Report summary
Company Overview
The company is a domestic optical cable supplier and is headquartered in Changzhou City, Jiangsu Province, China. The company's customers mainly include national and regional telecom network operators and telecom mitigation service providers in China. According to Freedonia data, in terms of sales, the company was the 10th largest supplier in the domestic communication cable market in 2015, with a market share of about 3.2%.
The optical cables produced by the company can be used in traditional applications in the telecommunications industry (such as mobile communication networks, Internet networks and fixed line networks), and can be installed under various conditions, including overhead, direct burial, pipeline and air blown installations. On a smaller scale, the company also manufactures and sells supporting products, such as (i) copper communication cables for local telephone networks and (ii) copper enameled wires used as windings for various electrical appliances such as transformers; and (b) sales of optical cable ancillary products such as optical fiber connectors purchased from third parties.
The company's 2013-15 revenue/net profit CAGR reached 52% /122.55, respectively. As of May 31, 2016, revenue/net profit increased 58.5%/92.1% year-on-year to 320 million/36.49 million yuan respectively.
Status and prospects of the industry
Domestic internet and mobile infrastructure continues to be upgraded.
The commercialization of 2020 E 5G in China will drive demand for optical cables.
Freedonia expects domestic telecommunications cable shipments to reach 7.8% in 2015-20E CAGR.
Advantages and opportunities
Long-term stable relationships with major customers.
Provide comprehensive product development and production solutions.
A management team with rich industry experience.
Weaknesses and risks
Competition in the industry is fierce.
Client concentration risk.
The accounts receivable period is long.
valuations
We calculated the company's historical price-earnings ratio in 2015 according to the prospectus price range of about 12.5-15 times, which is higher than the Hong Kong industrial manufacturing industry average of 8-10 times. We gave the company an IPO rating of 5.