\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 487 Hengtong Optic-Electric Co.Ltd(600487) )
Event: Hengtong Optic-Electric Co.Ltd(600487) announced that the company has won the bid and signed contracts for offshore wind power projects in recent days, with a total contract amount of about 1.443 billion yuan. Up to now, the company has offshore power projects such as submarine cable production, laying and fan installation, with an order amount of about 3.042 billion yuan.
Our comments are as follows:
1. Company order overview:
The announced orders totaled 1.443 billion yuan, all of which were offshore wind power submarine cables and supporting businesses, including 459 million yuan for “Vietnam jin’ou offshore wind power project”, “702 million yuan for Jieyang Shenquan 2 offshore wind farm project”, “49 million yuan for the procurement project of CGN new energy submarine cable inspection and maintenance framework agreement” and 210 million yuan for “Saudi Arabia red sea submarine cable project”, “35kV submarine cable procurement project of old oil field reconstruction project of Bozhong Kenli Oilfield Group shore power application project” 23 million yuan; The bid winning amount accounts for 4.46% of the company’s audited operating revenue in 2020, which has a positive impact on the company’s operating performance.
2. The bid winning order highlights the competitiveness of the company’s offshore wind power
The winning products of the company include 33kV, 35kV, 66kV and 220kV submarine cables, submarine cable laying and installation supporting facilities, which reflect the strong competitiveness of the company’s offshore wind power and the solution ability of industrial chain system. Moreover, the Chinese and overseas markets are in full bloom, and the brand influence and market share are expected to continue to improve. Previously, the company undertook Portugal offshore floating wind power project, Vietnam tra Vinh EPC and other projects. This order won the bid again to improve the popularity of the company in the international offshore wind power market.
3. Abundant orders on hand, fully benefiting from the development of the industry
Up to now, the company’s offshore power projects have orders of 3.042 billion yuan. Under the dual carbon target and the future parity trend of offshore wind power, the industry is expected to continue to be prosperous in the future. As the first echelon of China’s submarine cable, Hengtong is expected to fully benefit from the development of the industry in the future, while the market ignores the competitiveness and growth potential of the company’s business sector.
Profit forecast and investment suggestions:
On the whole, ① optical fiber and cable are expected to show a sustained upward trend, and the company’s optical network business will be improved. ② After the acquisition of Huawei ocean, the cross ocean communication business broke the international monopoly, with significant barriers, and the market share is expected to continue to increase. ③ The State Grid vigorously promotes the construction of UHV, and the company’s expansion into UHV market is expected to improve its profitability. ④ As the first tier manufacturer of China’s offshore Cable & Marine Engineering, under the trend of double carbon target implementation and parity Internet access, the value of Haifeng assets is expected to be continuously repaired and revalued, and there is a broad growth space in the future. As one of the top three submarine cable manufacturers, the company has obvious competitive advantages. It enjoys a good competitive pattern in medium and high voltage cable projects. Under the high boom of the industry, the offshore wind power related business is expected to continue to grow rapidly. It is estimated that the net profit of the company in 21-23 years will be RMB 1.6 billion, RMB 2.5 billion and RMB 3.1 billion, corresponding to PE 12.4x in 22 years, maintaining the “buy” rating!
Risk warning: the project implementation progress is less than expected, the upstream raw materials continue to maintain high price risk, the production expansion progress is less than expected, and the bidding rhythm and scale of the industry are less than expected
