Far East Smarter Energy Co.Ltd(600869) (600869)
Event: the company recently announced that in November 2021, it received a total of 1.333 billion yuan of contract orders awarded / signed by its subsidiaries, with a year-on-year increase of 254.41% and a month on month increase of 31.73%. From January to November 2021, the company received contract orders of more than 10 million yuan from its subsidiaries, totaling 16.075 billion yuan, a year-on-year increase of 169.47%.
Cable network business orders have accelerated, with significant advantages in the field of new energy. At the same time, it has benefited from the improvement of industry concentration. In November, the smart cable network sector won the bid / signed contract orders of more than 10 million yuan, with a year-on-year increase of 218.89%; From January to November, the total number of contract orders won / signed over 10 million yuan was 12.157 billion yuan, a year-on-year increase of 205.41%. As an industry leader focusing on the cable industry for 30 years, the company has significant technical advantages in clean energy fields such as wind power, photovoltaic, nuclear power, UHV and charging pile, and is the leading brand in various fields; At the same time, compared with developed countries in Europe, America and Japan, CR10 is higher than 70%, and there is still room for a significant improvement in the concentration of China’s cable industry. With the introduction of a series of policies such as canceling the lowest price bid winning and the construction of quality inspection system, the cable industry is in a period of policy dividend from extreme dispersion to concentration, and the company is expected to make significant profits.
There are frequent good news of batteries in the Far East, and copper foil products are in short supply. From January to November, the smart battery sector won the bid / signed contract orders of more than 10 million yuan, with a year-on-year increase of 1541%, of which the lithium battery was 1.651 billion yuan, with a year-on-year increase of 1229%, and the lithium copper foil was 387 million yuan, with a month-on-month increase of 14% in November. The company’s lithium battery business continues to focus on light travel, small household appliances, high-end digital and other market segments. On this basis, the company has successively signed large orders for energy storage and electric tools in Europe this year, making breakthroughs in two important areas of lithium battery application. This business segment achieved a revenue of 444 million yuan in the first three quarters, a year-on-year increase of 79.21%, a net profit of – 274 million yuan, a year-on-year loss reduction of 103 million yuan, and is expected to achieve profit and loss balance by the end of the year; Lithium battery copper foil supply Contemporary Amperex Technology Co.Limited(300750) and other customers have rapidly expanded production and high yield. In the first three quarters, they achieved a revenue of 458 million yuan, a year-on-year increase of 115.91%. The construction of 50000 ton lithium battery copper foil project in Yibin has been started. 4.0um ultra-thin copper foil has been successfully developed, and the continuous volume of this business will bring substantial growth in performance.
Smart airport business has steadily increased. In November, the sector won the bid / signed contract orders of more than 10 million yuan, with a total of 140 million yuan, a year-on-year increase of 417.80%; From January to November, the total number of contract orders awarded / signed over RMB 10 million was RMB 1.881 billion, a year-on-year increase of 1.07%. Beijing aviation safety maintains the leading position in advantageous fields such as navigation aid lighting and air traffic control weak current, and has been involved in the field of airport runway. This business is expected to maintain a steady and rising trend.
Investment suggestion: the company is a leading enterprise in the cable industry. It will benefit from the improvement of industry concentration, the light pack of battery business, the smooth development of power tools and energy storage market, full orders, effectively support performance growth, and look forward to the return of the company’s value. We expect the net profit of the company from 2021 to 2023 to be 640 million, 1.05 billion and 1.53 billion respectively; EPS is 0.29 yuan, 0.47 yuan and 0.69 yuan respectively; The corresponding PE is 27, 16 and 11 times respectively, giving a “buy” rating.
Risk tip: industry competition intensifies and new product development is lower than expected
