Dongfang Cable (603606): Submarine cable orders continue to land, marine projects contribute incremental
The event company released a semi-annual report for 2019, and accumulated revenue in the first half of the year14.
900 million, a ten-year growth of 7.
5%; net profit attributable to mother 1.
800 million, an annual increase of 220.
1%, net profit attributable to mothers in the second quarter1.
300 million, previously +263.
The increase in net profit attributable to the company far exceeded the increase in revenue, mainly due to the report’s significant increase in the proportion of submarine cables with high gross profit margins; continued until the 2019 interim reporting period.
The company maintains a low debt level (interest bearing rejection rate / total assets).
8%), with sufficient funds in hand (monetary funds / total assets 21).
4%), to provide sufficient guarantee for subsequent capacity expansion and order execution.
Substantial orders for submarine cable projects continued to be won, expanding offshore engineering transformation and perfecting the industrial chain layout In the first half of 2019, the company’s major submarine cable projects shifted to about 13 trillion bids, which was basically the same as the new orders in the first half of 2018, indicating that offshore wind power construction continuedAdvancement and related orders continued to land; until the end of June 2019, the company’s submarine cable order holdings reached 2.6 billion US dollars, which is the basis for the continued growth of subsequent submarine cable business.
In order to develop the offshore wind power industry link, the company and the Three Gorges New Energy, Fushun Investment and other companies jointly invested in the establishment of Dongfang Offshore Engineering Co., Ltd. to cover submarine engineering facilities decoration and offshore engineering design and other businesses.
We believe that through the establishment of an offshore engineering joint venture, the company is expected to further expand the offshore wind power industry chain layout.
Offshore wind power construction maintains a high degree of prosperity, and submarine cable companies are expected to continue to benefit from the addition of offshore wind power to the grid in 20181.
6GW (previously +42.
2%). In the first half of 2019, offshore wind power installations will be about 400MW (more than 150% a year), and internal offshore wind power construction will maintain a high degree of prosperity.
Offshore wind power construction extends from offshore to deeper sea areas with better wind resources. In 杭州夜生活网 early 2019, the offshore distance of Jiangsu Dafeng Project has reached 70KM.
The continuous advancement of offshore wind power construction and its extension to the distant and deep sea regions will further drive the growth in demand for the submarine cable market, and frontline submarine cable companies will help to fully benefit.
Estimates and grades: Considering that the rapid installation of offshore wind power construction in 2019-2021 will promote the rapid growth of offshore wind power capacity, we increase the company’s EPS from 2019 to 2020 to 0.
52 yuan, 0.
70 yuan (previous value was 0.
39 yuan / 0.
65 yuan), plus EPS0 in 2021.
99 yuan, maintain “Buy” rating.
Risk warning: Offshore wind power construction is not up to expectations, and offshore wind power development scale is less than expected.