Key investment points:
The installed capacity of offshore wind power in 2021 exceeded the expectation. In 2021, the new installed capacity of offshore wind power in China was 16.9gw, with a year-on-year increase of 440%. By the end of the year, the cumulative installed capacity of offshore wind power in China was about 26gw, with a year-on-year increase of 188%. Previously, according to China’s hoisting construction capacity, the market generally estimated that the new grid connection project was 8 ~ 10GW, and some advanced grid connection capacity was also considered, but the 16.9gw Haifeng project still far exceeded the market expectation. We have made detailed statistics on 97 projects with clear grid connection news in China, with a total of about 26gw projects, corresponding to 17gw of new full capacity grid connection in 2021 (see Appendix 6 for a detailed list).
At the end of the three-year “rush loading” cycle, the country added 22gw of sea wind installed capacity. After the release of the “national subsidy” exit policy of sea wind in April 2019, China’s offshore wind power entered a three-year rush loading cycle in order to obtain a “national subsidy” price of 0.85 yuan / kWh for grid connection before the end of 21. From 2019 to 2021, China added 22gw of offshore wind power grid connected capacity, accounting for about 85% of the cumulative grid connected installed capacity by the end of 2021. The three-year sea breeze “rush loading” has become the first cycle of China’s offshore wind power startup.
A new round of offshore wind power bidding is about to start. The bidding volume will reach 30gwin the next two years. In 2022, offshore wind power will enter a new round of bidding cycle. We have sorted out nearly 40 projects with signs of start-up, and it is expected that more than 15gw offshore wind projects will start bidding. Among them, Guangdong, Shandong, Jiangsu and other provinces have become important regions for the new round of bidding projects. Considering that the provinces plan to add nearly 30GW projects by the end of the 14th five year plan, it is expected that there will be more than 30GW bidding in 20222023.
The 40 billion submarine cable market space is the first to enter the delivery period. The inflection point of the demand for seabreeze castings is expected to appear. In the construction of offshore wind power, the delivery of submarine cables is mostly started one year after the commencement of construction. Therefore, corresponding to the installed capacity of more than 20GW in 2023 and 2024, submarine cables are expected to enter a new round of delivery period from the second half of 2022, which is expected to correspond to 40 billion market space. During the last round of rush loading, the production capacity of Haifeng castings expanded rapidly, and the demand has declined since the third quarter of 2021. We expect that there will be a demand inflection point in 2022, corresponding to more than 20GW of installed capacity in 2023 and 2024, and the single machine scale will be further improved, and the demand intensity is expected to increase.
Industry rating and focus on individual stocks. We believe that offshore wind power will enter a new round of growth cycle in the next three years, giving “recommended” ratings to subsector industries or sectors related to submarine cable and offshore wind castings. Starting from the discussion that submarine cables are expected to be delivered first in 2022 and the demand for offshore wind turbine castings picks up, we suggest paying attention to the companies related to submarine cables and offshore wind castings, focusing on cables, Zhangjiagang Guangda Special Material Co.Ltd(688186) , Jiangsu Zhongtian Technology Co.Ltd(600522) , Riyue Heavy Industry Co.Ltd(603218) .
Risk tip: in 2022, the bidding volume of offshore wind power is lower than expected. The promotion speed of relevant statistical projects was lower than expected. The price of upstream bulk raw materials, such as copper and pig iron, has increased too much, resulting in an increase in the production cost of submarine cables and castings. The policy of offshore wind power industry has changed, and the objectives of the 14th five year plan of each province have been lowered. The cost reduction rate of offshore wind power industry chain was lower than expected, and the development progress of wind resources in the whole sea area was delayed without subsidies. Focus on the company’s performance less than expected.
