Ping An View:
As the parity window approaches, offshore wind power has broad prospects. According to the recent bidding situation, the development situation of offshore wind power has exceeded the market expectation, the main equipment such as offshore wind turbines have been greatly reduced, and large-scale affordable offshore wind power projects have emerged and opened bidding in succession; As offshore wind power enters the era of parity, the core problem of high cost, which originally restricted the development of offshore wind power, has been resolved, and offshore wind power is expected to become one of the main power sources in major coastal provinces. According to the estimation that offshore wind power will contribute 15% of the power demand of coastal provinces in 2030, the installed capacity of offshore wind power in China will exceed 200GW in 2030, and offshore wind power will usher in a golden age of rapid development.
Demand side: offshore helps to increase the value of submarine cables. Offshore wind ionization is the development trend. Under the AC transmission scheme, the increase of offshore distance will increase the demand for submarine cables; Compared with AC, DC transmission scheme can reduce the cost of submarine cable transmission, but the premise is that the offshore distance is 60-70km or more; On the whole, the value of submarine cable per kilowatt has room for improvement in the future. Assuming that the average offshore distance of China’s offshore wind power projects in 2025 is 40-50km, the estimated cost of submarine cable per kilowatt is more than 1500 yuan, which is higher than the current average level of 1300-1400 yuan. According to the estimation that the new installed capacity of China’s offshore wind power will reach 18gw and the cost of submarine cable per kilowatt will exceed 1500 yuan in 2025, China’s submarine cable demand is expected to reach more than 27 billion yuan in 2025, which is significantly higher than the scale of China’s offshore wind power submarine cable market of 11-12 billion yuan in 2021.
Supply side: high barriers to entry and clear competition pattern. The submarine cable has a long production expansion cycle and high technical difficulty. Relying on years of accumulation, the head enterprise has formed obvious advantages in technology, brand and engineering performance, and relying on these advantages to speed up capacity expansion and strengthen territorial advantages. At present, the market concentration of offshore wind power submarine cable is high, and the leading enterprises occupy the vast majority of the share. It is difficult for new entrants to form a substantive impact on the submarine cable pattern in the short term. Looking forward to the future, the parity of offshore wind power will bring pressure on cost transmission to equipment enterprises. At the same time, the overall supply and demand situation of submarine cable will be looser than that in 2020-2021, and the probability of gross profit rate of submarine cable enterprises will be reduced on the existing basis; However, considering the relatively stable competition pattern of submarine cable and the increase in the proportion of high-end products with relatively high gross profit margin such as DC submarine cable, it is expected that the gross profit margin of leading enterprises will have limited room to decline.
Investment advice. The competition pattern of offshore wind power submarine cable is clear, and the demand is expected to grow rapidly in the future, which belongs to a high-quality growth track; Recommend Ningbo Orient Wires & Cables Co.Ltd(603606) with leading technical strength and share and territorial advantages in Zhejiang and Guangdong. It is recommended to pay attention to Jiangsu Zhongtian Technology Co.Ltd(600522) , Baosheng Science And Technology Innovation Co.Ltd(600973) , Qingdao Hanhe Cable Co.Ltd(002498) , Hengtong Optic-Electric Co.Ltd(600487) and other leading enterprises.
Risk tips: 1. The technological progress and cost reduction rate of offshore wind power are lower than expected, resulting in the parity process of offshore wind power and the future installed capacity lower than expected. 2. 2. In 2022, the new installed capacity of China’s offshore wind power may decline, and the short-term performance of submarine cable enterprises may be under pressure. 3. At present, many enterprises plan to set foot in or increase the scale of submarine cable manufacturing. In the future, it is not ruled out that the competition of submarine cable enterprises will intensify and the profit level will be lower than expected.
