\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 522 Jiangsu Zhongtian Technology Co.Ltd(600522) )
Key investment points
Company announcement: the company released the annual report of 2021 and the first quarterly report of 2022. In 2021, the company achieved an operating revenue of 46.163 billion yuan, a year-on-year increase of 9.7%, and a net profit attributable to the parent company of 172 million yuan, a year-on-year decrease of 92.43%. In the first quarter of 2022, the company achieved a revenue of 9.290 billion yuan, a year-on-year decrease of 13.32%, a net profit attributable to the parent company of 1.016 billion yuan, a year-on-year increase of 105.69%, and a net profit not attributable to the parent company of 1.043 billion yuan, a year-on-year increase of 90.4%.
The submarine cable business has a high outlook, and the 22q1 business structure has been further optimized. The company achieved good growth in operating revenue and profit in 2021. In terms of business, marine business achieved revenue of 9.419 billion yuan, a year-on-year increase of 101.8%, power grid construction business achieved revenue of 1.116 billion yuan, a year-on-year increase of 11.57%, optical communication and network business achieved revenue of 7.476 billion yuan, a year-on-year increase of 23.05%, new energy materials achieved revenue of 2.088 billion yuan, a year-on-year increase of 38.67%, commodity trade achieved revenue of 10.142 billion yuan, a year-on-year decrease of 36.7%, marine and power grid construction The business trend of optical communication and new energy materials is improving, and the scale of commodity trade continues to decline. The comprehensive gross profit margin was 16.01%, with a year-on-year increase of 2.11 PCT. The fluctuation of product structure and raw materials affected the gross profit margin of each sector. The gross profit margin of marine business was 35.55%, that of optical communication business was 22.47%, and that of new energy business was 15.13%. In terms of expenses, the R & D expense rate increased by 0.29 PCT year-on-year to 3.18%, and other expense rates remained stable. The company made 100% provision for impairment of high-end communication business risk assets throughout the year, reducing the company’s consolidated net profit attributable to the parent company by 2.973 billion yuan. Excluding this impact, the company’s annual net profit attributable to the parent company increased by 38.24%. 2022q1 company benefits from the rapid development of offshore wind power and new energy. At the same time, it takes the initiative to reduce the scale of commodity trade, improve the core manufacturing revenue, and maintain the high-quality growth of the company’s performance. The company is committed to becoming a global energy network solution service provider, and has built a full value chain system of energy network industry based on optical communication network, led by marine economy, new energy as a breakthrough and supported by smart grid.
Product + construction double engine drive, submarine cable faucet sailing in the wind. The company is a leader in the field of submarine cables in China. It has the total integration capacity of marine system engineering integrating submarine cable observation, exploration, submarine cable laying and fan construction. By the end of 2021, the company’s marine business is executing orders of about 7 billion yuan. According to the data of the national energy administration, China’s offshore wind power installed capacity increased by 16.9gw in 2021, including 21 offshore wind power projects served by Zhongtian submarine cable, with a total of 6.29gw, accounting for 37%. Zhongtian offshore engineering services six offshore wind power projects, with a total of 1.75gw of vertical 435 fans, accounting for 10%. In the field of submarine cable, the company’s technology and products are at the leading level in the industry. It has launched a variety of advanced products, such as 66kV collector submarine cable, flexible EHV DC submarine cable, three core 330kV EHV high-capacity transmission submarine cable, dynamic cable and so on. The company will build a new offshore cable manufacturing base from Guangdong Province to Haifeng and Guiwei in the South China Sea, and will continue to build a reasonable production base from Guangdong Province to Haifeng and Haifeng in the South China Sea, radiating the market of Jiangsu Haifeng and Haifeng in the future. In the field of offshore engineering, the trend of large-scale wind turbines is obvious. Major complete machine manufacturers have successively launched large-scale offshore wind turbines of 10MW and above. At present, the company will upgrade and transform the “two types and three ships” to meet the construction capacity of offshore wind turbines of 10MW and below in Jiangsu, Zhejiang, Shandong and other places. At the same time, it will strengthen the joint venture with leading enterprises in the field of wind power to establish offshore engineering companies to diversify and quickly improve the comprehensive capacity of piling, hoisting, operation and maintenance. In addition, the company accelerated its marine business to sea, and won 20 overseas orders totaling US $160 million in 2021. Seven of the world’s top ten oil and gas companies have used Zhongtian submarine cable.
Optical communication continues to pick up, adding new energy + power grid + new materials business layout. In terms of optical communication, under the catalysis of 5g construction and the development of digital economy, the demand for optical fiber and optical cable continues to pick up. In 2021, China Mobile and China Telecom Corporation Limited(601728) centralized procurement of optical fiber and optical cable have achieved both volume and price increases. China’s optical cable industry has entered a benign development stage of moderate growth in demand and gradual liquidation of supply. In 2022q1, due to the implementation of the new operator bidding price, the net profit of many companies in the optical fiber and cable industry in the first quarter increased significantly year-on-year, including Jiangsu Zhongtian Technology Co.Ltd(600522) (YoY + 105.6%) / Yangtze Optical Fibre And Cable Joint Stock Limited Company(601869) (YoY + 141%) / Hengtong Optic-Electric Co.Ltd(600487) (+ 30.3%) / Tongding Interconnection Information Co.Ltd(002491) (+ 338.5%). In terms of new energy, the company accelerated the layout of photovoltaic + energy storage and energy storage. The company focused on lithium battery series products and invested in the expansion of square lithium battery production line related to electric energy storage. Thanks to many years of energy storage system schemes and engineering experience in user side, power grid side, power generation side and other fields, the company carried out the construction of several green energy storage power station projects in an orderly manner. In terms of backup power supply, we focus on the communication supporting base station and focus on the supply of supporting backup power supply system, with the market share ranking among the top three in the industry. In the photovoltaic field, the company actively develops the EPC general contracting business of photovoltaic power stations, continues to increase the number of operation and maintenance power stations and customer groups, and is committed to becoming a full-cycle service provider of photovoltaic power stations. At present, the asset scale of various power stations under operation and maintenance management reaches 500MW. In terms of power grid construction, the company has the advantages of complete industrial chain of transmission and distribution products, and actively participates in the construction of new power system with UHV as the main grid and new energy as the main body. In addition, the company has made progress in many products in the field of new materials, and has independently developed a variety of high-end materials such as high-performance PI film, supercapacitor and high-temperature superconductor. After industrialization, it will bring a new growth pole to the growth of the company.
Investment suggestion: Jiangsu Zhongtian Technology Co.Ltd(600522) is a Chinese optical cable giant, and its submarine cable and optical fiber cable business are in a leading position in China. The company has formed four business lines: optical communication + ocean + power transmission + new energy, all of which benefit from the new infrastructure and carbon neutrality policy planning. The controlling shareholders increased their holdings, demonstrating their confidence in future development. The impairment of relevant assets and credit of the company will be completed in 2021, and the company will be light in the future. Considering the results of the first quarter, we adjusted the profit forecast. It is estimated that the net profit of the company from 2022 to 2024 will be 3.709 billion yuan / 4.582 billion yuan / 5.543 billion yuan respectively (the original forecast from 2022 to 2023: 3.693 billion yuan / 4.475 billion yuan), and the EPS will be 1.09 yuan / 1.34 yuan / 1.62 yuan respectively, maintaining the “buy” rating.
Risk warning: the demand for submarine cables and UHV cables is lower than expected; Risks of intensified industry competition; Risk that the expansion of new energy business is less than expected
