Jiangsu Zhongtian Technology Co.Ltd(600522) (600522)
In the era of double carbon, offshore wind power has broad development space. Driven by the double carbon policy, the cumulative installed capacity of global sea breeze is expected to reach 2000gw in 2050, with large long-term growth space. We believe that China’s sea breeze development has the following three driving forces: 1) policy subsidies: the parity policy brings a rush to load, and the subsequent provincial subsidies are expected to relay the national subsidies to promote the parity transition; 2) Supply and demand side: China’s eastern coastal provinces have large power load, rich sea breeze resources and great development potential; Recently, coastal provinces have issued a number of sea breeze planning policies that exceed expectations; 3) Cost side: Haifeng has a long industrial chain and more room for price reduction; The scale of wind farms, the scale of wind turbines, the overall stabilization or decline of raw materials, large MW, floating, flexible DC transmission and other technological progress are expected to reduce the construction cost of sea breeze, so as to promote parity and drive the growth of demand side.
As the leader of sea breeze, the company now has the total integration ability of marine system engineering integrating submarine cable submarine observation, exploration submarine cable laying and fan construction, which will deeply benefit from the development of sea breeze. Due to its product characteristics and special position in the industrial chain, submarine cable has high industrial barriers, high barriers in production technology, production qualification, production equipment, customers, capital, geographical location and other aspects, and the market competition pattern is stable. In 2019, the market share of Jiangsu Zhongtian Technology Co.Ltd(600522) was the first, up to 44%. Flexible and direct technology is leading in the country, in a leading position and has strong strength. With the transformation of submarine cable bidding of China’s offshore wind power projects to the “manufacturing + laying” whole package mode, submarine cable enterprises with whole package capability will be more competitive in the process of winning the bid. The company’s marine product layout is complete and is expected to benefit from the core in the future.
The company deeply arranges the new energy industry around “photovoltaic, energy storage and copper foil” to provide sufficient new power for long-term development. Since 2011, the company has entered the new energy industry and established 6 subsidiaries to layout the subdivided fields of photovoltaic, energy storage and copper foil. At present, the photovoltaic industry has a complete industrial chain and service system of photovoltaic power station products; In terms of energy storage, large-scale energy storage system is taken as the core, and energy storage applications on grid side, user side and power supply side are launched, with a complete energy storage industry; The copper foil industry has made two-way efforts to lithium battery copper foil and standard copper foil, with rapid layout. The company has been selected into the global top 500 new energy enterprises for six consecutive years. In 2021, it reached a new high and ranked 116th. The card position of the new energy industry will open a new space for the company to grow continuously.
The optical communication business is gradually warming up, and the power sector is facing new opportunities. The company started from optical fiber communication. After years of deep cultivation and development, it has become the leading enterprise in the field of optical fiber and cable in China. The centralized acquisition and landing of mobile ordinary cable and the “simultaneous rise of volume and price” release the warming signal of optical fiber and cable, which will drive the optical communication business to an upward turning point; In the power sector, the company has the most complete industrial chain advantages of transmission and distribution products in the industry, and actively participates in the construction of UHV power grid and smart grid. Under the national “carbon peak and carbon neutralization” strategy, the power grid investment has increased steadily and ushered in structural growth opportunities.
Investment suggestion: the company’s strategic layout includes four major businesses: Ocean, new energy, power cable and optical communication, covering two core tracks of new infrastructure and new energy. As the leader of sea wind, the core will benefit from the long-term growth of offshore wind power industry. At the same time, the gradual development of new energy business is expected to open a new growth curve of the company. It is estimated that the net profit of the company from 2021 to 2023 will be 319 million yuan, 3.929 billion yuan and 4.505 billion yuan respectively, corresponding to 162 times, 13 times and 11 times of PE. It will be covered for the first time and given a “buy” rating.
Risk factors: 1. The risk that the development of marine business is less than expected; 2. Price fluctuation risk of raw materials; 3. There is still a risk of impairment of high-end communication related assets; 4. Risk of repeated spread of covid-19 epidemic
