\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 522 Jiangsu Zhongtian Technology Co.Ltd(600522) )
Company announcement: the company issued the announcement of main business data from January to February 2022, during which the total operating revenue was about 6 billion yuan, with a year-on-year increase of about 17%; The net profit attributable to the shareholders of the listed company was about 800 million yuan, with a year-on-year increase of about 300%.
From January to February, the operating data exceeded expectations, the revenue structure was optimized, and the proportion of marine business continued to increase. Benefiting from the rapid development of offshore wind power and new energy, the business data from January to February 2022 showed a bright performance. The growth rate of net profit is higher than expected and much higher than that of revenue. We expect it to be mainly due to the decrease in the proportion of commodity trade-related income and the continuous increase in the proportion of marine business and new energy business with high gross profit margin. The company has formed the layout of four business segments, including new energy, marine, electric power and communication. From the revenue structure and orders of 21 years, we expect that the profit of marine business from January to February is expected to account for more than 60%. Affected by the rush to install offshore wind power in 21 years, the submarine cable market is in short supply. The company’s submarine cable and marine engineering business have sufficient orders. A large number of orders have not been confirmed in 21 years, and some will be carried forward to 22q1. Optical fiber and optical cable business. According to the latest bidding results of China Mobile and China Telecom Corporation Limited(601728) , the price of optical fiber and optical cable has increased significantly. It is expected that the implementation of new price delivery in 21q1 will also significantly improve the profit margin of this business, making the profit of optical fiber and optical cable increase year-on-year. The company’s submarine cable and other marine businesses are in a leading position in China, and has the total integration ability of submarine cable, submarine observation and exploration, submarine cable laying and fan construction. The new energy business realizes the integrated layout of photovoltaic + energy storage, continuously strengthens the integration of photovoltaic industry and expands the advantages of energy storage industry, extends to the upstream material end and enhances the ability of cost control. In 2021, the company completed the provision for asset impairment of high-end communication business, and the risk has been fully released. In 2022, the company will pack light.
The submarine cable business maintained a high boom, and the recent bidding results showed the competitive barriers of the industry. Hainan, Shandong and other coastal provinces have successively issued the 14th five year plan for offshore wind power. According to the 14th five year plan of the state and coastal provinces, the demand for offshore wind power development is clear, and the planned grid connection is more than 50gw. Referring to GWEC data, it is estimated that China’s offshore wind power installed capacity will be 8GW in 2021, and the compound growth rate of China’s offshore wind power will be more than 30% from 2020 to 2025. The offshore wind farm is developing towards the trend of open sea and deep sea, and the submarine cable industry continues to upgrade in terms of performance requirements, bringing strong support for the share and demand profit of leaders in the submarine cable industry such as Zhongtian. According to the recent bidding results, the leading manufacturers won the bid at a relatively high price in the competition of second-line manufacturers, which also shows the competitive barriers in the submarine cable market. The company’s production capacity is expanded in an orderly manner, and Shanwei Lufeng base and Yancheng Dafeng base are arranged on the basis of Nantong base. Actively expand business, and in the first half of the year, it won 17 orders in Canada, Vietnam, the Philippines and other countries, with a total of about US $130 million. In addition, the company is also actively engaged in marine engineering business. It has successively established joint ventures with wind turbine leader Xinjiang Goldwind Science And Technology Co.Ltd(002202) and Jiangsu Haili wind power, the leader of Haifeng equipment, to actively layout the installation of high-power wind turbines, strengthen its advantageous position in the field of marine engineering and strengthen the synergy with submarine cable business.
The price of optical fiber and cable has warmed up and the profitability has continued to improve. Driven by factors such as 5g construction and the development of digital economy, the demand for optical fiber and optical cable continues to pick up, and the centralized procurement of optical fiber and optical cable by China Mobile and China Telecom Corporation Limited(601728) 2021 has achieved both volume and price increases. China’s optical cable industry has entered a benign development stage of moderate growth in demand and gradual liquidation of supply. The supply side capacity continues to shrink. The number of successful optical fiber and cable manufacturers of China Mobile has gradually decreased from 17 in 2018 to 14 in 2020, and 14 won the bid again in 2021. The competition pattern tends to be stable. It is expected that the profitability of subsequent optical fiber and cable enterprises is expected to stabilize and recover. The company has the smooth rod production capacity of out of pipe method, which can effectively control the production cost of the whole rod fiber cable industry chain, improve the profit space, and continue to lead the production capacity in China. In the 2021 China Mobile and China Telecom Corporation Limited(601728) bidding, the winning share and price increased significantly year-on-year, which is expected to form a strong support for the optical communication business in 2022. We believe that considering that the Chinese operators have begun to implement the new bidding price, it is expected to play a positive role in driving the operation in 2022.
Investment suggestion: Jiangsu Zhongtian Technology Co.Ltd(600522) is a Chinese optical cable giant, and its submarine cable and optical fiber cable business are in a leading position in China. The company has formed four business lines: optical communication + ocean + power transmission + new energy, all of which benefit from the new infrastructure and carbon neutrality policy planning. The controlling shareholders increased their holdings, demonstrating their confidence in future development. The impairment of relevant assets and credit of the company will be completed in 2021, and the risk of high-end communication business is expected to be fully released. We expect the net profit of the company from 2021 to 2023 to be 132 million / 3693 million / 4475 million respectively, and EPS to be 0.04 yuan / 1.08 yuan / 1.31 yuan respectively, maintaining the “buy” rating.
Risk warning: the demand for submarine cables and UHV cables is lower than expected; Risks of intensified industry competition; Risk that the expansion of new energy business is less than expected
