The leader of the state-owned background cable testing industry, with the only testing capabilities in many industries: national cable testing originated from the cable testing center established by Shanghai Cable in 1983. It is one of the third-party cable testing service organizations with the earliest, widest product range and strongest comprehensive strength in China. It is also one of the few testing institutions in the world that can cover five major cable products: power cables, communication cables and optical fibers, bare wires and bare conductor products, electrical spare wires and cables, and electromagnetic wires (winding wires). For ultra-high-voltage DC cable testing, high-voltage submarine cable performance testing and other high-end testing areas with unique testing capabilities in many industries, complete certification qualifications, preside over and participate in the formulation and revision of industry standards, and master a certain industry voice. The company has strong brand credibility and cable testing technology advantages, is the scarcity target of the cable testing industry.
The company is expected to benefit deeply from the high prosperity of downstream new energy, power and supporting industries: the demand of the cable testing industry involves many links such as the research and development, manufacture and use of cable products, and the investment in the downstream cable application industry drives the production and marketing of the cable manufacturing industry. in turn, drive the growth of testing business demand.
Among its many downstream application fields, the growth of the new energy power industry is the most prominent, which is also the advantage area of the company's cable inspection and testing business, and is expected to benefit deeply:
The rapid development of ① offshore wind power has led to a high boom in wind power installation: the testing needs of high-voltage cables in wind power are mainly concentrated on sea breeze transmission cables. According to Zhongtian submarine cable prospectus and CWEA data, from 2014 to 2020, China's submarine cable delivery volume and sea breeze newly installed CAGR were 62.45% and 60% respectively, and the submarine cable demand was basically synchronized with the growth pace of sea breeze installation. According to the plans of coastal provinces, we expect that the compound growth rate of newly installed sea breeze from 2022 to 2025 is expected to reach 41.5%. The rapid development of sea breeze will bring a large amount of demand for medium and high voltage wires and cables and promote the growth of the cable testing industry.
The construction of ② scenery base catalytic UHV delivery channel investment speed up: the overall planning of China Scenic Base is as high as about 550GW, a batch of 97.05GW has been fully started, and the second batch of 200GW is expected to land during the 14th five-year Plan period. In order to solve the problem of consumption, UHV investment resumes the accelerated pace. According to the data of China Business Industrial Research Institute, the scale of UHV investment will maintain a steady growth from 2021 to 2025, with CAGR reaching 10.98%. The demand for transmission and distribution lines and overhead lines of UHV projects has led to an increase in the demand for cable testing.
As a complete set of new energy generation, the new ③ power grid system is an important part of the investment in the power industry.
The construction of a new power grid system is to promote the evolution of the power system to adapt to large-scale and high-proportion new energy. In addition to the need for UHV absorption system to adapt to large-scale centralized new energy, a wide range of distributed energy needs the integrated development of source network, load and storage. According to the planning of State Grid and Southern Power Grid, the total investment in power grid is expected to exceed 2.9 trillion yuan during the 14th five-year Plan period, an increase of about 13% over the 13th five-year Plan.
Continue to strengthen high-end cable detection capabilities, multi-domain, multi-regional two-hand layout to broaden the growth boundary:
IPO investment project reflects the company's high-end, multi-domain, multi-regional layout development ideas. ① high-end: in the traditional advantage field of power cable testing, the company increases the capacity of ultra-high voltage large capacity test and safety assessment to enhance the competitiveness of ultra-high voltage cable testing, with a corresponding investment of 120 million, accounting for 39.52% of the total investment scale. It is expected to increase income by 45 million yuan and profit by 15.13 million yuan after reaching production. ② multi-field: in the new application field, expand the cable testing capability of high-end equipment, including aerospace, industrial Internet, new energy and other fields, the corresponding investment is about 100 million yuan, accounting for 32.58% of the total investment scale. It is expected to increase income by 43 million yuan and profit by 13.68 million yuan after reaching production. ③ multi-region: set up Guangdong branch, corresponding to 40 million investment, accounting for 13.2% of the total investment scale, forming the laboratory layout of "headquarters-East China" and "branch-South China", effectively expanding the service radius, and expected to increase income by 25 million yuan and profit by 5.648 million. The relative concentration of cable industry in Guangdong is also conducive to radiating Southeast Asian overseas markets, with the continuous improvement of the hardware layout of Guangdong subsidiaries. There is great potential for income growth in the future.
Investment suggestion: it is estimated that from 2022 to 2024, the company's income will be 2.57,3.53 and 476 million yuan respectively, an increase of 17.58%, 37.23% and 34.85% over the same period last year, and the net profit will be 0.87,1.25% and 173 million yuan respectively, an increase of 19.3%, 42.5% and 39.0% over the same period last year, corresponding to PE of 27.5,19.3,13.9% respectively. Taking advantage of the development of the downstream new energy power industry, the company continues to enhance the comprehensive competitiveness of cable testing and enter a period of business expansion, and its market share is expected to increase steadily in the future, covering it for the first time. Give Buy-An investment rating, 6-month target price is 62.4 yuan, equivalent to 30 times dynamic price-earnings ratio in 2023.
Risk hint: the new installation of Haifeng is not as expected, the investment in the power industry, including UHV and new power grid systems, is not as expected, and the construction progress of the company's fund-raising projects is not as expected.
