Jiangsu Zhongtian Technology Co.Ltd(600522)
Event:
On April 16, Jiangsu Zhongtian Technology Co.Ltd(600522) marine industry group and the Management Committee of Shandong Dongying Economic and Technological Development Zone signed a submarine cable production base project. The project plans to invest 1.5 billion yuan and will form an annual production capacity of 1000km of medium and high voltage AC / DC submarine optical cables and 500km of ultra-high voltage AC / DC submarine optical cables.
Our comments are as follows:
1. The submarine cable base project was signed, and the submarine cable production capacity continued to improve
This time, Dongying signed 22 projects with a total amount of more than 35 billion yuan, involving sea wind design, development, submarine cables, fans, towers, equipment, operation and maintenance, energy storage and other fields. Among them, Jiangsu Zhongtian Technology Co.Ltd(600522) marine industry group is the only submarine cable base project signed. The project investment plan is 1.5 billion yuan, which will form an annual production capacity of 1000km medium and high voltage submarine cables and 500km ultra-high voltage submarine cables. We believe that the submarine cable base project signed by the company and Dongying will further improve the company’s submarine cable production capacity and enrich the high-voltage submarine cable production capacity to match the future or growing demand for high-voltage submarine cables.
2. Forward looking layout of Shandong market and lay the foundation for future orders
According to the energy planning of Shandong Province, 35gw sea breeze project is planned in 2022, and 10GW will be started during the 14th Five Year Plan period. The total installed capacity of Bozhong base in Dongying is 8.5gw, which is one of the three major sea breeze bases in Shandong. This time, Zhongtian actively signed a contract with the Dongying government and made a forward-looking layout, laying a solid foundation for developing Shandong Haifeng market in the future.
3. China’s multi regional layout, consolidating competition barriers and helping rapid growth
Jiangsu Zhongtian Technology Co.Ltd(600522) as the leader of China’s sea breeze submarine cable, it has active layout in Jiangsu (Nantong, Yancheng Dafeng), Guangdong Yuedong (Shanwei Lufeng), Shandong (Dongying) and other large sea breeze bases. In the future, it is expected to form a production capacity of 10 billion submarine cables and an industrial capacity of more than 6 billion Shanghai. It has obvious comprehensive competitive advantages, and the domestic and foreign markets are expected to achieve sustained and rapid growth.
In the short term, the submarine cable bidding of Yangjiang Qingzhou 5, 6 and 7 offshore wind power projects may be launched in the near future. The three major projects use high-voltage submarine cables, and the technical difficulty of high-voltage submarine cables is higher. Jiangsu Zhongtian Technology Co.Ltd(600522) as a leading manufacturer of submarine cables, it may gain some success in the three major projects.
In the medium term, according to the plan of Guangdong’s key construction projects in 2022, new projects such as Shantou lemen (II) and Nan’ao lemen I expansion projects will be started in 2022, with a total of 0.95gw. In addition, the preparatory projects for key construction in 2022 will be 21.4gw, of which all are East Guangdong projects except Zhanjiang Xuwen 0.3gw. The company may gain a large share of orders by virtue of its capacity layout in East Guangdong.
In the long run: according to the provincial plans, the construction scale of offshore wind power may exceed 50gw during the 14th Five Year Plan period, and the overall industry prosperity is high. At the same time, China is rich in offshore wind power resources. According to World Bank, a total of 2982gw of offshore wind power can be developed, with considerable overall growth potential Jiangsu Zhongtian Technology Co.Ltd(600522) is distributed in many places across the country, which may fully benefit from the sustained prosperity of offshore wind power construction in the long run.
Profit forecast and investment suggestions:
On the whole, the company focuses on communication + energy, including optical communication, power transmission, marine business and new energy. Among them: 1) the supply-demand relationship of optical fiber and optical cable continues to improve, showing a continuous upward trend, and the performance elasticity of price rise can be expected; 2) With the joint efforts of the industrial chain, offshore wind power is expected to usher in affordable Internet access in the future. Under the dual carbon goal, the broad space of the industry in the future is expected to be fully released. As the leader of China’s submarine cable & Marine Engineering, the company is expected to fully benefit. At the same time, it pays attention to the company’s capacity layout and globalization layout in the country; 3) With ten years of deep cultivation of new energy and the background of high prosperity of the industry, the company’s energy storage + copper foil + photovoltaic is expected to usher in an all-round and rapid development opportunity; 4) The power business is highly competitive and is expected to fully benefit from the construction of new power system and the growth of power grid investment in the future, which is expected to show a stable and rapid growth trend. It is estimated that the net profit of the company in 22-23 years will be 3.9 billion and 4.7 billion yuan, corresponding to 13X and 11x PE in 22 / 23 years, maintaining the “buy” rating.
Risk tip: the construction of production capacity is less than expected, the commencement progress of offshore wind power projects is less than expected, the fierce industry competition affects the profitability, and the risk of continuous price rise of upstream raw materials
