Incident: Wanma Co., Ltd. announced the signing of a “Strategic Cooperation Agreement” with Sinopec, deciding to form a deep and comprehensive strategic partnership to further deepen cooperation in the fields of production, marketing, research and use by integrating their respective advantages in terms of resources, technology, logistics, and platforms. The agreement is valid until December 31, 2026.
The two sides have achieved cooperation in various fields, including the guarantee and supply of raw materials. (1) The two sides are actively expanding the space for cooperation and expanding the scale of cooperation on LDPE, LLDPE, HDPE and EVA products. Sinopec gives priority to insuring Wanma's demand when resource supply is tight; Wanma gives priority to procuring and using Sinopec products under the same conditions. (2) The two sides comprehensively promote the upgrading of cable raw materials through measures such as joint research and development of new products, customized production of products, and construction of joint laboratories. The two sides are promoting cooperative development of ultra-high voltage cable materials, and are jointly developing 110kV and above ultra-high voltage cable bases on Shanghai Petrochemical LDPE1 series devices. (3) Explore joint venture cooperation opportunities to carry out chemical industry chain integration projects, and use synergy effects to effectively reduce the comprehensive costs of the upstream and downstream industrial chains. (4) Wanma participated in the Sinopec wire and cable tender project. Sinopec established cooperation with Wanma's Vietnam factory to jointly develop and service overseas markets, including but not limited to the export of raw materials and cooperation in overseas wire and cable projects. (5) Sinopec helped promote cooperation between Wanma and Sinopec related business sectors on the Sinopec charging station project to form business collaboration.
The strategic agreement favors the company's multiple business development. In terms of wires and cables, Wanma is expected to work with Sinopec Marketing and International Trade to jointly develop overseas markets to help Wanma Cable to cooperate in overseas projects; in terms of polymer materials, the company's high-pressure material production capacity is 2/40,000 tons in 22-23, respectively, and production capacity is expected to expand to 60,000 tons by 24.
This cooperation is expected to further improve the quality of Wanma's high-voltage materials, guarantee the supply of raw materials, and there is a possibility of cooperative expansion of production capacity in the future to achieve import substitution of high-voltage cable insulation materials; in addition, joint development in overseas markets will also help accelerate export substitution of Wanma polymer materials. In terms of charging piles, Sinopec's charging station project cooperation is expected to help Wanma charging pile performance grow and move towards profit goals.
Investment suggestions: The company is expected to achieve net profit of 650/851/1,223 million yuan in 23-25, +58.2%/30.9%/43.8% over the same period, and EPS of 0.63/0.82/1.18 yuan, maintaining the “buy” rating.
Risk warning: The progress of production capacity construction falls short of expectations; demand in the wire and cable industry falls short of expectations, etc.