在手订单规模大幅提升，海缆业务放量在即。24Q1，公司相继中标三峡金山海上风电场一期项目、大唐汕头-南澳勒门I海上风电项目和华能玉环2号海上风电项目，海缆在手订单规模达到9亿。自Q2开始，浙江苍南、福建福州、上海等优势区域均有潜在项目启动招标，公司的在手订单规模有望进一步增加。海缆业务的订单获取和交付规模都将大幅增加。Key points of investment:
Incident: On the evening of March 28, 2024, the company released its annual report for the year 23, and the performance was in line with expectations. In '23, the company achieved operating income of 23.35 billion yuan, an increase of 13% over the previous year; net profit to mother was 420 million yuan, an increase of 16% over the previous year. Q4 achieved revenue of 6.44 billion yuan, a year-on-year increase of 7%, and net profit to mother of 0.2 billion yuan, a year-on-year decrease of 69%.
Cash flow improved markedly in Q4, and cash flow was positive throughout the year. In 23Q4, the revenue side achieved positive growth of 7%/3% month-on-month, and net operating cash flow reached 1.78 billion yuan, driving positive operating cash flow throughout the year (net operating cash flow of -1.32 billion yuan in 23Q1-Q3). In terms of profit, the overall gross profit margin of Q4 was 4.7%, down 1.5pct from Q3. It was mainly due to Q4's implementation of a business strategy to collect payments and guarantee orders, which sacrificed part of the profit. There was no repayment pressure in Q1, and gross margin is expected to recover under business strategy adjustments.
The scale of on-hand orders has increased dramatically, and the submarine cable business is about to expand. In 24Q1, the company successively won bids for the first phase of the Three Gorges Jinshan Offshore Wind Farm project, the Datang Shantou-Nan'ao Lemen I offshore wind power project, and the Huaneng Yuhuan No. 2 offshore wind power project. The current order scale for submarine cables reached 900 million. Beginning in Q2, advantageous regions such as Zhejiang Cangnan, Fujian Fuzhou, and Shanghai have all initiated tenders for potential projects, and the company's ongoing orders are expected to increase further. The scale of order acquisition and delivery for the submarine cable business will increase dramatically.
High-voltage submarine cable products have broken through one after another, and the competitive strength of submarine cables continues to increase. The company delivered the first large-length 220kV transmission cable product in '23, and the 330KV and 500KV ultra-high voltage AC submarine cable products have also obtained qualified product inspection reports and have production capacity. In the future, it is expected to participate in the competition for orders for large-length ultra-high voltage transmission cables for the Shenzhen Ocean Project and occupy a certain share.
Profit forecast and investment advice: Considering that the profit recovery of the land cable business is lower than expected, we expect the company's net profit to be 6.0/7.5/9.2 (previous value was 7.9/9.8/increase) 100 million yuan in 2024-2026, respectively, and PE corresponding to the current stock price is 12/10/8 times, respectively. Considering that the company's submarine cable business is gradually gaining strength, it can contribute to greater profit flexibility as demand for offshore wind power installations rapidly increases. We still give 15 times PE in 24 years, corresponding to a target price of 21.41 yuan/share, maintaining a “buy” rating.
Risk warning: the risk of the company's new base falling short of expectations; the risk of offshore wind power installations falling short of expectations; the risk of increased industry competition; and the risk of rising raw material prices.
