\u3000\u3 Shengda Resources Co.Ltd(000603) 606 Ningbo Orient Wires & Cables Co.Ltd(603606) )
Event: according to the annual report, the company achieved a revenue of 7.932 billion yuan in 2021, an increase of 57% at the same time; The net profit attributable to the parent company was 1.189 billion yuan, an increase of 34% at the same time; The gross profit margin of the company is 25% and the net profit margin is 15%. Among them, the revenue of submarine cable and marine engineering was 4.082 billion yuan, an increase of 69% at the same time; Land cable revenue was 3.841 billion yuan, an increase of 46.02%.
High prosperity of offshore wind power, high barrier of submarine cable and strong profitability. 1) Strong profitability of submarine cable business: the gross profit margin of the company’s submarine cable business is 43.9%, significantly higher than all other main businesses of the company. 2) High barriers to submarine cable business: there are five barriers in the field of submarine cable, including wharf, tower, technology, construction qualification and past performance. General cable enterprises cannot enter. 3) High prosperity of offshore wind power and far-reaching Haihua have increased the value of submarine cables: the prosperity remains after the “rush for installation” of offshore wind in 2021, and the bidding price of offshore wind turbines continues to decline, which is expected to be parity in 2023. It is estimated that the scale of submarine cable industry will not be less than 100 billion yuan during the 14th Five Year Plan period. The sea breeze is far-reaching, and Haihua promotes the further increase of the demand for submarine cables installed per unit, the proportion of high-voltage products, the further reinforcement of technical barriers and the increase of product added value.
The company has a prominent leading position and superior resource endowment. The company entered the submarine cable industry as early as 2005 and has been deeply cultivated for more than ten years. In terms of resource endowment, the company has scarce resources such as docks; In terms of production capacity, the company’s Beilun industrial base will be put into operation this year, adding 3 billion yuan of submarine cable capacity and 1.5 billion yuan of land cable capacity, which will significantly improve the company’s profitability. Technology: at present, it has the system R & D and production capacity of 500kV and below AC submarine cables and ± 535kv and below DC submarine cables, and has outstanding advantages in large length, soft joint, special submarine cable production technology and so on.
Due to the high prosperity of submarine cable, the company has repeatedly won large orders at home and abroad, and the land cable capacity structure has been optimized to improve quality and efficiency: after winning the large order of 1.39 billion yuan for the fourth Qingzhou project in Yangjiang, Ming Dynasty in February, the company announced on March 20 that it had won the bid for the 1.7 billion yuan project of Yuedian Yangjiang Qingzhou I and II offshore wind farms. The product of the project is 500kV three core submarine cable, which is the first in the world and demonstrates the technical strength of the company; On March 25, it was announced that it won the bid for the 66kV and 220kV submarine cables with a value of 530 million yuan in boskalis, Europe. On March 11, the company announced that it would transfer its holding subsidiary Jiangxi Dongfang with RMB 70 million to optimize its business structure. We expect the company to achieve revenue of RMB 8.778/11.556/12.444 billion and net profit attributable to the parent company of RMB 1.414/18.82/2.271 billion from 2022 to 2024, corresponding to pe2.8 billion 97 / 21.76/18.04 times, with a “buy” rating.
Risk warning: price fluctuation of upstream raw materials; The progress of the winning project is less than expected; The launch of new production capacity is less than expected; Changes in competition pattern of submarine cable market.
