\u3000\u3 Shengda Resources Co.Ltd(000603) 606 Ningbo Orient Wires & Cables Co.Ltd(603606) )
Matters:
The company released the first quarterly report of 2022. During the reporting period, the company achieved a revenue of 1.816 billion yuan, a year-on-year increase of 25.60%, a net profit attributable to the parent of 278 million yuan, a year-on-year increase of 0.16%, and a net profit of 277 million yuan after deduction, a year-on-year increase of 0.76%. EPS0. 40 yuan. The company’s performance is in line with market expectations.
Ping An View:
Carry forward factors accelerate the pace of submarine cable delivery. In the first quarter, the company realized an operating revenue of 1.816 billion yuan, a year-on-year increase of 25.6%, including 799 million yuan for land cable system, a year-on-year increase of 23.09%, 741 million yuan for submarine cable system, a year-on-year increase of 23.45%, 271 million yuan for offshore engineering, a year-on-year increase of 38.30%, and 56% of the revenue of submarine cable and offshore engineering; Although the first quarter is a traditional off-season, due to carry over factors, the total revenue of submarine cable and offshore engineering in 2022q1 is higher than that in 2021q4. By the end of the first quarter, the company’s inventory scale and contract liability scale were still at a high level, and it is estimated that the second quarter will still be the peak season for submarine cable delivery.
The profit level of submarine cable in the first quarter was at a high level. In the first quarter, the company’s comprehensive gross profit margin was 27.14%, a year-on-year decrease of 2.73 percentage points and a significant increase of 8.68 percentage points month on month. The change of gross profit margin is related to the proportion of submarine cable business revenue and submarine cable shipping structure. Combined with the revenue structure of various businesses, it is estimated that the gross profit margin of submarine cable system business in the first quarter is close to 45%, which is still at a high level.
Expense control is good, and credit impairment affects current profits. With the rapid growth of sales scale, the company’s expense rate was diluted. During the first quarter, the expense rate was 6.4%, down 0.4/1.7 percentage points year-on-year / month on month. The credit impairment loss in the first quarter was 51 million yuan, with a year-on-year increase of 42 million yuan, which was the main reason why the profit growth rate was significantly lower than the revenue growth rate.
The newly acquired submarine cable orders in the first quarter were blowout, and the orders in hand were full. In the first quarter of 2022, the company received about 5 billion yuan of orders related to various submarine cables, including offshore wind power projects in Yangjiang and Zhejiang, umbilical projects of large oil and gas projects, European offshore wind power submarine cable projects and other orders, highlighting the company’s outstanding competitiveness in the field of submarine cables. By the end of the first quarter, the company’s orders on 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; It is expected that the orders related to submarine cables in hand will mainly be delivered in 2022, and the company’s submarine cable business in 2022 has sufficient order guarantee.
Investment advice. Maintaining the company’s profit forecast, it is estimated that the company’s net profit attributable to the parent company from 2022 to 2023 will be 1.344 billion yuan and 1.803 billion yuan, corresponding to eps1.5 billion yuan 95, 2.62 yuan, dynamic pe22 0, 16.4 times. The demand for offshore wind power submarine cable has a large growth space, and the competitiveness of the company’s submarine cable business is outstanding, maintaining the company’s “recommended” rating.
Risk warning. (1) The development of offshore wind power is affected by many factors such as policies, and there are less than expected risks. (2) The delivery of the company’s new submarine cable orders in 2022 is affected by the progress of relevant projects, and there are risks that they cannot be delivered on time and the submarine cable business income in 2022 is less than expected. (3) The profitability of 2022 new submarine cable orders needs to be further verified, and there is a risk that it is lower than expected.
