[Click eStock] "CS Wind, Positive Rapid Profit Turnaround of Subsidiary Blat"

Blatt Acquired, Expected Profit in 4Q Last Year
Positive Performance Improvement for Clients Vestas and GE

On the 25th, Samsung Securities analyzed that CS Wind is expected to show favorable performance among wind power component companies, and its subsidiary Bladt will achieve a turnaround to profitability sooner than expected. The investment opinion 'Buy' and the target price of 96,000 KRW were maintained. CS Wind's closing price on the 24th was 60,200 KRW.

Heo Jae-jun, a researcher at Samsung Securities, said, "Considering that orders from global wind turbine companies affect the performance of wind power component companies with a time lag, we can expect favorable results from wind power component companies including CS Wind for the time being," adding, "The profitability improvement of existing business units is also expected to proceed smoothly, and especially due to Bladt's faster-than-expected turnaround to profitability, it is anticipated to quickly adapt to the new offshore wind substructure business."

CS Wind acquired 100% of the shares of Danish offshore wind company Bladt for a total of 26.9 billion KRW in July last year. The acquisition process was completed in December and is expected to be reflected in the consolidated financial statements. Researcher Heo said, "We initially expected Bladt's turnaround to profitability in 2024, but due to successful negotiations with Ørsted, Bladt's major client, during the acquisition process, a turnaround to profitability in 2023 is possible," explaining, "This is due to price increases on existing contracts, waivers of penalties for delivery delays, and improvements in the profitability of existing businesses." Bladt's sales for the fourth quarter of 2023 are expected to be 79 billion KRW, with an operating profit of 400 million KRW. With gradual profitability improvement, the expected annual sales for 2024 are 1.0042 trillion KRW, and operating profit is 20.9 billion KRW.

Additionally, recently both Vestas and GE announced orders for the SuzZia project, known as the largest clean energy project in U.S. history, highlighting performance improvements. Researcher Heo noted, "Among the regions generating sales, the country contributing the most to sales is the United States, and most U.S.-bound sales come from Vestas and GE," emphasizing, "It is important to pay attention to the improvement in orders and performance of these two wind turbine manufacturers." Vestas recorded a record high of 6.9 GW in new wind turbine orders in the fourth quarter of 2023. Annual orders in 2023 increased by 52.7% compared to the previous year. GE Vernova, GE's integrated energy business brand, stated in its fourth-quarter earnings announcement that the onshore wind business is expected to achieve a high single-digit profit margin in 2024. Recently, both Vestas and GE announced orders for the SuzZia project, known as the largest clean energy project in U.S. history.

Including Bladt, CS Wind's sales and operating profit for the fourth quarter of 2023 are expected to be 443.2 billion KRW and 34.9 billion KRW, respectively. This represents a 7% increase in sales compared to 2022 and a turnaround to profitability. Researcher Heo said, "We expect temporary operating profit decreases related to AMPC sharing and one-time gains from price increases on existing contracts during the Bladt acquisition process to be reflected simultaneously."