Wind power: Technology, industry and industrial chain

3. Introduction of wind power industry chain

After talking about wind power technology and this industry, let's take a look at the investment opportunities in the wind power industry chain.

First, let's understand the upstream and downstream of the industrial chain:

Upstream raw materials: including glass fiber, carbon fiber, steel and other materials.

Midstream parts and whole machine manufacturing: According to the previously mentioned fan structure, parts mainly include blades, spindle, castings, bearings, etc., fan manufacturers assemble and integrate these parts into fan machines, and then sell them to wind power plant operators, while tower barrels, cables and other parts are generally purchased directly by wind power operators.

Downstream wind power plant operation investment: the main participants are mainly state-owned enterprises and central enterprises that have obtained wind farm investment and construction qualifications.

After understanding the upstream and downstream of the wind power industry chain, we want to know who has the strongest voice in the industry chain, usually we will look at the gross profit margin, and find that the gross profit margin of the wind power industry chain presents a trend of high on both sides and low in the middle, the gross profit margin of upstream raw materials and downstream operations is relatively high, and the middle parts are only the spindle, bearings and cables. In the later analysis, we will also find out why the gross profit margin of these links is higher.

In the wind power industry chain, the operation is the highest gross profit margin, after all, people are Party A, and of course, after the cancellation of subsidies to crazy press machine manufacturers. But the high gross margin does not necessarily mean that the investment value is high, because the investment in wind power construction is also very large, unlike photovoltaic to find a vacant roof can be installed.

When investing in a company, we often look at the return on investment, such as ROE, ROIC and other indicators, which is simply the proportion of annual income in the company's invested capital, ROE only looks at equity invested capital, ROIC in addition to looking at equity investment, but also add debt invested capital, because wind power operators also have a lot of liabilities, in order to unified comparison, Let's look at the ROIC of each link of the wind power industry chain, this time the return on investment of the operation link is very low, so the wind power operator is similar to the financial nature, to keep expanding capital to invest, somewhat similar to utilities such as hydropower, but not so stable, if really seek stability, it is better to buy hydropower stocks, Therefore, the operators of the wind power industry chain will not be introduced in detail later.

By observing the ROIC, we found that the ROIC of the bearings, submarine cables, mainshafts and glass fibers of upstream raw materials with higher gross profit margin in the components is still very high, so it is worth focusing on the analysis of each link of the industrial chain in the latter, and then we will learn several main links of the wind power industry chain together.

1. Upstream raw materials

The main raw materials of wind power blades include reinforcement materials (girder), sandwich materials, matrix materials, surface coatings and so on. The cost of matrix materials accounted for 36%, and the main use of wind power is epoxy resin, but the resin is a traditional chemical product, overseas companies are stronger, and the market share of domestic companies is not high.

Followed by reinforced fiber, the material cost accounted for 28%, mainly glass fiber and carbon fiber two, of which glass fiber price is lower, and carbon fiber quality is higher.

Carbon fiber is mainly used in aerospace, wind power blades, sports and leisure fields, 2021 wind power blade carbon fiber demand accounted for 27.97% of the global total demand, but compared to other industries need carbon fiber quality and price are the lowest, the total market demand accounted for 16.29% of the world, wind power blade is not currently the most important market for carbon fiber. It is expected that with the growth of wind power installed capacity, the proportion of demand will gradually increase.

Glass fiber is an important reinforcement material, and the glass fiber used in the field of wind power is called "wind power yarn". In 2018, in the Chinese wind power yarn market, China Boulder ranked first with a 37% share, but even so, in 2020, wind power yarn products only accounted for 20% of the company's total glass fiber products.

Steel and copper are used a lot in tower barrels, castings, cables and other parts, but I don't need to tell you that wind power is not the main market for these metals.

That is to say, most of the raw material companies in the market are not very pure wind power companies, and the performance of the relevant targets has little to do with wind power, even if it rises with wind power, it is largely in the speculation valuation, because the demand of the wind power industry does not play a leading role in their performance.