\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 522 Jiangsu Zhongtian Technology Co.Ltd(600522) )
Events
On the evening of March 10, 2022, the company issued the announcement of main business data from January to February 2022. According to the preliminary accounting of the company, from January to February 2022, the company achieved a total operating revenue of about 6 billion yuan, an increase of about 17% year-on-year; 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%.
Brief comment
1. The high prosperity of offshore wind power continued, and the superimposed optical communication sector hit the bottom. The profit of the company increased sharply from January to February 2022, significantly exceeding the market expectation.
From January to February 2022, the company realized a net profit attributable to the parent company of about 800 million yuan, with a year-on-year increase of about 300%, significantly exceeding market expectations. We believe that, first, there was a rush to install offshore wind power in 2021, and a large number of orders were not confirmed in the same year. Some carry forward orders were confirmed from January to February 2022. It is expected that the proportion of confirmed offshore orders will be higher, and the subsequent submarine cable orders and offshore orders will be gradually confirmed, which continued the high gross profit of 2021; Second, the optical communication sector hit the bottom and rebounded. In the centralized procurement of ordinary optical cables by China Mobile in 2021, the bid winning price of Jiangsu Zhongtian Technology Co.Ltd(600522) was about 75.3 yuan / core km (including tax, which will be implemented from the end of 2021), with a year-on-year increase of 34.8%. We believe that excluding the factors of rising costs, a considerable part will be transformed into the profits of the company, and the gross profit margin is expected to recover significantly. It is expected that the profit elasticity of price rise of optical cables in 2022q1 will be partially reflected. We believe that the net profit performance from January to February is beautiful, there are still many marine orders confirmed in the future, and the good growth momentum is expected to continue. In addition, the growth rate of the company’s revenue from January to February was significantly lower than that of net profit. We believe that first, there are more confirmation of marine orders with high gross profit margin, and second, trading business companies take the initiative to shrink, resulting in a significant decline in revenue scale, which will also affect the overall revenue growth.
2. The development of offshore wind power is expected to exceed expectations, and the competition pattern of submarine cable is good.
We expect that by the end of the 14th five year plan, China’s offshore wind power grid connection is expected to exceed 70gw, and the installed capacity will be 26.39gw by the end of 2021, which means that the installed capacity will still exceed 43gw from 2022 to 2025. From the perspective of landing rhythm, due to the large amount of rush installation and grid connection in 2021, the grid connection volume in 2022 will be at a phased low point, but the orders carried forward from 2021 to 2022 are still considerable. It is expected that the average annual new grid connection volume will exceed 12gw from 2023 to 2025. Submarine cable has high barriers and good competition pattern. As the leader of submarine cable, the company has benefited significantly. In the early stage, the bid winning results of Qingzhou four seas wind power project were announced, and the lowest bidder did not win the bid, which also confirmed the good competition pattern of submarine cable. Submarine cable is the key link of offshore wind power. The owner pays more attention to product quality, technical capability and delivery experience, rather than relying on low-cost competition to obtain orders.
3. The high prosperity of offshore wind power resonates globally, and Jiangsu Zhongtian Technology Co.Ltd(600522) has the advantage of first mover when going to sea.
Recently, the German Ministry of economy put forward a draft to be legislated. The country plans to accelerate the expansion of wind energy and Cecep Solar Energy Co.Ltd(000591) infrastructure and achieve the goal of 100% renewable energy power supply 15 years ahead of schedule (to 2035). Offshore wind power facilities will be a key part of the plan Jiangsu Zhongtian Technology Co.Ltd(600522) has a long-term cooperative relationship with German TenneT Tso GmbH (one of the four major power grid companies in Germany). In 2017, it won the bid for TenneT’s “enbw Hohe see” offshore wind power EPC project. It is the first Chinese submarine cable manufacturer to win the European wind power EPC project. At the same time, it also participated in the research and development of TenneT’s ± 525kv DC power cable system. We believe that under the background of the continuous increase of European new energy policy, Jiangsu Zhongtian Technology Co.Ltd(600522) as the first manufacturer in China to enter the overseas submarine cable market, it has advantages in customer certification, project delivery and so on.
4. The company joins hands with Haili wind power to build the next generation of large-scale sea wind foundation construction ship and strengthen the construction capacity of far-reaching sea wind farm.
In February 2022, Jiangsu Zhongtian Technology Co.Ltd(600522) group Offshore Engineering Co., Ltd., a wholly-owned subsidiary of Jiangsu Zhongtian Technology Co.Ltd(600522) group, plans to jointly invest with Jiangsu Haili wind power equipment Technology Co., Ltd. to establish Jiangsu Zhonghai Offshore Engineering Co., Ltd. to engage in offshore wind power engineering contracting business and undertake offshore wind power foundation construction, maintenance and other engineering services. Haili wind power is one of the leading manufacturers of wind power equipment parts in China. Its main products include wind power tower, pile foundation and jacket. Its products cover 2MW to 5MW and other mainstream market specifications, as well as 6.45mw, 8mW and other high-power products. It is in cooperation with China Huaneng, China Datang, China Huadian, China Resources Power, Three Gorges new energy, China Guangdong nuclear power, Jiangsu New Energy Development Co.Ltd(603693) and other wind farm operators, And China haizhuang, Shanghai Electric Group Company Limited(601727) , Xinjiang Goldwind Science And Technology Co.Ltd(002202) , vision energy, Yunda wind power and other wind power manufacturers have close business cooperation.
Jiangsu Zhongtian Technology Co.Ltd(600522) since the completion of the construction of “two types and three ships” in early 2019, it has made milestone progress in the field of offshore wind power construction, and has the ability of marine resource development and EPC service of offshore main works. Following the establishment of a joint venture with the wind turbine leader Xinjiang Goldwind Science And Technology Co.Ltd(002202) to jointly build a new generation of offshore wind power installation ship (hoisting ship), the company then established a joint venture with Haili wind power to build a next-generation large-scale foundation construction ship (pile driving ship) to adapt to the far-reaching localization of wind farms and large-scale units in the future.
During the 14th Five Year Plan period, there will be a trend of large-scale wind turbines and far-reaching offshore wind farms. At present, there is a shortage of ships with large-scale wind turbine (above 10MW) hoisting capacity and far-reaching offshore construction capacity in China. After the establishment of the joint venture, it will invest funds to build new hoisting ships and pile driving ships. The new ships have strong hoisting capacity and wind and wave resistance, and can operate in deep-water areas and under adverse weather conditions, which will better meet the hoisting requirements of large fans during the 14th Five Year Plan Period. In addition, we think there are two points worth paying attention to. First, with the continuous operation of offshore wind farms, the scale of offshore wind operation and maintenance market has gradually expanded (daily maintenance + damage repair). Generally, wind turbine manufacturers need to provide 5-year warranty service, and the company is expected to undertake Xinjiang Goldwind Science And Technology Co.Ltd(002202) wind turbine operation and maintenance orders in the future; Second, Jiangsu has taken the lead in launching the competitive allocation of offshore wind power projects, and this trend may be adopted by more provinces in the future. The so-called competitive allocation means that the bid consortium composed of the owner, wind turbine plant and submarine cable plant will report to the energy administration, which will score and select from the dimensions of enterprise capacity, past performance and technical scheme, Jiangsu Zhongtian Technology Co.Ltd(600522) and wind turbine The cooperation between leading manufacturers of equipment parts will help to win more project orders in the competition.
5. Profit forecast and investment rating.
Under the background of the high prosperity of marine business and new energy business, the bottom recovery of optical fiber and cable business and the contraction of trade business, we expect the company’s revenue to be 49.020 billion yuan, 44.022 billion yuan and 44.950 billion yuan from 2021 to 2023, and the net profit attributable to the parent company to be 125 million yuan, 3.983 billion yuan and 4.908 billion yuan. The current market value corresponds to 15x and 12x PE from 2022 to 2023, maintaining the “buy” rating.
Risk warning: the development of offshore wind power is not as expected; The competition between submarine cable and marine engineering has intensified, and the gross profit margin has decreased significantly; The price rise of raw materials exceeded expectations; The demand of optical fiber and cable industry is lower than expected, and the price has dropped significantly again.
