\u3000\u3 Shengda Resources Co.Ltd(000603) 606 Ningbo Orient Wires & Cables Co.Ltd(603606) )
Event:
On April 22, 2022, the company released its first quarterly report, with an operating revenue of 1.816 billion yuan, a year-on-year increase of 25.60%; The net profit attributable to the parent company was 278 million yuan, a year-on-year increase of 0.16% and a month on month increase of 22.44%.
Key investment points:
The main business grew significantly, and the submarine cable revenue increased. In the first quarter of 2022, the company achieved an operating revenue of 1.816 billion yuan, a year-on-year increase of 25.60%, a gross profit margin of 27.14%, and a month on month increase of 8.68 percentage points. Among the operating revenue, submarine cable revenue was 741 million yuan, a year-on-year increase of 23.45%; Land cable revenue was 799 million yuan, a year-on-year increase of 23.09%; The revenue from offshore engineering was 271 million yuan, a year-on-year increase of 38.3%. The first quarterly report of the company shows that due to the impact of the epidemic in China, the collection of some customers has been delayed, resulting in an increase in accounts receivable and an impact on operating cash flow.
The operating profit increased by 18% year-on-year. During the reporting period, the net profit attributable to the parent company was 278 million yuan, a slight increase of 0.16% year-on-year, but the operating net profit was about 338 million yuan, a year-on-year increase of 18%. In the first quarter, the company's changes in fair value and credit accrual increased by 51 million year-on-year. Among them, Western Securities Co.Ltd(002673) fixed increase resulted in a loss of 9 million due to changes in fair value, and receivables increased by 1.4 billion yuan year-on-year, resulting in an impairment of 51 million. After recovering the above effects, the company's operating net profit in the first quarter was about 338 million yuan, in line with expectations.
It is estimated that the gross profit margin of submarine cable business will recover to about 45%, and sufficient orders will support the performance. Assuming that the gross profit margin of land cable and marine engineering business is the same as that in 2021, we can calculate that the gross profit margin of submarine cable business in the reporting period is about 46%. According to our calculation and estimation, by the end of 2021, the company's submarine cable and offshore engineering had orders of 2.39 billion yuan (excluding tax, the same below). A total of 1.012 billion yuan was delivered in the first quarter, and 1.37 billion yuan remains to be delivered, which is expected to support the performance in the second quarter. At the same time, by the end of March 2022, the company's orders in hand were 9.187 billion yuan, including 5.464 billion yuan for submarine cables, 839 million yuan for marine engineering and 2.884 billion yuan for land cables. Among the new orders, 1.629 billion yuan is expected to be delivered this year. We believe that the company's annual submarine cable delivery is expected to exceed 4 billion yuan. During the reporting period, the company continued to expand its overseas business and announced to carry out foreign exchange hedging business.
Profit forecast and investment rating we predict that the company will realize net profits of 1.37 billion yuan, 1.83 billion yuan and 2.39 billion yuan from 2022 to 2024. The company has abundant submarine cable orders. We believe that the performance growth in 2022 is supported and maintain the "buy" rating.
The risk suggests that the copper price increases too much, resulting in the price can not be transmitted to the downstream; The bidding scale of offshore wind power projects is less than expected; The bidding time of offshore wind power project is less than expected; The company's key project orders were not obtained as expected; The cost of offshore wind power construction fell less than expected
