Orders in hand and advance receipts have grown rapidly, and the trend of large-scale order fans is obvious. As of the end of the third quarter of 2019, the company had 22.78GW of external orders on hand, a year-on-year rapid growth of 25.05%. Among them, the order capacity of 2.5S platform units was 9.7GW, a significant increase of 142% year-on-year, and orders for this model accounted for 42%, an increase of 20 percentage points year-on-year, becoming the company's main platform model in the external orders in hand; Among the external orders in hand, the order capacity of 3S platform units was 5.8GW, a year-on-year increase of 315%; The orders for the platform accounted for 26%, an increase of 18 percentage points year-on-year, and the company's wind turbine large-scale trend was obvious. In terms of advance receipts, the company's contract liabilities have increased significantly since 2019, reflecting the significant increase in the company's advance receipts. At the end of the first, second and third quarters of 2019, the company's contract liabilities were RMB4.853 billion, RMB6.979 billion and RMB8.964 billion, respectively, a significant increase from RMB4.062 billion at the end of 2018. Due to the long lead time of the company's wind turbine business, the increase in pre-receipts confirms the company's large increase in orders. With the further execution of subsequent orders, the recognition of revenue will drive the rapid growth of the company's performance.

Investment advice: The company is a leading domestic wind turbine enterprise, ranking first in China in 2018 in terms of new wind power installation, with a market share of more than 30%. The company's profit in the first three quarters of this year fell significantly, mainly because this year is still digesting last year's low-priced wind turbine orders, resulting in a significant decline in wind turbine gross margin. Entering the third quarter, with the gradual digestion of low-priced orders last year, the recovery of the price of new orders and the improvement of the order structure, the gross profit margin of the company's wind turbine business has risen, and the inflection point of performance has appeared. We believe that under the background of the rising bidding price of wind turbines this year, the gross profit margin of the company's wind turbines in 2020 will continue to improve, coupled with the improvement of the company's expense control ability, the company's performance will be flexible next year. Combined with the company's latest situation, adjusting the profit forecast, it is expected that the company's basic earnings per share in 2019-2020 will be 0.62 yuan and 1.03 yuan, corresponding to a price-earnings ratio of 19 times and 11 times, maintaining a recommended rating.

Risk warning: the risk of wind power absorption capacity decline and wind curtailment rate increase; the risk of blocked order execution; the risk of falling wind turbine prices; the risk of intensified market competition, etc.