Introduction to this report:

Maintain profit forecasts, raise target prices, and maintain holdings growth ratings; performance is in line with expectations, driven by grid and marine growth.

Ongoing orders are plentiful, and various businesses are expected to develop rapidly.

Key points of investment:

Maintain profit forecasts, raise target prices, and maintain holdings growth ratings. The company announced the 2024 three-quarter report, and the results were in line with market expectations. We maintain 2024-2026 net profit of 2.738/3.239/3.726 billion yuan, and the corresponding EPS of 1.11/1.31/1.51 yuan. Referring to the industry average, 17.6x PE was given in 2025, and the target price was raised to 23.06 yuan (previous value was 19.50 yuan), maintaining an increase in holdings rating.

Results are in line with expectations, and the grid and the ocean drive growth. In the first three quarters of 2024, the company achieved revenue of 42.399 billion yuan, a year-on-year increase of 20.79%; net profit to mother was 2.314 billion yuan, an increase of 28.32% over the previous year. Considering only the Q3 quarter, the company achieved revenue of 15.8 billion yuan, a year-on-year increase of 32.38%, and net profit to mother of 0.705 billion yuan in a single quarter, an increase of 27.25% year-on-year. By business, the marine business contributed greatly, and the year-on-year increase is expected to exceed 40%. This is mainly due to the fact that Ocean Communications confirmed a large amount of revenue since 2024, while the profitability of marine energy has remained relatively good. The power grid business is expected to maintain steady 15%-20% overall growth as a result of continued investment in power grids over the past 15 years. Both businesses are steady pillars contributing to profit and revenue growth.

Ongoing orders are plentiful, and various businesses are expected to develop rapidly. According to the company's announcement for the third quarter, there are currently about 20 billion yuan of on-hand orders in the energy interconnection sector, including submarine cables, marine engineering, land cable products, etc.; the current sales order amount for the PEACE trans-ocean cable communication system operation project exceeds 0.3 billion US dollars. Orders are full, and various businesses are expected to develop rapidly.

Catalyst: The Sea Breeze project continues to advance, and overseas orders continue to land.

Risk warning: Demand for fiber-optic cables is slowing down, and ocean breezes are falling short of expectations.