CITIC SEC: Wind Power Industry is in High Prosperity, Growth of Blade Segment is Promising.

CITIC SEC released a research report stating that with the improvement of wind power economic efficiency due to technological progress and the advantage of grid connectivity promoting investment, it is judged that the wind power industry will enter a period of prosperity. Wind turbine blades, as the core components of wind turbines, are crucial for the installation and delivery of wind turbines. Based on the two main factors of increasing demand and technological progress, it is recommended to invest in blade and related material component companies that are expected to benefit from the simultaneous increase in quantity and price, leading to sustained growth. The main points of CITIC SEC are as follows: Economic Outlook: Short-term domestic installation will be prosperous, with strong long-term global demand support. Against the backdrop of improved wind power economic efficiency and grid adaptability due to technological progress, the focus of new energy construction in China is expected to shift towards wind power. It is estimated that the domestic wind power installation capacity will exceed 115GW by 2025 (+~30% YoY), and the annual average installation of wind power during the "14th Five-Year Plan" period is expected to remain high. In addition, overseas wind power policy support has increased, accelerating the auction of offshore wind projects and supply chain bidding, creating a large market space. The Global Wind Energy Council (GWEC) predicts that the global wind power installation will have a CAGR of 23% in the next 3 years, and is expected to contribute significantly to the global wind power demand starting from 2026. Overall, it is expected that in the short term, with the conclusion of the "14th Five-Year Plan", domestic wind power installation demand will increase rapidly. In the medium to long term, both domestic and overseas demand for offshore wind power will be strongly supported. With the wind power industry entering a period of prosperity, it is expected that the entire industry chain will benefit, and companies may experience rapid growth in performance. Blade Industry: Key component in installation and delivery, with ample room for quantity and price increases. Blades are the core components of wind turbines that convert wind energy into mechanical energy, accounting for 15%-20% of the unit cost of the turbine. Blades are large in size, difficult to transport, and are a key part of the installation and delivery process. Considering the adjustment of downstream bidding scoring mechanisms to relieve price pressure on turbines, upward pressure on raw material prices, and the increasing requirements for larger blades in wind turbines, it is expected that the value of a single set of blades will increase. It is estimated that the market size of wind power blades in China will reach 38 billion yuan by 2025 (+20% YoY), with a CAGR of 13.5% from 2025 to 2027, indicating a large market space. In terms of competitive landscape, various factors such as technology, talent, capital, and market are creating barriers to entry in the wind power blade industry. Blade manufacturers are currently mainly divided into independent wind blade manufacturers and complete machine manufacturers that produce ancillary blades. With the wind power industry chain becoming increasingly mature and considering the cost and customization requirements of blades, independent blade companies are deeply tied to main machine manufacturers. It is expected that in the long run, the market share of independent blade manufacturers will increase. Against the backdrop of the wind power industry's recovery, independent blade manufacturers are expected to benefit from increased demand. Segment Details: Anticipated performance with increased demand and technological upgrades. Mold: The design and manufacture of blade molds are crucial in determining the aerodynamic performance of the blade, with non-metal molds currently dominating the market. Driven by both production consumption and model updates, it is estimated that the demand for wind power blade molds in China will reach 11.6 billion yuan by 2025, maintaining steady growth from 2025 to 2027. The wind power blade mold industry has few participants, and leading companies with a clear market share advantage are expected to benefit first. Hub Castings: The hub of the wind turbine is a connecting component that supports the blades. With the easing of price pressures and continuous cost improvements, it is expected that global castings will experience simultaneous increases in quantity and profits, with the global wind power casting market expected to reach 42.6 billion yuan by 2025, with a CAGR of 12.1% over the next three years. Raw Materials: Raw materials account for over 70% of the cost structure of wind power blades, with reinforced fibers and resins being the main components. Currently, fiberglass is the main reinforced fiber used, but considering its superior material properties, the requirements for technological advancements, and the continuous cost reductions, it is expected that with the high installation demand, carbon fibers will be introduced into the blade manufacturing process. It is estimated that by 2025, the global demand for carbon fibers in wind power will reach 48,000 tons, with a CAGR of 13.4% from 2025 to 2027. Related carbon fiber companies are expected to benefit greatly. In addition, resins and curing agents are also expected to benefit from increased demand and technological advancements, providing opportunities for business growth. Risk factors: Unexpected lower-than-expected growth in wind power installations; Slow progress in wind turbine price recovery; Increasing trade barriers overseas; Fluctuation in raw material prices; Unexpected setbacks in the development and validation of new technological products.