Why were third-quarter results under pressure?

  • Morgan Stanley believes shipping bottlenecks from the second quarter continued into the third quarter. Dajin Heavy Industry shipped only one vessel load of offshore wind foundations to Europe during the quarter, and deliveries fell short of expectations.
  • Lower shipments and an unfavorable product mix jointly weighed on quarterly earnings; the third quarter was also affected by approximately 50 million to 60 million yuan in foreign exchange losses. The bank believes the company’s underlying production efficiency remains strong.

How did operating profitability change as profit fell in the first nine months?

  • In the first nine months of 2026, net profit fell 20% year on year to 710 million yuan, mainly due to foreign exchange losses: foreign exchange losses were 150 million yuan in the period, compared with a gain of 80 million yuan a year earlier.
  • Excluding foreign exchange effects, net profit rose 6% year on year to 860 million yuan, and the adjusted net margin increased by 2 percentage points to 19.7%; over the same period, revenue fell 5% year on year, while the gross margin rose by 4.5 percentage points to 35.6%.

How much can fourth-quarter shipments improve, and where does the pressure lie?

  • Continuous shipments for the Nordseecluster B and BC-Wind projects resumed in September, and both company-owned vessels have been deployed for deliveries. Management expects shipments and profit to improve significantly quarter on quarter in the fourth quarter.
  • As of late October, the company had completed less than 50% of its full-year planned monopile shipments, meaning a large volume of deliveries must be completed in the fourth quarter. Whether the resumption of shipments translates into the expected improvement in results depends on the progress of these deliveries.

When will shipbuilding begin contributing to growth?

  • Morgan Stanley expects shipbuilding to become a new growth driver starting in 2027. The company has secured orders for 23 vessels from third parties and plans to deliver 4, 9 and 16 vessels in 2027, 2028 and 2029, respectively. Planned deliveries include company-owned vessels.
  • Shipbuilding revenue is recognized according to construction progress; large crane vessels, oil and gas transportation, and offshore wind installation services offer medium-term earnings opportunities. Morgan Stanley rates Dajin Heavy Industry overweight, with a target price of 42.90 yuan per share.