Dongfang Cable (603606) In-depth Report: Inclined sales structure towards submarine cables to boost company profitability

Investment points: First, although the output value of the cable industry in developing countries is relatively long, it has reached 9935 at the end of 2018.

09 ppm, but most of the products are concentrated in the low-end level, the industry’s gross profit margin has decreased, about 3.

5% -5.

3%, and the high-end products represented by submarine cables in the products ranked first among all types of cables with a median gross profit margin of about 39%.

Submarine cables play an important role in cross-sea connections, offshore wind power, and offshore oil and gas surveys. According to public information in 2016, the global offshore wind power market ‘s demand for submarine cables accounts for 47% of the total submarine cable market, which is among the three major marketsWith the highest demand, according to the estimated investment of offshore wind power projects, the demand for offshore wind power offshore cables in 2019 is expected to reach US $ 12.7 billion to US $ 15.6 billion.

  Second, there are only four companies that research and develop and sell submarine cable products in listed companies. The total submarine cable revenue of listed companies in 2018 was about 33.

21 杭州夜网论坛 trillion, accounting for 0% of the total cable market revenue.

3%. In the same year, the gross sales profit of the industry was 40.2 billion, and the total gross profit of submarine cable sales of listed companies was 10.

7.6 billion, accounting for a market gross profit ratio of 2.

67%, submarine cable products have a higher contribution to the industry’s profits.

  3. Dongfang Cable, as a leading company in the upstream cable industry, is also the first company to develop submarine cable business. In 2018, submarine cable sales revenue was 10%.

7.2 billion US dollars, the current market share of the submarine cable is about 30%. From the perspective of the restructuring company ‘s sales structure, the proportion of its submarine cable sales has increased from 7% in 2017 to 36% in 2018.The high profit, the company’s net interest rate also changed from 2 in 2017.

5% rose to 5 in 2018.

7%.

In the future, the company will also continue to increase its investment in research and development of submarine cable cars. At the end of 2017, the company will raise funds through a fixed increase6.

USD 900 billion to develop high-end marine energy equipment cable system projects. It is estimated that the annual output of marine new energy equipment cables will reach 630km, marine power equipment cables 250km, offshore oil and gas equipment cables 510km, and intelligent transportation equipment cables 92,450km., The company will continue to benefit from the development of submarine cable business.

  4. According to the development trend of the company, it is estimated that the company’s operating income for 2019-2021 will be 37.

80, 45.

36, 54.

US $ 4.4 billion, with growth rates of 25%, 20%, and 20% at the beginning of the year, and net profit attributable to mothers was 2 respectively.

44、3.

45, 4.

25 trillion, a growth rate of 46 in ten years.

9%, 41.

18%, 23.

4%, corresponding to EPS (diluted) are 0.

373, 0.

527, 0.

650 yuan, the current industry PE is 20.

11 times, the company’s lowest in the past year is 26 times PE, the highest is 44 times PE, to be conservative, the company is given 25 times PE in 2019, slightly higher than the industry value, corresponding to the target city valuation of 60.

50 ppm with a target price of 9.

25 yuan, give “hold” rating.

  Risk disclosure: risks from tilted business structure; market competition risks; investment projects fail to meet expectations

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