The selection of wind power subdivision track still follows the anti deflation principle, and the submarine cable meets this characteristic: the ASP (single gigawatt) is relatively stable under the large-scale and Far-sea wind power. Specifically, high voltage, flexible DC and other technologies have reduced the unit price caused by the large-scale fan and wind farm, and the competitive pattern is also conducive to the concentration of leaders.
What is the value of submarine cable in sea breeze industry chain?
As the "blood vessel" of offshore wind power transmission, submarine cable has both complexity and importance. As the transmission link of offshore wind power, submarine cable has an important impact on the safety and stability of offshore power transmission. The application environment of submarine cable determines that its water resistance and mechanical performance requirements are higher. At the same time, the failure of submarine cable, especially the sending submarine cable, will affect the operation of the whole wind farm, and the product quality is very important. According to the use link, the submarine cable can be divided into [array submarine cable for power collection line in offshore wind farm] and [transmission submarine cable transmitted to onshore centralized control center]. According to our calculation, the investment of the two accounts for about 10% of the initial investment cost of the offshore wind project (including wind turbine, tower, wind power foundation and construction, booster station, etc.).
What are the technical trends and impacts of submarine cables?
Short term development to higher voltage level: with the large-scale wind farm and fan, the original transmission capacity can not be met. The submarine cable with higher voltage level has more advantages in terms of transmission capacity and reducing the investment cost of the overall project, and the high voltage of submarine cable has become a trend.
The resulting changes: 1) supplement quantity with price: according to our calculation, in terms of quantity - the length of 66kV array submarine cable is reduced by 30% ~ 40% compared with that of 35kV submarine cable, and in terms of price - the cost per kilometer of 66kV submarine cable is about 36% higher than that of 35kV submarine cable. At the same time, 66kV high added value will correspond to higher gross profit to alleviate the pressure brought by cost reduction of the whole Haifeng industrial chain; 2) In terms of competition pattern, as the insulation field strength of high-voltage submarine cables is more concentrated, and the electrical performance of insulating materials is the core challenge to improve the voltage level, the improvement of technical barriers is conducive to the optimization of competition pattern.
Increase in the proportion of flexible and direct submarine cables connected to the grid in the medium and long term: under the trend of far sea wind farm, flexible and direct submarine cables have prominent advantages in transmission capacity and length compared with AC submarine cables. At the same time, the increased converter station cost of flexible and direct transmission system is thinned over a long distance. We expect that the proportion of medium and long-term flexible DC submarine cables in offshore projects will increase significantly.
Summary: 1) quantity: oceanization increases the length of submarine cables sent out by a single project; 2) Advantages: flexible DC submarine cable has higher technical requirements and higher value than AC submarine cable. With the increase of quantity and profit, the investment proportion of submarine cable in the whole sea breeze project is expected to increase, which is a rare sub track of wind power anti deflation. At the same time, the requirements for insulation processing and flexible joints of flexible and straight submarine cables are higher, and the technical barriers make the competition pattern more concentrated.
Medium term market space and investment opportunities of China submarine cable?
Core assumptions: 1) the value of single kilowatt of 35kV submarine cable changes by 3% / - 1% / 1% / 1% / 1% year on year from 21 to 25, and the cost of single kilowatt of 66kV submarine cable is 5% lower than that of 35kV; 2) The 21 / 25 year permeability of 66kV submarine cable is 0% / 30%; 3) The CAGR of new wind farm scale in 21-25 years is 25%; 4) In the 21st / 25th year, the average offshore distance of China's offshore wind power projects is 30 / 60km, the growth rate of single wind farm scale is 20% from 2021 to 2025, and the price change percentage of single kilometer of submarine cable from 2021 to 2025 is 4% / 1% / 2% / 2% / 2% respectively; 5) The gross profit margin of submarine cable is 45% / 40% in 21 / 25 years.
Market space: compared with the sea wind parity, the wind turbine and other links have been greatly diluted. The ASP (single gigawatt) of China submarine cable has not decreased significantly, and even increased by 1% from 2021 to 2025. It is estimated that the CAGR of China's submarine cable industry will reach 26% in 21-25 years, and the market scale in 25 years will reach 32.2 billion yuan, of which the market scale of array submarine cable and outgoing submarine cable will be 12.5 billion yuan and 19.7 billion yuan respectively. The profit margin of China submarine cable is 5.8/12.9 billion yuan in 21 / 25 years, and the CAGR is 22% in 21-25 years.
Competitive advantage?
Competitive elements:
1) product quality is the key to winning the bid, which is reflected in qualification and performance threshold. Submarine cable has an important impact on the safety and stability of offshore power transmission. It is difficult to repair and replace and the cost is high. Therefore, the owner has high requirements for qualification and historical performance during bidding.
2) leading technology is particularly important in the product upgrading stage. The difficulty coefficient of product iteration increases exponentially, the required R & D and production cycle is long, and the leading technical reserve is conducive to manufacturers to occupy the first mover advantage.
3) the solution of the whole life cycle will become a long-term growth point. The general contracting trend of submarine cable procurement and laying is obvious. The industrial system integrating design and R & D, production and manufacturing, installation and laying and operation and maintenance services will become the company's long-term competitiveness.
4) territorial advantages brought by wharf resources. Submarine cable manufacturers need to build special cable transmission trestles to connect the wharf and the plant, and the increasingly scarce wharf coastline resources form a certain barrier to the expansion of new enterprises or original enterprises in the industry. In addition, there is a large gap in the development speed and scale of offshore wind power in various provinces and cities. Submarine cable manufacturers with local production bases in Haifeng project will have more advantages in bidding.
Competition pattern: referring to the European submarine cable market, the industry competition pattern is relatively concentrated. In 2020, China's CR3 accounted for more than 80%. At present, it is difficult for new entrants to break through technical, qualification, performance and other barriers in the short term, but in the long run, if their plant construction and technology accumulation cycle are faster than the technology iteration cycle, and have the territorial advantage of production base, non head enterprises may still have the opportunity. As for the regional layout of manufacturers, as of 2022 According to the completed situation on April 2, 2014, Shandong: Qingdao Hanhe Cable Co.Ltd(002498) , Wanda cable; Jiangsu: Jiangsu Zhongtian Technology Co.Ltd(600522) , Hengtong Optic-Electric Co.Ltd(600487) (capacity about 4 billion), Baosheng Science And Technology Innovation Co.Ltd(600973) ; Zhejiang - Ningbo Orient Wires & Cables Co.Ltd(603606) (planned capacity of 6 billion); Shanwei, Guangdong - Jiangsu Zhongtian Technology Co.Ltd(600522) .
Investment opportunities: Technology iteration period - the Chinese market is or will be in the iteration period of higher voltage submarine cable and DC submarine cable products. The head manufacturers can consolidate their leading advantages with continuous technological innovation and independent research and development. Long term - bidding for the procurement and laying of submarine cables will become a trend, and the whole life-cycle solution of customized design, production, testing, integration, laying and operation and maintenance of submarine cables will also become the embodiment of the comprehensive ability of enterprises in submarine cable business. We believe that submarine cable manufacturers that can reserve technology in advance and provide comprehensive solutions have greater competitive advantages.
Investment advice
Ningbo Orient Wires & Cables Co.Ltd(603606) : high-purity submarine cable targets, leading technology, multi system solutions and enhanced growth.
From 2018 to 2021, the proportion of submarine cable business revenue increased from 35% to 41%. Submarine cable technology and product quality - high voltage AC submarine cable and DC submarine cable have corresponding technical reserves, and 66kV and 500kV submarine cables have won the bid.
In terms of submarine cable capacity - expand production in Yangjiang, Guangdong and Ningbo, Zhejiang, with a planned capacity of 6 / 7.5 billion in 22 / 23 years.
Solutions - the company actively builds an industrial system integrating design, R & D, manufacturing, installation, laying and operation and maintenance services of high-end marine cable products, forms a multi service system solution and strengthens its growth.
It is suggested to pay attention to Jiangsu Zhongtian Technology Co.Ltd(600522) (coverage of communication group): multi sector layout forms the whole marine industry chain, which is expected to blossom in both China and the world in the long term.
Submarine cable technology and product quality - 500kV AC submarine cable and ± 400kV flexible DC submarine cable of the company have been delivered.
In terms of submarine cable production capacity - build two submarine cable production bases in Yancheng, Jiangsu and Shanwei, Guangdong to expand production to meet the demand.
In terms of solutions - the layout of several subsidiaries of the company has been completed. At present, the marine system integrating submarine cable - submarine observation and Exploration - submarine cable laying - offshore wind power foundation construction and wind turbine hoisting has been completed
The layout of the whole industrial chain of the project has been continuously consolidated and improved, and R & D cooperation with European power suppliers is expected to compete in the European high-end market.
Risk warning: the demand of offshore wind power projects is less than expected; Submarine cable technology iteration is not as expected; The calculation is subjective and for reference only.
