\u3000\u3 Shengda Resources Co.Ltd(000603) 606 Ningbo Orient Wires & Cables Co.Ltd(603606) )
Event:
On March 24, the company released its annual report for 2021. The company achieved a revenue of 7.932 billion yuan, a year-on-year increase of 57%, and a net profit of 1.189 billion yuan, a year-on-year increase of 34%.
Key investment points:
Submarine cable revenue increased by 50%, and marine business accounted for more than 50% for the first time. In 2021, the company’s submarine cable revenue was 3.273 billion yuan, a year-on-year increase of 50%; The revenue of offshore engineering was 809 million yuan, a year-on-year increase of 253%; Land cable revenue was 3.841 billion yuan, a year-on-year increase of 46%. The company’s submarine cable and marine engineering revenue accounted for 51% in total, surpassing the land cable revenue for the first time. The company’s marine business should exceed the land cable revenue and become the largest source of business revenue of the company.
At the end of 2021, the sea wind rush to install, and the proportion of array cables is relatively high. 2021 is the last year for offshore wind power to enjoy subsidies. Therefore, there are many projects rush to connect to the grid at the end of the year. We expect that the proportion of on-site cable delivery is relatively high. In addition, the proportion of the company’s marine engineering revenue increased by 253%, and the proportion in the revenue increased rapidly.
In 2022, the bid for new marine cables has reached 4.9 billion yuan. Since 2022, the company has successively won the bid for Mingyang Qingzhou IV, Yuedian Qingzhou first / second-class sea breeze submarine cable project and other umbilical cable projects, with a total bid winning amount of more than 4.9 billion yuan.
Profit forecast and investment rating we predict that the net profit of the company from 2022 to 2024 will be 1.37 billion yuan, 1.83 billion yuan and 2.39 billion yuan respectively. The company has abundant submarine cable orders and sufficient support for performance growth in 2023. It is covered for the first time and is rated as “buy”
The risk suggests that the copper price has increased too much; The bidding scale of offshore wind power projects is less than expected; The bidding time of offshore wind power project is less than expected; The company’s key project orders were not obtained as expected; The cost of offshore wind power construction fell less than expected
