Dongfang Cable (603606): Offshore Wind Power Enters Burst Period, Submarine Cable Leader’s High Growth Can Be Expected
Investment highlights: The company is a leading submarine cable company in Southeast Asia, leading the high-end market for submarine cables.
The company produces various wires and cables for R & D, production, sales and service, and forms three major business segments: land cable, submarine cable and engineering services.
The company’s technological level is leading the industry. In 2007 and 2010, it produced 110kV photovoltaic composite submarine cables and 220kV photovoltaic composite submarine cables. It broke through the foreign occupation and realized import substitution.The rate is over 40%, and in 2018, it became the only company in the industry with a 500kV submarine cable body and a 500kV soft joint engineering application.
Benefiting from the outbreak of offshore wind power business, the company achieved operating income of 30 in 2018.
2.4 billion, an annual increase of 46.
67%; net profit attributable to mothers1.
71 ppm, an increase of 241 in ten years.
The company achieved operating income of 25 on January 9, 2019.
68 ppm, an increase of 17 in ten years.
32%; net profit attributable to mothers3.
20,000 yuan, an increase of 162 in ten years.
Offshore wind power has entered an outbreak period, and the market space for submarine cables is expected to be about 26.5 billion in the next three years.
Island interconnection was once the main market for submarine cables, and through the acceleration of the development of offshore wind power, submarine cables ushered in a wider market demand.
The baseline offshore wind power since 2017 has ushered in breakthrough progress. In 2018, it added 1.65 million kilowatts of new installed capacity, an increase 四川耍耍网 of 42 throughout the year.
2%, cumulative installed capacity reached 4.44 million kilowatts.
The annual installed capacity of offshore wind power in 2019-2021 is expected to reach 3GW, 4GW, and 5GW, respectively. The corresponding internal submarine cable market space layout is expected to expand the capacity to 26.5 billion yuan.
Submarine cable business orders broke out and is expected to become a new growth point for performance.
With the launch of offshore wind power, the company’s submarine cable orders have exploded. The amount of successful bids for submarine cables has increased by $ 4.5 billion since 2017, of which the amount of successful bids since 2019 has reached 17.
6.8 billion yuan.
With the realization of submarine cable order delivery revenue, the proportion of submarine cable business revenue has increased rapidly. In 2018, the company’s submarine cable system business revenue reached 10.
72 ppm, an increase of 802 in ten years.
61% of the main business income from 6 in 2017.
14% increased to 35 in 2018.
Horizontally expand the rich product series, and initially build the advantages of the entire industry chain.
The company will raise funds in 20177.
1 ‰, currently planning to occupy 6.
31 trillion US dollars to build a high-end marine energy equipment cable system project, is expected to expand the output value of 4.5 billion, while enriching the company’s product line.
At the same time, the company actively extends its engineering services downstream, and has the most advanced domestic large-scale submarine cable construction vessels with the strongest offshore construction capacity. Since 2018, the company has repeatedly won domestic large-scale offshore wind power turnkey projects, with orders amounting to 1 billion ordersIts scale is ahead of its peers, and it further builds the advantages of the entire industry chain.
Coverage for the first time, given an “overweight” rating: through the technical maturity of offshore wind power and the decline in cost, the demand for offshore wind power investment has significantly improved, and the industry has entered an accelerated period.
It is expected that the company will realize net profit attributable to its mother in 19-21.
81 trillion, the corresponding EPS is 0.
19 yuan / share, the current PE corresponding to 19-21 years is 17 times, 12 times and 9 times respectively.
Considering that the company’s future performance increase is mainly contributed by the offshore wind power business, and the company’s assessment is highly correlated with the wind power sector’s estimates, we choose Riyue shares, Hewang Electric, Taisheng Wind Energy and Dongfang Electric in the wind power sector as comparable companies.
The industry average valuation in 2019 is 22 times PE. With reference to the industry average valuation, we give the company 22 times PE in 2019, corresponding to a current total of 27.
The increase rate of 23%. Considering that there is still uncertainty in the rate of expansion of the offshore wind power market, it is prudent to give an “overweight” rating for the first time.
Risk warning: Offshore wind power projects are not up to expectations; submarine cable capacity is not up to expectations.