the company continues to reduce costs and enhance its competitive advantage. In addition, the company has also actively expanded other precision drive shaft businesses, which not only increased revenue, but also effectively digested the production capacity of small megawatt forging spindles, ensuring the overall profitability of forging products.
In terms of foundry business, Jinlei has started the first phase of construction in Dongying, which is expected to be put into operation in the second half of 2023. By 2025, the company's effective casting capacity is expected to reach 180,000 tons. With the technology, process and customer advantages accumulated in the field of forging spindles for many years, Jinlei is expected to transform these advantages into the competitiveness of the casting business, so as to achieve rapid market expansion. Therefore, the casting business is expected to become the core driving force for the company's future performance growth.
To sum up, with its profound technical accumulation, market position and strategic vision, Jinlei shares are ushering in new development opportunities. Investors can consider adding it to their portfolios to share the growth dividends of the wind power spindle and casting business.