\u3000\u3 Shengda Resources Co.Ltd(000603) 606 Ningbo Orient Wires & Cables Co.Ltd(603606) )
Event: on the evening of March 24, 2022, Ningbo Orient Wires & Cables Co.Ltd(603606) released the 2021 annual report. In the 21st year, the company achieved a total operating revenue of 7.932 billion yuan, a year-on-year increase of + 57%, and a net profit attributable to the parent company of 1.189 billion yuan, a year-on-year increase of + 33.98%. The company realized an operating revenue of 3.841 billion yuan of land cable system, a year-on-year increase of + 46.02%. The operating revenue of submarine cable system and offshore engineering was 4.082 billion yuan, a year-on-year increase of + 69.54%, and the revenue of submarine cable and engineering accounted for 51.46%.
“Land and sea” strategy promotes the rapid growth of revenue and profit, and the product confirmation structure affects Q4 performance: Overall, in 21 years, the company achieved a total operating revenue of 7.932 billion yuan, a year-on-year increase of + 57%, and a net profit attributable to the parent company of 1.189 billion yuan, a year-on-year increase of + 33.98%. The company realized an operating revenue of 3.841 billion yuan of land cable system, a year-on-year increase of + 46.02%; The company achieved a gross profit margin of 25.34%, a year-on-year -5.21 PCTs, and a net profit margin of 14.99%, a year-on-year -2.57 PCT. In terms of quarters, Q4 achieved an operating revenue of RMB 2.159 billion, a year-on-year increase of + 41.10%, a month on month increase of – 9.54%, and a net profit attributable to the parent company of RMB 227 million, a year-on-year increase of – 17.03% and a month on month increase of – 29.95%. We believe that there are two factors leading to the decline of Q4 company’s performance month on month: 1) affected by the price fluctuation of raw materials; 2) The company confirmed that there were many 35kV submarine cable and land cable products, and the value and gross profit level of these products were relatively low, so the performance fell in a single quarter.
In terms of business, the gross profit of submarine cable system decreased: 1) submarine cable system: the operating revenue was 3.273 billion yuan, a year-on-year increase of + 50.21%, the sales volume was 1419.9 kilometers, a year-on-year increase of + 64.28%, the sales unit price of submarine cable products was 2.355 million yuan / km, a year-on-year decrease of 8.59%, and the gross profit margin was 43.90%, a year-on-year decrease of 9.82pcts; 2) Land cable system: the operating revenue was 3.841 billion yuan, a year-on-year increase of + 45.99%, the sales volume was 159000 km, a year-on-year increase of + 41.10%, the sales unit price of land cable products was 24300 yuan / km, and the gross profit margin was 9.49%, a year-on-year decrease of 2.60 PCTs; 3) Offshore engineering: the operating revenue was 809 million yuan, a year-on-year increase of 253.53%, and the gross profit margin was 25.14%, a year-on-year increase of 1.59pcts.
Offshore wind power is planned to exceed 100gw in the 14th five year plan, and submarine cable is the link with the most investment value: at present, the offshore wind power project planning released by coastal provinces and cities exceeds 100gw. Recently, it has been observed that the wind turbine with the highest cost ratio and offshore engineering expenses have decreased significantly, and the dawn of offshore wind level price has come. It is expected that offshore wind power will increase rapidly during the 14th five year plan. The submarine cable link has high production barriers and excellent competition pattern. We think it is the link with the most investment value in the field of sea breeze.
The orders on hand are full, and the performance in 22 years is safe: the orders on hand of 2021q3 company are about 6.4 billion yuan (3.8 billion for submarine cable + marine engineering and 2.6 billion for land cable). By the end of February 2022, the orders on hand of the company are still as high as 6.311 billion yuan, including 3.510 billion yuan for submarine cable + marine engineering and 2.801 billion yuan for land cable system. After Haifeng’s rush loading, the company still maintains a large number of orders on hand: ① some submarine cable orders in 21 years are carried forward to 22 years; ② In the field of offshore wind power, the company’s ability to get orders is prominent. In the past 22 years, it has successively won the bid of China Resources Power Cangnan 1 (35kV array submarine cable), Mingyang Qingzhou IV, CGN Xiangshan tuci, Yuedian Qingzhou I and Qingzhou II projects, European TenneT offshore wind power and other projects, with a total amount of 4.616 billion yuan. New projects continue to supplement orders in hand. Under the background of the sharp decline in the newly installed capacity of Haifeng with the decline of subsidies, sufficient orders on hand are still expected to support the company’s annual performance.
Risk warning: the installed capacity of sea breeze is less than expected; Risk of sharp fluctuations in raw material prices;
