On the evening of March 25, Yangtze Optical Fibre And Cable Joint Stock Limited Company(601869) ( Yangtze Optical Fibre And Cable Joint Stock Limited Company(601869) . SH) released the performance report for 2021. During the reporting period, the company achieved an operating revenue of 9.536 billion yuan, a year-on-year increase of 15.99%; The net profit attributable to the parent company was 709 million yuan, a year-on-year increase of 30.32%. Previously, since the optical fiber and optical cable industry entered the downward cycle in the second half of 2018, the product unit price fell step by step, and the parent net profit of Yangtze Optical Fibre And Cable Joint Stock Limited Company(601869) has declined for two consecutive years.
The reporter of the daily economic news noted that after deducting non recurring profits and losses, the net profit of Yangtze Optical Fibre And Cable Joint Stock Limited Company(601869) was 311 million yuan, a year-on-year decrease of 10.92%, but the decline was narrowed compared with 43.11% in 2020 and 34.20% in the first half of 2021. The non recurring gains and losses amounting to 398 million yuan contributed significantly to the growth of Yangtze Optical Fibre And Cable Joint Stock Limited Company(601869) net profit, of which the largest amount was the fair value change income and investment income of trading financial assets, totaling 366 million yuan.
In the second half of 2021, the supply-demand relationship of the industry improved. In October 2021, China Mobile completed the centralized purchase of ordinary optical cable products, and its total demand and the average price of winning the bid rebounded greatly Yangtze Optical Fibre And Cable Joint Stock Limited Company(601869) said that the supply and demand structure of the industry continued to improve in 2022, and the optical fiber and cable industry entered a growth cycle.
Recently, the volume and price of centralized purchase by operators have increased simultaneously
For the optical fiber and cable industry, the market pressure and opportunities coexist in 2021. On the one hand, the industry demand has stabilized and rebounded. With the steady progress of 5g construction in accordance with the principle of moderate advance, the industry demand has gradually warmed up since 2020, and the revenue in Yangtze Optical Fibre And Cable Joint Stock Limited Company(601869) 2020 and the first half of 2021 has increased by 5.82% and 27.74% respectively.
However, on the other hand, the unit price of products continues to decline, coupled with the rapid rise in the price of raw materials, Yangtze Optical Fibre And Cable Joint Stock Limited Company(601869) ‘s net profit deduction is still declining Yangtze Optical Fibre And Cable Joint Stock Limited Company(601869) the previous performance express said that in the first half of 2021, the optical fiber and cable industry was at the bottom of the cycle, and the rapid rise of the ultimate average unit price of optical cable products and the price of raw materials had a great pressure on the profitability of the company.
After the second half of 2021, the relationship between supply and demand in the industry tends to improve, and the market situation of both volume and price increases appears in the centralized purchase of operators. In October 2021, China Mobile completed the centralized procurement of ordinary optical cable products, and its announced demand scale was about 143 million core kilometers, an increase of about 20% compared with 2020; The average unit price of optical cable established by centralized procurement exceeds 60 yuan / core km, which is significantly higher than about 40 yuan / core km in 2020.
Source: screenshot of announcement
The reporter noted that in the second half of 2021, although the optical fiber and cable industry hit the bottom and rebounded, and the volume and price of centralized procurement by operators rose at the same time, the gross profit margin of Yangtze Optical Fibre And Cable Joint Stock Limited Company(601869) in the first half of the year was 23.24%, and the gross profit margin of the whole year was 19.63%, which further declined. In this regard, on March 26, a relevant person of Yangtze Optical Fibre And Cable Joint Stock Limited Company(601869) Securities Department told the reporter of the daily economic news that the gross profit margin of the whole year included this adjustment, but there was no such adjustment in the first half of the year, because the freight was classified into the operating cost according to an accounting policy answer of the accounting department of the Ministry of Finance in November 2021.
Following the increase in the volume and price of China Mobile’s centralized procurement results, China Telecom Corporation Limited(601728) completed the centralized procurement of outdoor optical cables in January 2022. Under the condition that the total demand is basically the same as that of the previous time, the price is higher than that of China Mobile’s centralized procurement results Yangtze Optical Fibre And Cable Joint Stock Limited Company(601869) believes that this reflects the continuous improvement of the supply and demand structure of the industry, and the optical fiber and cable industry will enter a growth cycle in 2022.
However, the industry may still face market and policy risks Yangtze Optical Fibre And Cable Joint Stock Limited Company(601869) said that the company’s main customers are telecom operators, and the investment demand of operators constitutes the main driving force for the company’s development. If the country’s industrial policies on infrastructure investment such as communication are adjusted under the comprehensive influence of macroeconomic cyclical fluctuations and economic development speed, or the operator’s investment in 5g is less than expected, it will have a negative impact on the company’s business development.
Overseas business income accounted for more than 30% for the first time
As for the product segment, in 2021, Yangtze Optical Fibre And Cable Joint Stock Limited Company(601869) the revenue of optical fiber and optical fiber preform was 2.919 billion yuan, a year-on-year decrease of 1.17%; The revenue of optical cable products was 3.921 billion yuan, a year-on-year increase of 19.26%; Other products and services contributed a total revenue of about 2.697 billion yuan, a year-on-year increase of 36.13%.
The segment with the largest increase in revenue was other products and services, mainly due to the significant increase in overseas communication network engineering revenue and cable revenue in 2021 compared with the previous year. The annual report shows that in 2021, countries continued to strengthen investment in communication network infrastructure construction, and Yangtze Optical Fibre And Cable Joint Stock Limited Company(601869) the overseas business income reached 3.086 billion yuan, accounting for more than 30% of the total operating income for the first time.
In terms of internationalization strategy, since 2018, Yangtze Optical Fibre And Cable Joint Stock Limited Company(601869) has set up a number of overseas offices and production bases, mainly targeting Southeast Asia, Africa, Latin America, etc. In 2021, Yangtze Optical Fibre And Cable Joint Stock Limited Company(601869) also completed the acquisition of Changfei Baolilong in Brazil, and carried out capacity layout in Brazil and Latin America for the first time.
In 2022, the overseas communication market is facing development opportunities, but there are many risk factors in overseas business Yangtze Optical Fibre And Cable Joint Stock Limited Company(601869) said that in 2022, geopolitical tensions intensified; Covid-19 epidemic is still spreading overseas; International transportation costs are rising and transportation capacity is tight; With the continuous introduction of trade protective measures, the above factors will increase the uncertainty and risk of the company’s overseas business and overseas investment.
On the performance of the secondary market, on March 25, Yangtze Optical Fibre And Cable Joint Stock Limited Company(601869) closing price was 26.87 yuan / share, down 2.40%.
