\u3000\u3 Shengda Resources Co.Ltd(000603) 606 Ningbo Orient Wires & Cables Co.Ltd(603606) )
Event: the company released its annual report for 2021. The company achieved a total operating revenue of 7.932 billion yuan, an increase of 57% over the same period last year; The net profit attributable to the parent company was 1.189 billion yuan, an increase of 33.98% over the same period last year; Deducting non net profit of 1.149 billion yuan, an increase of 39.44% over the same period of last year; The basic earnings per share was 1.81 yuan, an increase of 33.09% over the same period last year.
The gross profit rate declined slightly and is expected to remain stable this year. The company’s annual gross profit margin was 25.34%, a year-on-year decrease of 5.21 percentage points. We believe that the main reason for the decline of the company’s gross profit margin is still affected by the rise of copper price. At present, the copper price remains high for consolidation, and there is little room for subsequent upward growth. In addition, the company basically locks the copper price of submarine cable orders. At the same time, the new base is equipped with special cable production capacity, which can improve the gross profit margin of the company’s land cable products. In the future, the company will continue to expand the production capacity of high-end products. Therefore, the gross profit margin is expected to remain stable this year.
New production capacity was gradually released, and submarine cable revenue maintained growth. The company’s revenue of submarine cable system and marine engineering was 4.082 billion yuan, a year-on-year increase of 1.674 billion yuan, an increase of 69.54%. The proportion of the company’s marine industry sector in the annual revenue exceeded 50% for the first time, reaching 51.52%. Among them, the company’s submarine cable revenue was 3.273 billion yuan, with a year-on-year increase of 50.21%. In 2021, the company’s eastern (Beilun) base · future factory was successfully put into operation, the southern (Yangjiang) base was officially started, and the new production capacity was gradually released, which will continue to maintain the growth of the company’s submarine cable revenue.
The company has full orders in hand to ensure high performance. By the end of February 2022, the company’s orders on hand were 6.311 billion yuan, including 2.853 billion yuan for submarine cable system, 2.801 billion yuan for land cable system and 657 million yuan for offshore engineering. In March, the company newly signed submarine cable orders of Zhejiang Xiangshan, Qingzhou phase I and phase II, hollandsekustwest beta and other offshore wind power projects of about 3 billion yuan. It is estimated that the orders in hand have reached about 9 billion yuan, ensuring that the company’s submarine cable revenue will continue to grow at a high speed.
Profit forecast and investment suggestions. The company’s submarine cable, umbilical cable and other businesses have broad market space. The company focuses on the horizontal expansion of the cable industry. In the future, the optimization of product structure will improve the company’s profitability. We expect the company’s performance in the next three years to be RMB 1.345/13.80/1.695 billion respectively, maintaining the “buy” rating.
Risk tip: the company’s capacity climb is lower than expected; In 2022, the demand for offshore wind power orders decreased significantly and the utilization rate of the company’s submarine cable capacity decreased; The change of submarine cable supply and demand pattern brings the risk of excessive decline in product price.
