The company's recent situation

The company announced that it won the bid for the Three Gorges Yangjiang Qingzhou 5, 7 ± 500kV DC submarine cable EPC project, with a bid amount of about 1.514 billion yuan. In addition, the announcement also included 1.708 billion yuan for the Guangdong Yangjiang Fanshiyi Cable EPC project, the 0.548 billion yuan order for the Zhejiang Shengsi 220kV submarine cable project, and the 0.216 billion yuan order for the Huarun Lianjiang 66kV submarine cable EPC project. The total bid amount for the 4 projects announced this time is about 4 billion yuan billion yuan.

reviews

It won the bid for the five- and seven-±500kV DC submarine cable orders in Qingzhou, Yangjiang, Guangdong, fully reflecting the company's competitive advantage. The Three Gorges Guangdong Yangjiang Qingzhou 5, 7 ± 500kV DC Project is the second large-scale domestic ultra-high voltage DC transmission offshore wind power project after the Jiangsu Rudong 1.1 GW ± 400kV DC transmission project completed in 2020. It is also the first ±500kV DC transmission project in China. Previously, the project was delayed due to delays in approval. Recently, we have observed that the project is already in the normal start-up phase. We believe that the company's bid for the project has on the one hand enhanced the certainty of the company's performance in 2025, and also fully demonstrated the company's strong competitiveness in the field of ultra-high voltage DC submarine cables. Following the execution of this project, we believe it is expected that the company will increase endorsements for subsequent domestic and overseas UHVDC projects and continue to obtain more high-quality orders.

The company continues to fulfill new domestic orders and has clearly entered the order upward cycle. From the beginning of 2023 to October 2024, before the company won the submarine cable order for the Yangjiang Fanshi 1 project, the company's new domestic orders were weak for nearly 2 years, mainly due to the poor pace of commencement of the downstream sea breeze project. In particular, the ongoing approval of the Yangjiang market project in Guangdong, where the company has an advantage, was slow. As the company has successively won orders for Yangjiang Fanshi 1, Qingzhou 5, and 7 Sea Cable over the past month, we believe that the company has clearly entered the upward order cycle. We expect that the company will continue to receive a large number of domestic submarine cable orders in the next six months to a year or so. At the same time, overseas orders are also expected to continue to be fulfilled after winning the bid for the UK Inch Cape project in July this year.

Profit forecasting and valuation

We are optimistic about the company's new order fulfillment trend during the upward period of domestic and overseas offshore wind power, and keep the company's performance ratings and profit forecasts unchanged. The company's current stock price corresponds to 31.2 and 18.2 times the price-earnings ratio for 2024 and 2025. We maintain the company's target price of 66.47 yuan, which corresponds to 22.0 times the 2025 price-earnings ratio, and has 20.6% upside compared to the current stock price.

risks

The construction progress of the offshore wind power project fell short of expectations; the number of new orders fell short of expectations.