\u3000\u3 Shengda Resources Co.Ltd(000603) 606 Ningbo Orient Wires & Cables Co.Ltd(603606) )
Event overview: on April 22, the company released the first quarterly report of 2022. During the reporting period, the company achieved an operating revenue of 1.816 billion yuan, a year-on-year increase of 25.60% and a month on month decrease of 15.88%; The net profit attributable to the parent company was 278 million yuan, an increase of 0.16% year-on-year and 22.47% month on month; Net profit deducted from non parent company was 277 million yuan, with a year-on-year increase of 0.76% and a month on month increase of 42.59%; The basic earnings per share is 0.4 yuan. Affected by the epidemic, the collection of some customers of the company was delayed, resulting in a year-on-year decrease of 36.83% in monetary funds and a year-on-year increase of 35.84% in accounts receivable in the quarter. Accordingly, the provision for credit impairment loss increased, about 51.23 million yuan, a year-on-year increase of 461.99%.
The profitability improved significantly month on month.
In terms of profitability, according to the company’s annual report for 21 years, the gross profit margin of 21q4 was 18.46%, with a year-on-year and month on month decrease of 11.5pcts and 6.8pcts respectively, and the net profit margin was 10.53%, with a year-on-year and month on month decrease of 8.7pcts and 3.1pcts respectively; According to the first quarterly report of the company for 22 years, the gross profit margin was 27.14%, increased by 8.68 PCTs month on month, and the net profit margin was 15.33%, increased by 4.8 PCTs month on month; The gross profit margin is expected to improve significantly month on month, mainly due to the increase in the proportion of submarine cables with high gross profit in the income structure.
The submarine cable business grew steadily with sufficient orders on hand.
From the perspective of segment revenue, 22q1 company realized the revenue of land cable system of 799 million yuan, a year-on-year increase of 23.09%; The revenue of submarine cable system was 741 million yuan, a year-on-year increase of 23.45%; The revenue from offshore engineering was 271 million yuan, a year-on-year increase of 38.30%; The revenue from submarine cable and offshore engineering accounts for about 55.7%. By the end of the reporting period, the company’s orders in hand were 9.187 billion yuan, including 5.464 billion yuan for submarine cable system, 2.884 billion yuan for land cable system and 839 million yuan for offshore engineering.
Investment suggestion: we expect the company’s revenue from 2022 to 2024 to be RMB 9.372 billion, RMB 12.210 billion and RMB 14.442 billion respectively, with a growth rate of 18% / 30% / 18%; The net profit attributable to the parent company was 1.305 billion yuan, 1.905 billion yuan and 2.327 billion yuan respectively, with a growth rate of 10% / 46% / 22%, corresponding to 23x / 16x / 13X PE in 22-24 years, maintaining the “recommended” rating.
Risk warning: downstream demand is less than expected; The price of upstream raw materials fluctuates violently, and the industry competition intensifies.
