\u3000\u3000 Jiangsu Zhongtian Technology Co.Ltd(600522) (600522)
Event: Jiangsu Zhongtian Technology Co.Ltd(600522) announced the pre reduction of performance in 2021. The company realized a net profit attributable to the parent company of RMB 100-150 million in 2021, a year-on-year decrease of 93.4% – 95.6%; The non net profit deducted was 20-100 million yuan, a year-on-year decrease of 95.2% – 99.0%. The performance reduction is mainly due to the abnormal execution of contracts related to high-end communication business, which affects the net profit attributable to the parent company of -3.02 billion yuan. If the impairment provision is excluded, the company will realize a net profit attributable to the parent company of RMB 3.12-3.17 billion in 21 years. 21q4 the provision for impairment of high-end communication business assets in a single quarter decreased the net profit attributable to the parent company by 1.355 billion. Regardless of the provision, the net profit attributable to the parent company in a single quarter was 970-1.02 billion yuan, a year-on-year increase of 40% – 47%.
The completion of the company’s shareholding increase shows its confidence in development. On July 26, 2021, the controlling shareholder Jiangsu Zhongtian Technology Co.Ltd(600522) group announced the notice of share increase, and planned to increase the shares of the company with its own funds within 6 months, with a total of no less than 0.18% and no more than 2% of the total share capital. As of January 25, 2022, the shareholding has increased by 0.2%, exceeding the lower limit of shareholding increase, with a total transaction amount of 45.461 million yuan, and the implementation of the shareholding increase plan has been completed.
Focusing on the two strategic directions of communication and new energy, marine business and photovoltaic business are expected to achieve sustained and rapid growth by taking advantage of policy advantages. (1) Marine business: the rush effect of Haifeng in 21 years is significant. Haifeng has added 16.90gw of installed capacity, accounting for 35.5% of the total installed capacity of wind power, exceeding market expectations. The company’s technology research and development is oriented to the deep and open sea, and the market layout is oriented to globalization. It continues to cultivate marine equipment such as submarine optical cable, submarine cable, submarine photoelectric composite cable and submarine cable construction ship and machine. Now it has the general integration ability of marine system engineering integrating submarine cable, submarine observation, exploration, submarine cable laying and fan construction, Committed to becoming the world’s leading provider of energy information interconnection system solutions. (2) The company has a photovoltaic power station product industry chain and service system, and its main business includes photovoltaic system product supply, photovoltaic resource development, general contracting and power station operation and maintenance. During the 14th Five Year Plan period, Jiangsu Zhongtian Technology Co.Ltd(600522) will implement strategic cooperation with state-owned companies in Rudong County and take advantage of Rudong’s ground and sea photovoltaic resources to implement photovoltaic project construction. Jiangsu Zhongtian Technology Co.Ltd(600522) in 2021, the photovoltaic installed capacity planned by Rudong is about 3 million KW, which will drive a total revenue of more than 23 billion yuan from photovoltaic materials, energy storage systems and electrical equipment.
In depth layout of energy storage, business continues to break. The company takes the large-scale energy storage system as the core and focuses on the energy storage applications on the power grid side, user side and power supply side. The company has formed a complete energy storage industry chain including battery anode and cathode materials, structural parts, copper foil, lithium battery, BMS, PCs, EMS, transformer, switchgear, energy storage container and other core components, which can realize the internal independent matching rate of equipment required by power grid side energy storage power station of more than 95%, and the internal independent matching rate of equipment required by user side energy storage power station of more than 99%.
Profit forecast, valuation and rating: the prosperity of optical fiber and cable industry is rising, and the submarine cable business is expanding rapidly. The company is a leading enterprise in China’s optical fiber communication and power cable, constantly expanding its business and transforming into a communication and new energy giant. As the provision for impairment of high-end communication business assets in 2021 exceeded expectations, we lowered the net profit in 2021 to 148 million yuan, with a range of – 16.4%, maintaining the net profit attributable to the parent company in 2022-2023 to 3.916 billion yuan and 4.230 billion yuan, corresponding to 358x, 13X and 12x PE in 21-23 years, maintaining the rating of “overweight”.
Risk warning: the boom cycle of optical fiber price falls, the gross profit margin falls, the boom of submarine cable falls, and the impairment is accrued
