Jiangsu Etern Company Limited(600105) (600105)
The company is an old key enterprise of optical communication in China. Focusing on the communication business, the company continues to expand the industrial layout of overseas engineering, automobile harness, superconductivity and so on. The company is the first private listed company in China’s optical cable industry. It has been deeply engaged in the communication field for more than 20 years, and the industrial chain has been continuously expanded. It has changed from the original single communication cable manufacturing, It has developed into one of the industry-leading enterprises covering optical communication (optical fiber, optical cable, optical rod, optical module / device / chip, communication equipment, etc.), power cables (wires and cables, superconducting materials, automobile harness, etc.) and the provision of engineering and system integration solutions.
The comprehensive layout of rod fiber cables in the communication industry ushered in the inflection point of simultaneous rise in volume and price, expanded new business sectors such as optical modules / chips and 5g news, and opened up greater growth space. The company’s production capacity of optical rod, optical fiber and optical cable is fully laid out. The latest bidding results of operators clarify the inflection point of simultaneous rise of volume and price in the industry, and the company is expected to focus on benefiting. Focusing on the communication sector, the company focuses on expanding new business sectors such as optical modules / optical chips and 5g messages, with strong business synergy. Benefiting from the large-scale construction of 5g and the gradual expansion of 5g applications, the company is expected to open greater growth space.
We have worked hard in the automotive harness business for many years, worked closely with large automobile enterprises and suppliers, and made key breakthroughs in high-value products of new energy. Through its wholly-owned subsidiary Shanghai Jinting wire harness and its associated company Suzhou Portney, the company has arranged automobile wire harness business, and has close cooperation with vehicle manufacturers such as GM, Volkswagen and Volvo, as well as large suppliers such as Cummins, Yanfeng andotto and Faurecia. The company focuses on breaking through new energy vehicle customers such as Huawei, Chinese express and new forces of car making. The value of new energy harness has increased significantly, the impact of short-term epidemic has been eliminated quickly, and the company’s automobile harness business is expected to enter the fast lane of growth.
Overseas projects are well one’s hands, and one belt, one road continues to grow. One belt, one road, 12 countries, 42 contracts and nearly 3 billion dollars in contracts, signed several important projects. One belt, one road project, has been accumulated in overseas projects and the whole area. The new projects are expected to continue to fall and lay the foundation for long-term growth.
Profit forecast and investment suggestions
The company closely focuses on the two industrial directions of light and electricity, and arranges optical communication, automobile harness, overseas engineering and superconducting industry. Optical communication has benefited from the simultaneous rise in the volume and price of optical fiber and optical cable, as well as the development of optical modules / chips, 5g messages and other services, and regained the growth trend; New models of automobile harness are constantly in large quantities, and key breakthroughs are made in high value products of new energy; Abundant orders for overseas projects have laid the foundation for the company’s performance growth; Strategic reserves such as superconductivity are expected to be gradually industrialized and open up long-term growth space. It is estimated that the net profit attributable to the parent company in 21-23 years will be 150 million yuan, 290 million yuan and 390 million yuan respectively, corresponding to 29 times and 22 times P / E ratio in 22-23 years. With reference to the segment valuation of comparable companies, the target price is RMB 7.8, and the “buy” rating is given for the first coverage.
Risk tips: operators’ capital expenditure is lower than expected, market competition is higher than expected, technology R & D risk, global epidemic impact is higher than expected, and exchange rate fluctuation risk
