\u3000\u3 Shengda Resources Co.Ltd(000603) 606 Ningbo Orient Wires & Cables Co.Ltd(603606) )
Investment logic
Sea breeze long cycle boom. 1) It is estimated that the installed capacity of sea breeze will reach 60GW during the 14th Five Year Plan period, and 17 / 7 / 12 / 14 / 17gw from 2021 to 2025 respectively. As 2022 is the first year for the cancellation of national compensation for sea breeze, the installed capacity of sea breeze in 2022 is lower than that in 2021; 2) In 2021, the bidding price of China Resources Cangnan offshore wind turbine unit (including tower) was 4061 yuan / kW, far lower than the bidding price of the project in 2020, 7263 yuan / kW, with an annual decrease of 44%; 3) The "14th five year plan" of all provinces exceeded expectations. Up to now, the published sea breeze planning of each province in the 14th five year plan has reached about 50.39gw.
The submarine cable industry has high barriers to entry, Oligarchic Competition and stable pattern, and the depth benefits from the development of sea breeze. The entry barrier of submarine cable industry is high. At present, Ningbo Orient Wires & Cables Co.Ltd(603606) , Jiangsu Zhongtian Technology Co.Ltd(600522) and Hengtong Optic-Electric Co.Ltd(600487) are in an oligarchic pattern. According to our statistics, in 2020, the total market share of the three companies in the submarine cable bidding scale reached 91%, of which Ningbo Orient Wires & Cables Co.Ltd(603606) reached 36%. In view of the first mover advantages and technological advantages of existing enterprises, the pattern of submarine cable industry is expected to remain stable in the future. Compared with land wind, cable is more important in sea wind construction. Land cable cost accounts for less than 1.5% of the total cost of land wind construction, while sea cable accounts for about 8% - 10% of the total cost of sea wind construction. It is expected to benefit from the development of sea wind in the future.
Company: China's leading submarine cable company, with strong technical advantages and abundant orders in hand. The company is a leading enterprise of submarine cables in China and the only enterprise in China that can master the design and analysis of marine umbilical cables and conduct independent production. It has strong technical advantages. In 2021, the company's submarine cable system + offshore engineering revenue accounted for 51%, and the land cable system revenue accounted for 48%. As of 1q22, 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.
Investment advice
We expect the company to realize net profits of 1.34 billion yuan, 1.91 billion yuan and 2.37 billion yuan respectively from 2022 to 2024, with a year-on-year increase of 13%, 42% and 24% respectively, corresponding to eps1 95 yuan, 2.77 yuan, 3.44 yuan. The current share price of the company corresponds to 21, 15 and 12 times of PE in the three years respectively. According to the P / E ratio method, the overall valuation of 2022 is 25 times, the target price is 48.75 yuan / share, which is covered for the first time, and the rating of "overweight" is given.
Risk tips
Risk of price fluctuation of raw materials and slowdown of industrial investment due to offshore wind power policy
