\u3000\u3 Shengda Resources Co.Ltd(000603) 606 Ningbo Orient Wires & Cables Co.Ltd(603606) )
Events
In 2021, the company achieved revenue of 7.932 billion yuan, a year-on-year increase of 57%, net profit attributable to the parent company of 1.189 billion yuan, a year-on-year increase of 34%, deducting non net profit of 1.149 billion yuan, a year-on-year increase of 39%. In 2021q4, the company achieved a revenue of 2.159 billion yuan, an increase of 41% year-on-year and a decrease of 10% month on month; The net profit attributable to the parent company was 227 million yuan, a year-on-year decrease of 17% and a month on month decrease of 30%; Deducting non net profit of 195 million yuan, a year-on-year decrease of 23% and a month on month decrease of 40%. The cash flow from operating activities was RMB 757 million, with a year-on-year increase of 439% and a month on month increase of 11445%.
Affected by the product structure, the gross profit margin decreased
In terms of business, the company’s submarine cable system and offshore engineering were driven by the rush of loading in 2021, with a revenue of 4.082 billion yuan, a year-on-year increase of 70%. Among them, the sales volume of submarine cable was 141990 kilometers, with a year-on-year increase of 64%; The average price is 2.355 million yuan / km, a year-on-year decrease of 9%. The gross profit margin of submarine cable was 43.90%, a decrease of 9.82pct over the previous year; The gross profit margin of offshore engineering was 25.14%, an increase of 1.59pct over the previous year. The average price and gross profit of submarine cable fluctuate due to the influence of product structure. At the same time, during rush loading, the ship rental price increased, diluting the submarine cable gross profit margin to a certain extent. The revenue of land cable system was 3.841 billion yuan, a year-on-year increase of 46%. The gross profit margin of land cable was 9.49%, a decrease of 2.60pct over the previous year.
Focus on issuing goods
At the end of the year, 435 million yuan of goods were issued, with a year-on-year increase of 138%, and only 175 million yuan of goods were issued at the end of June of the year. The management expenses increased by 24.75% year-on-year in 21 years, mainly because the company accrued the reward fund, increased personnel and performance bonus according to the OIMS reward fund management measures, resulting in a year-on-year increase of 33.11 million yuan in the overall salary. The R & D cost in the 21st year was 266 million yuan, with a year-on-year increase of 42%, mainly due to the company’s increasing investment in R & D projects such as dynamic submarine cable and ultra-high voltage photoelectric composite submarine cable.
There are sufficient orders on hand and the production capacity continues to expand
By the end of February 2022, the company had orders of 6.311 billion yuan (2.853 billion yuan for submarine cables, 2.801 billion yuan for land cables and 657 million yuan for Offshore Engineering). According to the statistics on the winning of major projects announced by the company, in March, the company has won a total of 1.94 billion yuan for submarine cables and marine engineering, and 520 million yuan for offshore oil and gas umbilical cables. In terms of production capacity, the company’s Beilun qijiashan base plans an annual output value of 3 billion submarine cables; Beilun Guoju (put into operation in September 2021) has a planned annual output value of more than 4.5 billion, submarine cable of 3 billion and land cable of 1.5 billion; Guangdong Yangjiang base (completed in the first half of 2023) has an annual output value of 1.5 billion submarine cables. It is estimated that the company’s production capacity will reach more than 10 billion yuan by 2023.
Profit forecast
Originally, we expected the operating revenue to be 8.859 billion yuan and 9.922 billion yuan in 20222023, and the net profit attributable to the parent company to be 1.632 billion yuan and 1.951 billion yuan. Now, considering the reduction of bidding for rush loading tide projects, the active promotion of offshore wind power projects by all localities during the 14th Five Year Plan period, and the decline of submarine cable gross profit rate caused by sea wind parity, we adjusted the revenue to 8.800 billion yuan, 12.200 billion yuan and 13.5 billion yuan in 20222024, and the net profit attributable to the parent company to be 12.36, 18.74 RMB 2.206 billion, corresponding to 30, 20 and 17 times of PE, with “buy rating”.
Risk tip: the installed capacity of wind power is less than expected, the speed of capacity construction is less than expected, the risk of policy adjustment and the risk of price fluctuation of raw materials.
