At the end of 2024, Delijia, the rising star of wind power main gearboxes, submitted a prospectus (declaration draft) to the main board of the Shanghai Stock Exchange, planning to use the raised funds of 1.881 billion yuan to invest in onshore and offshore wind power gearbox projects with a total annual output of 1,800 units.

During the reporting period, Delijia's revenue was 1.762 billion yuan, 3.108 billion yuan, 4.442 billion yuan and 1.372 billion yuan respectively, and the net profit attributable to the parent company was 327 million yuan, 540 million yuan, 634 million yuan and 235 million yuan respectively. On an annual basis, Delijia has shown high growth in both revenue and net profit.

However, behind the high growth of Delijia, the related party sales from important shareholders have played an important role, and at the critical moment of listing since 2023, the price of related party sales products is still higher than that of non-related parties, and the fairness of its transaction is doubtful. In addition, the company's accounts receivable turnover rate is lower than the industry average, and the performance of the industry leader is also worth paying attention to.

Related-party transactions with two major shareholders support half of the revenue

Delijia's main business is the production and sales of wind power gearboxes, and the actual controllers are Liu Jianguo and Kong Jinfeng, who hold a total of 41.98% of the shares, both of whom have worked in China High-speed Transmission (00658), the leader of wind power transmission equipment, of which Chairman Liu Jianguo has also served as the executive director of China High-speed Transmission for a long time.

In January 2017, Liu Jianguo, Kong Jinfeng, Sany Renewable Energy (688349) and Jiasheng Investment established Delijia, Sany Renewable Energy held 15% of the shares, and then changed to hold 28% before the submission of the prospectus, and on January 1, 2021, Envision Energy held 16% of the shares of Delijia through Binjing Investment in the form of proxy holding, and held 15.27% before the submission of the prospectus, becoming the third largest shareholder.

The two important shareholders are the top five wind turbine manufacturers in the industry. According to data from CWEA, in 2023, Envision Energy and Sany Renewable Energy will add 14.88GW and 7.41GW of new hoisting capacity, respectively, with market shares of 18.7% and 9.3%, respectively, ranking second and fifth.

Since shareholders hold more than 5% of the shares, Delijia's sales to Sany Renewable Energy and Envision Energy constitute connected transactions. In each period of the reporting period, Delijia's related sales accounted for 74.75%, 37.39%, 45.43% and 57.72% respectively. In this regard, the company said that it sells wind power main gearboxes to it, both of which are leading enterprises in the wind power manufacturing industry.

During the reporting period, Sany Renewable Energy has always ranked among the top five customers of Delijia, contributing revenue of 423 million yuan, 387 million yuan, 865 million yuan and 503 million yuan respectively, accounting for 23.99%, 12.44%, 19.48% and 36.68% respectively.

Sany Renewable Energy was listed in June 2022, and from 2021 to the first half of 2024, Sany Renewable Energy's revenue was 10.175 billion yuan, 12.325 billion yuan, 14.939 billion yuan and 5.28 billion yuan, respectively. Before Sany Renewable Energy went public, there were fewer related party transactions between the two, and after Sany Renewable Energy went public, related party sales soared.

During the reporting period, Envision Energy contributed 894 million yuan, 775 million yuan, 1.153 billion yuan and 289 million yuan respectively, accounting for 50.76%, 24.94%, 25.95% and 21.04% respectively.

However, there is a risk that this part of the income will be reduced. According to the prospectus (declaration draft), at present, most wind turbine manufacturers rely on external procurement of main gearboxes, but some companies have begun to independently develop and produce gearboxes, for example, Envision Energy has realized the mass production of wind power main gearboxes, and may reduce the purchase volume of issuers in the future.

Not only that, Caizhongshe found that since entering the critical moment of listing in 2023, Delijia has sold products to related parties at a higher price than non-related parties. During the reporting period, Delijia's selling price to related parties in 2021 and 2022 was slightly lower, while in 2023 and the first half of 2024, the selling price to related parties was higher.

High growth to be examined

In 2020 and 2021, due to the "rush to install" of onshore wind power and offshore wind power, the revenue and profit of the wind power industry remained at a high level, and this 2022 began to fall into a trough, which is directly reflected in the fluctuation of new installed capacity of wind turbines: from 2020 to 2023, China's new grid-connected capacity will be 54.43GW, 47.57GW, 37.53GW and 75.9GW respectively.

Generally speaking, 2020 and 2021 are the peak revenues and profitability of wind power companies. Delijia did not disclose the data in 2020, while the prospectus of Sany Renewable Energy disclosed the relevant data, in 2020, the net profit of Delijia's predecessor Delijia Transmission Technology (Jiangsu) Co., Ltd. was 475 million yuan, and the revenue status was not disclosed.

From 2020 to 2023, Delijia's net profit has reached a new high after a slight decline in 2021, which is quite different from the performance of leading companies in the industry.

Delijia listed China High-speed Transmission, China Dynamics, Dalian Heavy Industry, Hangzhou Tooth Forward, Weili Transmission, Asia-Pacific Transmission and Xihua Technology as comparable companies, of which the latter two are pre-IPO companies, and Asia-Pacific Transmission has terminated the review. However, Asia-Pacific Transmission, Xihua Technology, Weili Transmission, and Hangzhou Gear Forward are all engaged in gearbox parts enterprises, not direct competitors, while China Dynamics and Dalian Heavy Industry are engaged in related businesses, but they account for a relatively small proportion, and the company's only competitor in China is NGC Group, which is controlled by China High-speed Transmission.

There are not many players in the field of wind power gearboxes, and the market concentration is high. According to Xihua Technology's reply letter, the world's top three wind turbine gearbox manufacturing businesses are NGC Group, Flanders Group and ZF Group, among which NGC has a global market share of more than 30% for many years.

The performance of China's high-speed transmission is in great contrast with Delijia. The company has been deteriorating since achieving a high point of 1.315 billion yuan in attributable shareholders in 2021, and the profit attributable to shareholders from 2022 to the first half of 2024 is 102 million yuan, 96 million yuan and a loss of 529 million yuan, respectively.

China High Speed Transmission did not disclose the gross profit margin of its wind power transmission equipment segment, but its overall gross profit margin has shown a downward trend in recent years. In the first half of 2024, the revenue of China's high-speed transmission wind power gear transmission equipment was 5.489 billion yuan, a year-on-year decrease of 22.5%, and the company's gross profit margin in the current period also showed a downward trend, mainly due to the decline in the selling price and the increase in the cost of wind power transmission equipment. According to the China High-speed Transmission Report, from 2022 to the first half of 2024, the gross profit margin of the company's wind power gear transmission equipment has shown a downward trend, which is due to the decline in selling price and rising costs.

This is also the opposite of Delijia's performance. During the reporting period, the gross profit margin of Delijia was 29.18%, 23.1%, 23.66% and 25.8% respectively, showing an overall trend of first declining and then rising. Since 2023, Delijia's gross profit margin has been in the opposite direction to that of China's high-speed transmission, the industry leader.

In addition, Delijia's slower payment collection is also worth paying attention to. During the reporting period, the average accounts receivable turnover ratio of comparable listed companies was 3.82 times, 3.8 times, 3.4 times and 2.76 times, while the accounts receivable turnover rate of Delijia was 2.49 times, 2.91 times, 3.24 times and 2.03 times respectively in the same period, and the company's accounts receivable turnover rate was much lower than that of comparable listed companies all year round. In this regard, the company explained that due to the comparison with the same industry, the company has differences in revenue structure, customer structure, etc., and there are certain differences in the turnover rate of accounts receivable. The overall level tends to be consistent with that of comparable companies, in line with the characteristics of the industry, and is reasonable.

During the reporting period, the sum of the company's accounts receivable and notes receivable were 1.382 billion yuan, 1.797 billion yuan, 2.66 billion yuan and 1.819 billion yuan respectively.