\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 522 Jiangsu Zhongtian Technology Co.Ltd(600522) )
Key investment points
The first quarterly report was in line with expectations and laid a high growth tone for the annual performance
In 2021, the company realized a revenue of 46.16 billion yuan, a year-on-year increase of 9.7%, and the net profit attributable to the parent company was 172 million yuan, a year-on-year decrease of 92.4%. The sharp decline in profit was mainly due to the 100% provision for impairment of assets related to high-end communication business, a total of 3.619 billion yuan. After deducting income tax factors, the net profit attributable to the parent company decreased by 2.973 billion yuan. Excluding the impact of impairment, the net profit attributable to the parent company was 3.145 billion yuan, a year-on-year increase of.
The risk of high-end communication business has been fully released, and the company will go into battle with light equipment in 2022. In 2022q1, the company achieved a revenue of 9.29 billion yuan, a year-on-year decrease of 13.3%, which was mainly due to the company’s initiative to reduce the scale of bulk commodity trade business. The net profit attributable to the parent company was 1.016 billion yuan, a year-on-year increase of 105.7%. The performance was in line with expectations and laid the tone of high growth of the annual performance.
Marine sector: with 7 billion orders on hand, the leader fully benefited from the high prosperity of the industry
In 2021, the company’s marine series revenue was 9.42 billion yuan, with a year-on-year increase of 102%, and the gross profit margin was 35.6%, with a year-on-year decrease of 7.3pct. The decline of gross profit margin was judged to be caused by the change of product structure caused by the company’s ability to coordinate marine equipment during Haifeng rush loading. By the end of December 2021, the company’s marine series business was executing orders of about 7 billion yuan, effectively supporting the release of marine sector performance in 2022.
China’s supply performance in the field of Haifeng continues to be outstanding, and the overseas market and umbilical market have achieved excellent development. According to the data of the national energy administration, in 2021, China’s offshore wind power installed capacity increased by 16.9gw, and 21 offshore wind power projects served by Zhongtian submarine cable (6.29gw in total, accounting for 37%); Zhongtian offshore engineering services 6 offshore wind power projects (1.75gw of vertical 435 fans, accounting for 10%).
In 2021, the company won more than 20 orders in Canada, Vietnam, the Philippines, Indonesia, Qatar, the United Arab Emirates and other countries, with a total of about US $160 million. Among them, the 230kV submarine cable EPC project of Philippine national power company is the company’s first 230kV high-voltage EPC performance in the Philippines; The medium voltage submarine photoelectric composite cable project of Qatar oil and gas is the largest submarine cable supply project in the overseas oil and gas industry signed by the company so far; Two projects were executed by TenneT in Germany in 2021. By the end of 2021, the company’s submarine cable supply covers six continents except Antarctica, with a total mileage of more than 20000 kilometers.
In 2021, the R & D team led by the company broke through the key technology of non-metallic armored umbilical cable of ROV in the whole sea. In addition, it won the bid for CNOOC’s “iwocs umbilical system” integration project.
The company actively deployed and expanded production, stabilized its leading position and fully benefited from the sea breeze business cycle.
In terms of submarine cable, the company currently has submarine cable bases in Nantong, Jiangsu, Shanwei, Guangdong, Yancheng, Jiangsu and Dongying, Shandong, with leading production capacity and scale in the industry.
In terms of offshore engineering, the company completed the construction of “two types and three ships” in early 2019. At present, the company will upgrade and transform the “two types and three ships” to meet the construction capacity of 10MW and below wind turbines. At the same time, it will work with leading enterprises in the field of wind power such as Xinjiang Goldwind Science And Technology Co.Ltd(002202) , Haili wind power to build the next generation of offshore wind power installation ships and foundation construction ships suitable for the large-scale and far-reaching localization of wind turbines in the future, so as to diversify and quickly improve the comprehensive capacity of piling, hoisting and operation and maintenance.
According to the data of Polaris wind power generation network in March 2022, the near future plan of China’s offshore wind power has exceeded 150gw, and the “14th five year plan” is nearly 60GW. The production expansion progress of the company’s submarine cable and marine engineering fully conforms to the release of China’s sea breeze construction demand, which is conducive to the company to better grasp the development opportunities of the sea breeze industry in the future, further stabilize the leading position and maintain the sustained and steady growth of the marine sector.
New energy: focus on the two main lines of energy storage photovoltaic and become a new growth engine
In 2021, the company’s new energy revenue was 2.09 billion yuan, with a year-on-year increase of 38.7%, and the gross profit margin was 15.1%, with a year-on-year increase of 7.7pct. The company focuses on two main lines of energy storage and photovoltaic in the field of new energy. At present, it is in the first echelon in the industry in terms of customer base, industrial chain layout, resource reserve and so on.
In the field of energy storage, the company focuses on the R & D and production of lithium battery series products such as low-cost and long-life lithium-ion batteries, high specific energy and large capacity lithium-ion batteries and high-voltage container energy storage system. In 2021, the company will carry out the construction of Hunan Qidong Dama wind power storage 10MW / 20mwh project, Hunan Longshan 10MW / 20mwh wind storage project, Foshan Century Internet data center optical storage EPC project, Rudong user side energy storage power station project and other projects, And invested in expanding the production line of electric energy storage lithium battery.
In the photovoltaic field, the company has transformed photovoltaic resources into EPC general contracting business through cooperation with energy enterprises such as central enterprise power generation group, so as to fully reflect the value of resources. In 2021, the company established a joint venture with Jiangsu Donghe Investment Group Co., Ltd. to obtain the development right of Zhakou photovoltaic resources in Rudong coastal beach; Sign the land resources development agreement with Fengli town to lock in 50000 mu of beach resources in the area; Led the preparation of the roof photovoltaic development pilot scheme in Rudong County and was successfully approved.
At the same time, the company increased industrial chain cooperation, cooperated with China Three Gorges Renewables (Group) Co.Ltd(600905) , Kehua Data Co.Ltd(002335) and other companies to further integrate resources. The development expectation of energy storage and photovoltaic industry driven by carbon neutralization and carbon peak is optimistic. Based on its own advantages, the company focuses on resources in the field of new energy business and aims to “scale photovoltaic industry and integrate energy storage industry”. At present, the energy storage photovoltaic business is progressing smoothly, and the new energy business is expected to become a new growth engine of the company.
Optical communication: optical fiber and cable usher in an inflection point, and the effectiveness of industrial chain layout is becoming more and more obvious
Focusing on the construction of “all-optical network”, the company’s communication network business gives full play to the role of optical communication industry chain. In addition to the advantageous optical fiber and optical cable business, the company continues to improve ICT technology industry clusters such as antenna, optical module, 5g energy integration cabinet, data center, active terminal and so on. At present, the effectiveness of industrial chain layout has been gradually reflected. In 2021, under the background of the year-on-year decline of optical fiber and optical cable prices in 2020, The company’s revenue from optical communication and network business was 7.48 billion yuan, with a year-on-year increase of 23.1%, and the gross profit margin was 22.5%, with a year-on-year decrease of 9.4pct. The decline of gross profit margin was mainly due to the drag of optical fiber and optical cable business.
In 2022, the price of optical fiber and optical cable increased significantly year-on-year. The latest centralized purchase price of optical fiber and optical cable of China Mobile and China Telecom Corporation Limited(601728) increased by 58% and 50% respectively compared with the previous one, while the bidding ranking of optical fiber and optical cable of the company in the centralized purchase of China Mobile and China Telecom Corporation Limited(601728) increased significantly. In addition, the sales of optical fiber and optical cable of the company in South Asia, Latin America, ASEAN and Europe increased steadily in 2021, The overall development of 4G / 5G / optical fiber network construction driven by overseas epidemic catalysis also continues to be optimistic; In 2022, optical fiber and cable are expected to usher in an inflection point, and the profit contribution is expected to increase significantly.
The layout development of antenna, optical module, data center and other businesses is expected to further drive the revenue and profitability of the sector. The company’s feeder and accessory products, ODN and other series of products rank first in the industry in terms of the total amount of centralized purchase and distribution; The antenna has won the bid in China Mobile 700m antenna project and China Telecom Corporation Limited(601728) room sub antenna project; Won the bid for the first centralized purchase of China Telecom Corporation Limited(601728) modular (DC) warehouse project in 2021.
The overseas market has a strong development momentum, which is further conducive to the development of optical communication business. In 2021, the export of the company’s communication products in the overseas market increased by 48% year-on-year. 5g energy-saving cabinets, data centers and optical modules achieved a breakthrough in the overseas market for the first time. The ODN rapid implementation scheme with independent intellectual property rights gave full play to the company’s advantage of the lowest double anti-tariff, took Europe as a key strategic market, and the customized FTTH products were recognized by customers; Successfully won the bid for ooredoo20212023ibs5g material centralized purchase project in Qatar, helping the company expand its 5g room and branch business around the world.
Power grid construction: driven by the construction of new power system, the company is expected to grow continuously and steadily. Focusing on the power business development strategy of “transmission and distribution integration and continuous innovation”, the company focuses on the technology and R & D of high-end transmission power equipment products of new power system, and has formed a complete integrated industrial chain of transmission and distribution. In 2021, the revenue of the power grid construction sector of the company was 11.16 billion yuan, with a year-on-year increase of 11.6%, and the gross profit margin was 13.8%, with a year-on-year decrease of 0.1pct. Under the background of commodity price rise, the gross profit margin was still effectively maintained, reflecting the business strength of the company. The construction of new power system has significantly increased the investment in power grid planning. The cumulative investment in power grid planning during the 14th Five Year Plan period of the State Grid and China Southern Power Grid will exceed 2.9 trillion yuan. Superimposed on the investment planning of China’s local power grid companies, the total investment in national power grid during the 14th Five Year Plan period is expected to be nearly 3 trillion yuan, which will be significantly higher than the total investment in national power grid during the 13th Five Year Plan period of 2.57 trillion yuan.
The company’s products have obvious competitive advantages in the industry. Ordinary conductors, special conductors, OPGW and other products maintain the first market share in the State Grid and South grid system. In 2021, the company won the bid for the full share of UHV large span conductors, which is expected to benefit fully. The power grid construction sector is expected to continue to grow steadily.
Profit forecast and valuation
The risks of high-end communication business have been fully released. The performance of the first quarter report in 2022 has laid the tone of high growth of the annual performance. The marine business is booming / the turning point of optical communication business / the continuous and steady growth of power business / the high elasticity of new energy business. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 3.86 billion yuan, 4.72 billion yuan and 5.7 billion yuan, corresponding to pe1.4 billion yuan 5 times, 11.8 times and 9.8 times, and the rating was raised to “buy”.
Risk warning: the impact of the epidemic exceeds expectations; The price rise of raw materials exceeded expectations; The gross profit margin of submarine cable decreased more than expected; The follow-up development of optical fiber and optical cable is not as expected.
