A cable veteran with a rich technical heritage. The company was founded in 1994. With more than 30 years of construction, it has established good sales channels and strong R&D capabilities, and has been selected as one of the “Top 100 Enterprises in China's Cable Industry” for many years in a row. The company specializes in power cables and wire and cable products for electrical equipment. It has a Shanghai academician expert workstation and the Shanghai Enterprise Technology Center, has obtained more than 130 national invention patents and utility model patents, and has established close industry-university-research partnerships with universities such as Shanghai Jiao Tong University and Harbin Institute of Technology, as well as research institutes and research institutes such as the Shanghai Cable Research Institute. In 2019-2021, the company's revenue CAGR reached 57.12%, and net profit CAGR after deducting non-return to the mother reached 44.98%. In the context of the industry where land cable supply is oversupplied and competition is intensifying, revenue growth is still strong.

A new submarine cable rookie won an order for a high voltage submarine cable for the first time, starting a new stage of growth. Looking at deep-sea chemistry in the long run is the trend of ocean wind development. As the “blood vessel” of the sea breeze, we expect the size of China's submarine cable market to reach 41 billion yuan in 2025. Under the high winds of the sea, the company seized the opportunity to enter the high-value-added submarine cable sector. In March 2023, with its deep technical heritage, the company won the Shandong Peninsula North BW project, breaking the order for 220kv high voltage submarine cable for the first time. As a local enterprise in Shanghai, it is also promoting the expansion of Guangxi and Shandong regions. It is expected that in the future, the company will continue to strengthen its ability to take orders with its territorial business advantage and embark on a new stage of growth.

Submarine cable production capacity is expanding at an accelerated pace, and future performance can be expected. In February 2023, the company announced that it would change the Guangxi submarine cable production base from Beihai to Fangchenggang, raising the total investment to 2 billion yuan, shortening the overall construction cycle of the project to 2.5 years, and increasing the acceleration of investment and construction of the submarine cable production base. It is expected that as orders continue to break through and production capacity is released at an accelerated pace, the company's submarine cable performance can be expected.

As a cable veteran and rookie of submarine cables, the company won orders for high-voltage submarine cables for the first time and increased the expansion of submarine cable production capacity. Under the high sea breeze, future growth is highly certain. We expect the company's EPS to be 1.00, 1.70, and 2.46 yuan respectively in 2022-2024. Referring to the adjusted average valuation of comparable companies in 2023, the corresponding target price was 23.8 yuan, giving a “buy” rating for the first time.

Risk warning

New offshore wind power installations fell short of expectations; industry competition intensified; the expansion of fund-raising capacity fell short of expectations; the risk of large fluctuations in raw material prices; the risk of asset and credit impairment; and changes in assumptions affected the calculation results.