Following China Mobile and China Telecom Corporation Limited(601728) , China United Network Communications Limited(600050) also announced the bid winner of a new round of centralized procurement of optical fiber and cable products.
On May 20, China United Network Communications Limited(600050) issued the announcement of candidates for winning the bid of China United Network Communications Limited(600050) local network optical cable centralized procurement project in 2022, and a total of 12 manufacturers won the bid, including Hengtong Optic-Electric Co.Ltd(600487) , Jiangsu Zhongtian Technology Co.Ltd(600522) , Yangtze Optical Fibre And Cable Joint Stock Limited Company(601869) , Fiberhome Telecommunication Technologies Co.Ltd(600498) , Tianjin Futong Information Science&Technology Co.Ltd(000836) , and other listed companies.
As one of the important infrastructure of digital economy, optical fiber and cable are regarded as “blood vessels of digital economy”. Due to the advantages of low optical fiber loss, wide frequency band and long transmission distance, “optical advance and copper retreat” has become a general trend.
Previously, due to the overcapacity caused by the expansion of optical fiber and cable manufacturers and the decline in the demand for fixed network construction, the industry began to experience a serious double kill of volume and price in 2019, and the capacity of some optical rods contracted and withdrew.
At present, the industry’s capacity expansion has slowed significantly. Stimulated by the accelerated development of the digital economy and the policy of “taking a moderate first strategy in the construction of communication infrastructure”, the optical fiber and cable industry is expected to usher in a new wave of demand and drive the price to bottom up.
▌ the scale of centralized purchase of operators continues to grow, and suppliers are no longer involved in the price war
with the accelerated development of 5g and gigabit optical network, the demand of operators for optical fiber and cable is increasing year by year among the three major operators in China, China Mobile has the largest centralized procurement scale. According to the bidding announcement for centralized procurement of ordinary optical cables from 2021 to 2022, the estimated scale of ordinary optical cables to be intensively procured is 4.4705 million skin kilometers, equivalent to 143.2 million core kilometers, an increase of 20% compared with 2020 and 36% compared with 2019.
China United Network Communications Limited(600050) the centralized procurement of optical cables is 1.44 million skin kilometers. According to Tianfeng Securities Co.Ltd(601162) calculation, the corresponding length is 34.56-51.84 million core kilometers, with a median of 43.2 million core kilometers plus the previous 143 million core kilometers and China Telecom Corporation Limited(601728) 431 million core kilometers intensively purchased by China Mobile, the three operators have collected more than 220 million core kilometers in total
In terms of price, Tianfeng Securities Co.Ltd(601162) previously estimated that the average bid winning price of China Telecom Corporation Limited(601728) excluding tax is about 72.4 yuan / core kilometer, about 12% higher than the price of 64.9 yuan of China Mobile; While China United Network Communications Limited(600050) this tender offer ranges from 2.391 billion yuan to 2.748 billion yuan, Tianfeng Securities Co.Ltd(601162) said that if estimated by the median price, the unit price is about 63.6 yuan / core kilometer according to the previous bidding results of China Mobile’s common cable, the bidding price of China Mobile’s common cable in 2021 increased by more than 50%. The China United Network Communications Limited(600050) bidding price remains stable compared with the bidding price of China Mobile
In fact, after nearly fierce price competition in recent years, all parties in the industry are actively calling for rational competition. According to the previous report of c114 communication network, industry insiders revealed that China Mobile has made important changes in the bid evaluation method, and the price score has decreased from 50% to 40% in the previous two years. At the same time, the downward guiding middle price method has been introduced to guide manufacturers to make rational quotations; The proportion of technical score increased from 20% to 30%, and more attention was paid to the quality of products.
Tianfeng Securities Co.Ltd(601162) analyst Wang Yihong said that looking forward to the future, the demand side will benefit from the growth of traffic, East digital West computing and Gigabit broadband, showing a sustained and stable growth trend, while the production expansion progress of supply light rods has slowed down significantly after the previous cable bidding price has been halved, and even we expect the supply will shrink slightly thereafter. Therefore, it is judged that the relationship between supply and demand will continue to improve and is expected to achieve the balance / tight balance between supply and demand, in the next two years, the price of optical fiber and cable is expected to rise steadily, and the price of raw materials also begins to fall. Therefore, the profitability of optical fiber and cable can be continuously improved .
Citic Securities Company Limited(600030) analyst Huang Yayuan also said that the rising volume and price of centralized purchase results of Chinese operators confirmed the arrival of the inflection point of industry prosperity and was optimistic about the continuous growth of industry demand.
▌ leading companies are expected to benefit first
Judging from the bid winning results, seven companies have become suppliers of three major operators in China at the same time, with the highest share and higher bid winning price:
Tianfeng Securities Co.Ltd(601162) previously commented on the implementation of centralized procurement of China Telecom Corporation Limited(601728) : from the bid winning results, the top five shares are Zhongtian, Hengtong, Changfei, Futong and beacon, and the bid winning prices of the top five are also the highest this result reflects that the centralized purchase of the industry restricts vicious competition, promotes benign development, and is conducive to the head manufacturers to obtain a high share
Citic Securities Company Limited(600030) believes that process research and development, product delivery, upstream and downstream bargaining power and overseas layout are very important for the future development of optical fiber and cable enterprises. The overall scale effect of industry is significant, so it is recommended to pay attention to the leading companies in the industry
several of the above winning companies have realized the layout of the whole industry chain of rod fiber cable . Among them, Jiangsu Zhongtian Technology Co.Ltd(600522) offshore wind power business continues to be booming, and new energy business is expected to grow rapidly Hengtong Optic-Electric Co.Ltd(600487) is the leading manufacturer of offshore wind power, with high barriers to marine communication and leading market share.
Since the low point on April 27, the companies whose share price has increased by more than 20% include Yangtze Optical Fibre And Cable Joint Stock Limited Company(601869) , Shenzhen Sdg Information Co.Ltd(000070) , Jiangsu Zhongtian Technology Co.Ltd(600522) , Hengtong Optic-Electric Co.Ltd(600487) , of which Yangtze Optical Fibre And Cable Joint Stock Limited Company(601869) first quarter net profit has more than doubled year-on-year and revenue has achieved positive growth year-on-year. In the first quarter, there are Tianjin Futong Information Science&Technology Co.Ltd(000836) , but their share price has increased later.
