\u3000\u3000 Jiangsu Zhongtian Technology Co.Ltd(600522) (600522)
Event: on January 26, 2021, the company issued the announcement of performance reduction in 2021. It is estimated that the company will realize a net profit attributable to the parent company of RMB 100-150 million in 2021, a decrease of RMB 2.125-2.175 billion compared with the same period of last year, a year-on-year decrease of 93.4% – 95.6%. It is estimated that the net profit deducted from non parent company in 2021 will be RMB 20-100 million, a decrease of RMB 2.00-2.080 billion compared with the same period of last year, a year-on-year decrease of 95.2% – 99.0%. In Q4, the net profit attributable to the parent company is expected to reach -388 million yuan to -338 million yuan in a single quarter, with a year-on-year decrease of 156.1% – 148.8% and a month-on-month decrease of 259.7% – 239.1%.
Withdrawing large asset impairment losses dragged down the company’s performance: the company’s performance reduction was mainly due to the abnormal execution of some contracts related to high-end communication business, and the company’s withdrawing large impairment losses for accounts receivable, other accounts receivable and inventory of high-end communication business. In 2021, the company has accrued a total of 3.678 billion yuan for impairment of assets related to high-end communication business. After the provision, the book value of assets related to high-end communication business is 15600 yuan. After deducting income tax factors, the net profit of the company’s consolidated statements in 2021 will be reduced by 3.126 billion yuan (including 103 million yuan of minority shareholders’ equity at the beginning of the period, and the remaining losses will be borne by the parent company), Reduce the net profit attributable to the parent company in the consolidated statements of the company in 2021 by 3.023 billion yuan. The provision basically meets the market expectation, and the risks faced by the company are basically released.
The company’s land cable business is expected to benefit from the UHV construction during the 14th Five Year Plan Period: according to China Energy News, during the 14th Five Year Plan period, the State Grid plans to build the UHV project “24 AC and 14 DC”, involving more than 30000 kilometers of lines, 340 million KVA of substation and current conversion capacity and a total investment of 380 billion yuan. In 2022, the State Grid plans to start 13 UHV lines of “10 AC and 3 DC”. The arrival of UHV construction peak will greatly increase the demand for UHV cables. The company has complete industrial chain advantages of transmission and distribution products, and actively participates in the construction of UHV power grid and smart grid. According to the company’s official website, the company’s “key technology and application of high-performance aluminum alloy overhead conductor manufacturing” won the second prize of national technological invention and was recognized as the single champion product of the industry by the Ministry of industry and information technology; The world-class OPGW runs more than 500000 km online. The company’s land cable business is expected to develop rapidly in the wind of UHV construction.
Submarine cable and new energy business will benefit from the increase of wind power and photovoltaic installed capacity: according to the data of the national energy administration, the new installed capacity of wind power and photovoltaic power generation in China will exceed 100 million kW in 2021. The new grid connected scale of wind power in the whole year was 47.57gw, of which the new installed scale of offshore wind power was 16.9gw (+ 452%), and the cumulative grid connected scale of wind power was close to 330gw (+ 17%) by the end of 2021. In the context of the price rise of the whole industrial chain and the cancellation of subsidies, China’s new photovoltaic installed capacity still achieved a year-on-year growth of 10.4% in 2020, reaching 53gw. On December 20, 2021, China Three Gorges Renewables (Group) Co.Ltd(600905) announced that three large offshore wind farm projects will be invested and built, with a total investment of 41.169 billion yuan. During the 14th Five Year Plan period, Yancheng, Jiangsu Province plans to have 9.02 million KW offshore and 24 million KW offshore wind power installed capacity, and Zhangzhou, Fujian Province plans to have 50 million KW offshore wind power installed capacity, totaling more than 80gw. The installed capacity of offshore wind power is expected to continue to exceed expectations. The company is a leading enterprise in China’s submarine cable market. It continues to cultivate submarine optical cables, submarine cables, submarine photoelectric composite cables, submarine cable construction ships and other marine equipment. Now it has the total integration ability of submarine cable submarine observation, exploration submarine cable laying wind turbine construction. According to the company’s announcement, in 2021, the company installed 405 of the 810 fans in the whole sea area of Rudong County. In terms of new energy business, the company is a professional integrator providing one-stop services for the construction of photovoltaic power stations. According to the company’s official website, as of August 2021, the scale of photovoltaic power stations independently developed, constructed and operated by the company was nearly 400mwp, and the comprehensive indicators of the first batch of 18 national distributed photovoltaic power generation 150MW demonstration areas in China ranked first in China. In the field of energy storage, the company participated in the construction of the first batch of 66mwh energy storage power station on the east side of Zhenjiang Power Grid of the State Grid and the world’s largest 48.4mwh energy storage power station on the second phase of Kunshan, Jiangsu Province. By H1 of 2021, the company’s energy storage projects had landed more than 250mwh in total. In the future, the company’s submarine cable and new energy business will fully benefit from the continuous growth of the industry.
Investment suggestion: we estimate that the operating revenue of the company from 2021 to 2023 will be 46.86 billion yuan (+ 6.4%), 46.69 billion yuan (- 0.4%) and 49.77 billion yuan (+ 6.6%) respectively; The net profit attributable to the parent company is expected to be 120 million yuan (- 94.8%), 3.81 billion yuan (+ 3059.6%) and 4.58 billion yuan (+ 20.9%) respectively. We give the company 18 times PE in 2022, corresponding to the target price of 20.16 yuan in 2022, maintaining the “Buy-A” investment rating.
Risk tips: risks of intensified market competition, overseas market demand affected by the epidemic, local subsidies for offshore wind power less than expected, UHV construction progress less than expected, new energy business landing less than expected, and hypothetical calculation less than expected
