(Report Producer/Author: Tianfeng Securities, Tang Haiqing, Jiang Jiaxun)
. Deeply engaged in the optoelectronic industry for 20 years, and perfected the layout of the optoelectronic industry chain. The company was restructured and established in 1994, and established in Shanghai in 1997 is listed on the stock exchange and is the first privately-owned listed company in China's optical cable industry. The company is a core enterprise of Yongding Group . It has continued to work hard in the field of communications. For more than 20 years, the industrial chain has been continuously expanded. It has developed from the initial single communication cable manufacturing to now covering optical communications ( optical fiber cable One of the industry's leading companies in providing optical rods, optical modules /devices/chips, communication equipment, etc.), power cables (wires and cables, superconducting materials, automotive wiring harnesses, etc.), as well as engineering and system integration solutions.
Yongding Co., Ltd. continues to focus on innovation and is determined to continuously achieve new leaps and bounds. It has innovation platforms such as a national enterprise technology center, a national postdoctoral research station, and a national CNAS accredited laboratory. It insists on driving business with R&D and supporting the market with technology. Independent research and development as the core development strategy. The company is committed to building "Hundred Years of and Yongding ".
1.1. Internal and external extension, solid foundation, steady business development
internal and external extension to create full industry chain coverage. Yongding Co., Ltd. was established in 1994. It initially started in the optical cable industry, and its optical communication business continued to expand, and then began to get involved in the power industry in 2002. The company continues to expand its business and enters the overseas engineering industry and superconducting industry through professional subsidiaries. In 2015, the company entered the automotive industry by acquiring Shanghai Jinting Automotive Wiring Harness Co., Ltd. and . In 2016, it acquired Beijing Yongding Zhiyuan Network Technology Co., Ltd. again to enter the big data industry. Through endogenous and external expansion, a complete industrial chain layout will be gradually formed.
focuses on the two major industrial sectors of light and electricity and has laid out four major industrial directions. The company is involved in four major industries, namely communication technology, overseas engineering, automobile industry and superconducting industry. The four major industries closely revolve around the company's two major industrial layouts of light and electricity, and around the optical industry chain, forming a business layout including rod fiber and cable manufacturing, optical devices, optical modules, optical chips , big data and 5G messaging; around the electrical industry chain, laying out wires and cables, automobile wiring harnesses, overseas power engineering, and superconducting industries.
professional subsidiaries cover different fields and optimize the management system. Yongding Co., Ltd. has a number of subsidiaries, covering multiple communication business fields, including Shanghai Jinting Automotive Wiring Harness Co., Ltd. (production and sales of automotive wiring harnesses), Shanghai Yongding Optoelectronics Technology Co., Ltd. (optical devices and other products). Improve management efficiency through the subsidiary business unit model.
The company has consolidated its main business, its new business layout has entered the harvest period, and it is expected to usher in new leapfrog development opportunities. For a long time, the company has been deeply involved in its main business. Focusing on the direction of the optoelectronics business, it has steadily deployed several major business areas. With international development as the direction, relying on strategy and talents, and focusing on technological innovation, it is committed to continuous breakthroughs in various business areas to become stronger. We will continue to achieve new leaps and bounds by focusing on fiber optic cables, making sophisticated optical devices, implementing superconducting applications, improving system integration capabilities, and innovating overseas layout.
1.2. The equity structure is stable, and the new equity incentive shows confidence in future development.
The company’s equity structure is stable. As of November 24, 2021, Yongding Group’s equity shareholding ratio is 29.74%, and the remaining shareholders’ shareholding ratios are all 5%. the following.
equity incentives mobilize employees' enthusiasm and demonstrate confidence in future development. In November 2021, Yongding Shares announced the 2021 restricted stock incentive plan, which plans to grant 34.9723 million restricted shares to incentive targets, accounting for 2.53% of the company's total share capital when the draft incentive plan was announced. The incentive targets include a total of 138 directors and deputy general managers of the company, core technical personnel, key business personnel and senior executives of the company's business divisions (subsidiaries), as well as some reserved equity. Equity incentives cover a wide range and strengthen the long-term development motivation of the company's core team.
equity incentives have set higher performance unlocking conditions to demonstrate confidence in future development.The performance requirements for equity incentive unlocking are that the net profit from 2021 to 2023 is no less than 150 million yuan, 300 million yuan and 400 million yuan respectively (excluding the impact of equity incentive expenses). This equity incentive will boost employee morale and provide impetus for the company's rapid development.
1.3. Operating income grew steadily, and returned to the growth track after the short-term impact factors were eliminated.
The company focuses on the layout of the industrial chain in the communications field and continues to expand its business. The company has been deeply involved in the industry for 20 years and has accumulated rich business technologies. At the same time, it actively explores new fields and seizes market opportunities. At present, the company's traditional optical communications main business is expected to usher in an inflection point in development. Focused areas such as automotive wiring harnesses and overseas projects have begun to become important performance drivers. Strategically reserved superconducting and other business directions are expected to add new impetus to the company's growth.
From the perspective of overall revenue and net profit attributable to the parent company, the company's overall operating income has grown steadily in recent years. There was a slight decline in 2020, with operating income of 3.285 billion yuan, a year-on-year decrease of 2.54%, mainly due to the deterioration of the international environment and intensified industry competition. and the impact of the epidemic. In terms of net profit, the company achieved a net profit of -560 million yuan in 2020, a year-on-year decrease of 2686.19%. The main reason is that 1) the optical communications industry was affected by the new crown epidemic and the industry cycle, and the order volume of the three major operators, its main customers, dropped significantly, and The bidding price dropped significantly. Due to the drop in bidding price, the inventory was tested for impairment at the end of the period. made a provision for inventory decline of 19.97 million yuan. 2) Automotive wiring harness business orders were less than expected and provision for inventory decline and production equipment were made. Fixed asset impairment provision . 3) Suzhou Botany Electrical System Co., Ltd. profit decreased and investment income decreased. 4) Overseas projects are greatly affected by intensified industry competition + the epidemic. 5) Shanghai Jinting and Beijing Zhiyuan made goodwill impairment provisions of RMB 137.4847 million.
However, the above reasons are mainly short-term adverse factors. As these adverse effects gradually subside, the company returned to the growth track in the first three quarters of 2021. In the first three quarters of 2021, it achieved operating income of 2.814 billion yuan, a year-on-year increase of 25.64%, and achieved net profit attributable to the parent company 141 million yuan, a year-on-year increase of 192.25%. Looking forward to the future, the optical communication business will benefit mainly from the increase in optical cable bidding volume and price, the automotive wiring harness business has increased demand for traditional models + key breakthroughs in new energy high-voltage wiring harnesses, the impact of the overseas engineering epidemic has gradually been eliminated, orders have continued to be landed, and strategic reserve businesses such as superconductors have grown steadily. The company The business will enter a new development track.
Judging from the company's main business structure, the company's three major business segments: optical cables and communication equipment, automotive wiring harnesses, and overseas engineering account for more than 90% of the operating revenue. Among them, the proportion of overseas project contracting has been increasing year by year, which is due to the company's continuous expansion of overseas markets and vigorous development of international business. In terms of automotive wiring harnesses, the revenue share has declined in the past two years, mainly due to the adverse effects of business development in the past few years such as slow release of new models and annual product declines. The overall downward trend in optical cables, electrical cables and communication equipment is related to the company's continued development of new business areas.
From the perspective of gross profit margin and net profit margin. The company's gross profit margin and net profit margin continued to decline from 2018 to 2020, mainly due to the decline in gross profit margin caused by intensified competition in overseas projects and the impact of Shanghai Jinting's annual automobile reduction policy and rising raw material prices. In 2020, the company's gross profit margin and net profit margin fell sharply. The main reason is that overseas engineering business was affected by the epidemic, costs increased, and newly developed markets such as , Tanzania, have relatively low profit margins; in addition, the bidding price of optical cables in 2020 decreased, and automobile wiring harnesses Orders are less than expected, old projects are declining every year, new projects have not yet been put into mass production, resulting in lower gross profits, and multiple impairment provisions are made, which all have an impact on the company's gross profit margin and net profit margin.
Entering 2021, the company's early impairment provisions have been fully accrued, and the short-term adverse effects of the main business segments have gradually been eliminated, and the automotive wiring harness business has made breakthroughs. The company's gross profit margin and net profit margin have rebounded significantly. As the company's main business operations continue to improve, the company Gross profit margin and net profit margin are expected to be further optimized in the future. Looking at the gross profit margin of
segmented business.The company's various businesses have basically experienced a sharp decline in 2020. The main reasons are mentioned above. We believe that the optical cable business is expected to gradually weaken its impact on overseas projects with the recovery of bidding prices, the development of the automotive wiring harness business and the overseas epidemic. As the impact subsides, the company's gross profit margins across all businesses are expected to recover quickly.
From the perspective of the company's various expenses, the company's sales expenses, administrative expenses, and financial expenses in 2020 were 108 million yuan, 202 million yuan, and 80 million yuan respectively, and the expense rates were 3.27%, 6.15%, and 2.43% respectively, of which administrative expenses The reasons for the significant increase in the rate are: 1. Sun Electric Power Energy incurred RMB 20 million in preliminary consulting fees for the 100MW fishery-light complementary photovoltaic power generation project in Chenghai District; 2. The last equity incentive offset management expenses of RMB 9.5922 million; 3. Optoelectronics Group Improve product competitiveness and recruit a large number of management personnel to increase salary expenses by 3.187 million yuan. Shanghai Jinting laid off employees due to sporadic relocation, and successively paid out economic compensation in total of 3.41 million yuan; 4. The company's special cable R&D building and related The production equipment and other equipment put into use in 2020 will increase the depreciation of fixed assets by 3.85 million yuan, and the newly purchased land and sporadic decoration will increase the amortization by 3.0767 million yuan; the company's lease of the headquarters building of Yongding Group will increase the rental fee by 1.52 million yuan; 5. The company in 2020 The annual litigation fees and consulting fees increased by RMB 4.0718 million compared with the previous year. The reason for the significant increase in financial expense ratio is: exchange losses caused by fluctuations in the US dollar exchange rate.
2021Q3 The company’s three major expense ratios all showed a downward trend. We believe that as the company continues to control expenses and after the company handles several temporary events that affect management expenses, the company's three major expense ratios are expected to stabilize and decline, thereby reducing the company's period costs and ensuring net profit margins.
From the perspective of the company’s fixed assets. The continuous expansion of the company's business is accompanied by the investment in projects under construction and the transfer of fixed assets. In 2019, the company's projects under construction increased by nearly 300 million yuan, mainly due to the new investment of 192 million yuan in the optical rod project and the new investment in the special cable project. Investment of 32.9744 million yuan and new investment in superconducting R&D building. Since then, the company has focused on its main business segments, expanded production capacity, increased R&D investment, etc., and continued to invest in projects under construction. In 2021Q3, the company's projects under construction reached 903 million yuan.
company continues to increase research and development and deepen its competitiveness in multiple fields. The company has always adhered to independent research and development innovation, and the amount of R&D investment and the proportion of main business income have continued to rise. In 2020, the company's R&D investment amount was 191 million yuan, accounting for 5.80% of main business income.
2.5G In the context of large-scale construction and traffic expansion, the future of the optical communications industry is promising.
2.1. 5G Large-scale construction and broadband upgrade and expansion will promote continued high growth in traffic.
Network construction continues to advance, and the number of base stations is growing steadily. According to the 2020 Communications Industry Bulletin of the Ministry of Industry and Information Technology, the three domestic telecom operators and China Tower completed a total fixed asset investment of 407.2 billion yuan in 2020, an increase of 11% over the previous year, and the growth rate increased by 6.3 percentage points year-on-year. In 2020, there was a net increase of 900,000 mobile communication base stations across the country (a decrease of 48.3% year-on-year in 2019), with the total number reaching 9.31 million. The total number of 4G base stations reaches 5.75 million, providing deep coverage in urban areas. 5G network construction is advancing steadily. In accordance with the principle of moderate advancement, 580,000 new 5G base stations have been built, and 710,000 5G base stations have been opened. The 5G network has covered cities at or above the prefecture level and key counties and cities across the country. As of the end of June 21, the total number of mobile phone base stations reached 9.48 million, a net increase of 170,000 from the end of the previous year. Among them, the total number of 4G base stations is 5.84 million, accounting for 61.6%; the total number of 5G base stations is 961,000, of which 190,000 were newly built from January to June.
The scale of mobile phone users remains stable, and the number of 5G users is expanding rapidly, driving network traffic to maintain rapid growth. According to data from the Ministry of Industry and Information Technology, as of the end of June, the total number of mobile phone users of the three basic telecommunications companies reached 1.614 billion, a net increase of 19.85 million from the end of the previous year. Among them, the number of 5G mobile terminal connections reached 365 million, a net increase of 166 million from the end of the previous year. Mobile Internet traffic has grown significantly, and the DOU value in the first half of 2021 remains at a high level.According to data from the Ministry of Industry and Information Technology, in the first half of 2021, the cumulative traffic of mobile Internet reached 103.3 billion GB, a year-on-year increase of 38.6%, achieving four consecutive months of accelerated growth. Among them, Internet traffic through mobile phones reached 98.9 billion GB, a year-on-year increase of 37.4%, accounting for 95.8% of the total mobile Internet traffic.
accelerate the construction of broadband network. According to data from the Ministry of Industry and Information Technology, as of the end of June 2021, the number of Internet broadband access ports nationwide reached 982 million, a net increase of 35.63 million from the end of the previous year. Among them, the number of optical fiber access (FTTH/O) ports reached 918 million, a net increase of 37.9 million compared with the end of the previous year, and the proportion increased from 93% at the end of the previous year to 93.5%. Gigabit broadband deployment is accelerating, and 10G PON ports are entering a period of rapid construction.
The total length of optical cable lines is steadily increasing. According to data from the Ministry of Industry and Information Technology, as of the end of June 2021, the total length of optical cable lines nationwide reached 53.52 million kilometers, a net increase of 1.828 million kilometers from the end of the previous year. Among them, the proportions of access network optical cables, local network relay optical cables and long-distance optical cable lines were 63.5%, 34.4% and 2.1% respectively; the access network optical cables had a net increase of 1.928 million kilometers compared with the end of the previous year, and their proportion increased by 2 percentage points year-on-year. Promote further optimization and upgrading of optical fiber networks.
2.2. The supply and demand structure of optical fiber and cable continues to improve, and the industry is expected to enter a new round of business cycle
In October 2021, China Mobile released an announcement on the winning bidders for general optical cable centralized procurement in 2021-2022. The average winning price of optical cables was 64.49 yuan/ core kilometers. The scale of this centralized procurement of , China Mobile and is 142.3 million core kilometers, an increase of approximately 19.4% compared to the 119.2 million core kilometers of centralized procurement in 2020. The demand in 2020 is an increase of approximately 13.5% compared to the 105 million core kilometers of centralized procurement in 2019. . The growth rate of optical fiber demand is further upward, reflecting that the large-scale construction of 5G/high traffic growth and capacity expansion drive the demand for optical fiber and cables to continue to grow rapidly, and the future trend is expected to continue.
Looking at the supply and demand structure of fiber optic cables, previous price drops have led to the contraction and withdrawal of some optical fiber rod production capacities. However, demand continues to grow rapidly, and the marginal supply and demand pattern is expected to continue to improve. 1) Supply side: The last round of domestic optical rod new capacity release is coming to an end, and prices continue to decline and are under pressure, and small and medium-sized production capacity is expected to exit; 2) Demand side: Looking to the future, new technologies driven by 5G/cloud computing/Internet of Things/AI A cycle of high traffic growth will drive a new boom in optical fiber demand. In the future, the supply and demand relationship will gradually improve, and the industry is expected to enter a new boom cycle.
Infrastructure construction needs to proceed appropriately, and the optical fiber and cable industry is expected to continue to pick up. Vice Premier Liu He pointed out that "the construction of infrastructure and should be carried out appropriately ahead of schedule", including former Minister of Industry and Information Technology Miao Wei who pointed out that "a moderately advanced strategy should be adopted in the construction of communication infrastructure". We believe that optical fiber and cable are important carrying pipes for communication infrastructure, and the industry Demand is expected to continue to pick up, and profits from the optical fiber and cable business are expected to recover steadily.
Faced with the sluggish price of domestic operators’ optical fiber and cable market and the excessive proportion of operators’ orders, in the second quarter of 21, the company began to focus on promoting the expansion of domestic non-operator markets and overseas markets. By June 2021, among the optical cable orders that month, the total proportion of non-operator and overseas orders had increased to nearly 50%. The inversion of prices and costs prompted the company to transform the original sales structure and make it more reasonable.
In terms of industrial layout, the company has accelerated the progress of the Yongding special optical fiber project (polarization-maintaining optical fiber, laser optical fiber, multi-mode optical fiber project), and strives to complete the project by the end of 2021 based on project establishment, environmental assessment, and core equipment selection. Factory and other infrastructure construction work is required. It is guaranteed to enter the installation and commissioning period in the first quarter of 2022. The advancement of the Yongding Special Fiber Project will help improve the industrial layout, fill the company's gaps in the field of special fibers, and enhance the company's comprehensive market competitiveness.
2.3. Extend the layout of optical modules, , and optical chips to open up greater room for growth.
focuses on the optical communication industry chain and further expands the layout of the optical module, device, and chip industry chain, breaks through core technologies, and accelerates to seize the commanding heights of the industry.With the rapid development of cutting-edge technologies such as , artificial intelligence, , the Internet of Things, and 5G communications, as well as the accelerated expansion of large-scale data centers, the expansion and upgrading of bearer networks has promoted the expansion and upgrading of bearer networks. While bringing massive demand for optical devices and , the transmission speed of information systems has also increased. The requirements are getting higher and higher, and the optical communications industry will usher in a new round of critical period for technology and product upgrading and development. Whether it has optical chip process technology and the industrialization capabilities of the technology has gradually become the main basis for judging the competitiveness of my country's optical communications industry. In order to adapt to changes in market demand and industry technological progress, the company has successively established Suzhou Xinding Optoelectronics Technology Co., Ltd. and Suzhou Dingxin Optoelectronics Technology Co., Ltd. to focus on the research and development and mass production of 5G transport network core chips, devices and module products. 5G Large-scale construction will bring about tens of millions of demand for bearer network optical modules, and the company is expected to fully benefit.
company's optical communication industry chain extends from rods and cables to optical modules/devices/chips, with strong business synergy. At the same time, the company relies on existing optical device packaging and testing technology to continue R&D and upgrade existing technologies to form chip industrialization capabilities. The company deepens school-enterprise cooperation and continues to strengthen research and development in the field of optical communications. On March 17, 2021, Nanyou Yongding 5G Application Technology Research Institute was officially unveiled. It will carry out research on 5G-related key technologies, seize the commanding heights of industry competition in the "5G new infrastructure", empower the industry to develop high-quality , and enhance Market competitiveness, improve the company's overall profitability, and help accelerate the domestic replacement process of 5G optical communication chips (Report source: Future Think Tank)
. Automotive wiring harness: New energy drives high-voltage demand, and the company is expected to fully benefit.
3.1. Automotive wiring harness is. The important connection carrier for automotive electronics
Automotive wiring harness is the network main body that connects automotive circuits. There are a large number of electrical equipment and electronic and electrical components in the car. In order to make the entire vehicle wiring neat, easy to install, and protect the wires, there are a large number of cables, wires, etc. on the car. , wrapped by insulating materials into bundles, called automobile wiring harnesses. Automobile wiring harnesses are made by selecting the shortest path between electrical appliances and wrapping several wires in the same path with insulating tape. They are made of low-voltage and high-voltage wires of different colors. , as well as connectors, terminals , insulation wrapping materials, etc.
3.2. The development of automobile intelligence + new energy vehicles has led to a significant increase in the value of automobile wiring harnesses.
With the development of automobile technology and user experience needs, the pursuit of a sense of technology is pursued. , automobile products continue to add more entertainment, interactive, and experience systems, bringing a large number of new in-vehicle electrical equipment, so the number and demand for supporting automobile wiring harnesses continue to increase. The current "new four modernizations" of automobiles are leading important changes in the automobile industry. , user experience systems, entertainment systems, interactive systems and active safety functions are constantly being improved. Car functions will become more diverse and complex, and the electronic modules and electrical equipment installed in cars will continue to grow at an unprecedented rate. It will be accompanied by the increase in demand for automobile wiring harnesses.
The development of new energy vehicles will bring more demand for high-voltage wiring harnesses. Due to the structural characteristics of new energy vehicles, batteries are the main energy source, so there is a demand for more high-voltage wiring harnesses. The high-voltage wiring harness in the car mainly provides high-voltage power supply to the vehicle. It is a high-safety component in new energy vehicles and has the characteristics of large voltage/large current, large number of large diameter wires, etc.:
1) High voltage, large Current: The battery voltage of new energy vehicles can reach 600V, and the corresponding wire withstand voltage level can reach 300A, while the voltage resistance level of traditional fuel vehicle battery wires is less than 60V;
2) The demand for large wire diameters has increased: new energy vehicles have high voltage batteries and inverters. , transformers, low-voltage batteries, air-conditioning compressors, and other parts all need to use large diameter wires, and the quantity is very large;
3) challenges such as safety, wiring, sealing, weight: high voltage and high current are very important for new energy vehicles The safety and sealing of automobile wiring harnesses pose greater challenges. Wiring design and weight reduction also have an important impact on the performance and reliability of new energy vehicles.
The technical requirements for automotive wiring harnesses for new energy vehicles have increased significantly, driving a substantial increase in the value of bicycle wiring harnesses. The characteristics of high-voltage wiring harnesses for new energy vehicles also determine that they face challenges such as safety, wiring, shielding, weight, and cost. They have a high technical threshold. The single-vehicle value of high-voltage wiring harnesses is also higher than that of fuel vehicles. According to EV WIRE data, the average value of a new energy vehicle wiring harness is about 5,000 yuan, of which the high-voltage wiring harness system is worth about 2,500 yuan. The traditional passenger car wiring harness varies according to the model grade. The single value of the general automobile wiring harness is 2,500, 3,500, and 4,500. Yuan does not vary.
New energy vehicles have entered a period of heavy growth, which will drive the continued growth of the automotive wiring harness industry. According to BNEF predictions, electric vehicles will dominate the future, battery electric vehicles will account for more than 50% of new car sales, and new energy vehicles will become the main application model in the world. In September 2020, China's new energy vehicle sales growth reached 67.7% year-on-year. According to forecasts from the Qianzhan Industry Research Institute, sales of new energy vehicles will reach 8.07 million units in 2025. The rapid increase in sales of new energy vehicles and the increasing proportion of new energy vehicles will drive the continued rapid growth of the overall market demand for automotive wiring harnesses.
3.3. The company has been deeply involved in the automotive wiring harness industry for many years, with continuous expansion of traditional models and key breakthroughs in new energy vehicles.
The company is involved in the automotive wiring harness business through its wholly-owned subsidiary Shanghai Jinting Automotive Wiring Harness Co., Ltd., and its main products include body assembly wiring harness, electrical Injection engine wiring harness, instrument panel wiring harness, etc. Shanghai Jinting Automotive Wiring Harness was established in March 1997. Since its establishment, the company has successively won the titles of "Shanghai High-tech Enterprise", "Shanghai Quality Management Award", "Shanghai Famous Brand", "Shanghai Brand Enterprise", and "Shanghai Brand Enterprise". "AAA Credit Enterprise", "Shanghai AAA Enterprise for Observing Contracts and Valuing Credit", "Shanghai Class A Tax Credit Enterprise", "Shanghai Model Collective", "National Workers Pioneer" and other honors.
At the same time, Shanghai Jinting jointly established Suzhou Portney with Sumitomo Electric Bodenez Europe Co., Ltd. in 2004 to further improve the layout of the automotive wiring harness market. Shanghai Jinting Wire Harness has a shareholding ratio of 40%, and Suzhou Portney It is an associate subsidiary of a listed company.
Jinting Automobile’s revenue remained above 1 billion yuan. Negative factors such as the epidemic in 19-20 were gradually eliminated, and it turned losses into profits in 21. From 2019 to 2020, the operating income and net profit of Shanghai Jinting Wire Harness experienced downward pressure. In terms of net profit, it suffered losses for two consecutive years from 2019 to 2020. This was mainly due to the annual decline in product prices of old projects and the lack of mass production of new projects, resulting in revenue and gross profit. decline, and at the same time, provisions for inventory depreciation and fixed asset impairment provisions have been made, which has a certain drag on profits. In 2020, the company also faced the adverse impact of the epidemic, with production shutdowns, personnel isolation, etc. leading to a significant increase in personnel costs. In the first half of 2021, Jinting Automobile Company turned losses into profits, achieving operating income of 578 million yuan and net profit of 16.0262 million yuan. New traditional automobile wiring harness projects continued to increase, and new energy vehicle orders made major breakthroughs, pushing the automobile wiring harness business into a new stage of development. track.
The revenue scale of the associated company Suzhou Botany also remains above 1 billion yuan, and it remains profitable and contributes stable investment income. Suzhou Botany's revenue grew steadily from 2016 to 2019. In 2020, it faced a decline due to the impact of the epidemic and production shutdowns, but it still remained above 1 billion yuan and remained profitable. With the continued development of the automotive wiring harness industry and the gradual weakening of the impact of the epidemic, Botany's revenue and profits are also expected to improve rapidly. The profits achieved in the first half of 21 have exceeded the full year of 2020.
Jinting Wiring Harness maintains in-depth cooperative relationships with many well-known car companies in the field of traditional automotive wiring harnesses. Shanghai Jinting Automotive Wiring Harness Co., Ltd. main service customers include famous automobile manufacturers such as SAIC General Motors, SAIC Volkswagen , Volvo Cars , as well as Cummins , Yanfeng Adient, Faurecia and other car companies. business. The company has a good cooperative relationship with its customers, and its products are recognized by customers. It has won many awards such as "Best Product Supplier".The company works closely with large automobile companies and major suppliers to lay the foundation for long-term development.
company's new projects in the automotive wiring harness business continue to be implemented. In the first half of 2021, it participated in the quotations of nearly 40 domestic and foreign projects and secured 14 project appointments, including the Huawei project, Human Horizons electric vehicle high-voltage vehicle wiring harness project, Xiaoju (Didi) project, SAIC Volkswagen vehicle wiring harness project and new generation engine wiring harness project, part of the American Cummins project, part of SAIC GM project.
New energy high-voltage wiring harness has made key breakthroughs. The company has cooperated with many new energy vehicle companies/suppliers such as Huawei, Human Horizon, and new car-making forces. The new energy wiring harness business is expected to focus on expansion. In 2021, the proportion of new energy vehicle wiring harness revenue will gradually increase. promote. The company's newly introduced high-voltage automated production line in 2020, applying high-voltage MES system, planning AGV and RFID technology, etc., has now entered mass production and is running in good condition, which has greatly improved the company's automation in high-voltage wiring harnesses for new energy vehicles. Manufacturing capabilities. In the future, the company's automotive wiring harness business is expected to usher in a two-wheel drive of new projects + new energy high-value projects, and the adverse effects such as short-term epidemics will be quickly eliminated, thereby achieving sustained and rapid growth in revenue and profits.
. Overseas power engineering orders are abundant, and the Belt and Road Initiative helps the company grow In the domestic communication product market, the company has a market foundation of more than 20 years, especially in the operator market for many years, with a solid market foundation. Domestic offices except Tibet have achieved Full coverage. The company continues to deeply explore overseas markets, and has joined forces with well-known enterprises such as SF Express Tyson Holdings (Group) Co., Ltd. to jointly deploy overseas supply chains, lay out a global network, and integrate global resources. In the process of continuously meeting the comprehensive needs of customers, we achieve win-win results with our partners.
Yongding's overseas power engineering sector is targeting emerging markets in countries along the "Belt and Road" such as Southeast Asia and East Africa, and has continuously innovated and upgraded " general contracting " to " general contracting + finance", "general contracting + government double excellence", "General Contracting + Operation" business model. Yongding Taifu, the main company engaged in overseas projects, was rated as one of the first batch of Jiangsu provincial key service trade enterprises (project contracting and construction services).
In recent years, as our country’s economy has maintained a high level of development and its participation in and influence on international market competition has continued to increase, overseas markets have gradually become an important growth pole for our country’s enterprises. Since the establishment of "Jiangsu Yongding Taifu Engineering Co., Ltd." in 2008, Yongding has officially entered the overseas engineering industry and deepened its layout, thereby opening the door to overseas markets and gradually gathering overseas competitive advantages.
On the one hand, Yongding focuses on "business-oriented" team management, strengthens the training of technical backbones, and creates "elite soldiers and strong generals." At present, the teams responsible for overseas projects generally have the advantages of rich execution experience, excellent ideological quality, and solid capabilities, and have been fully recognized by project owners, shareholders, team employees, local governments, etc. In order to maintain the collective sense of honor, team members live up to expectations and adhere to the original business aspiration of "being specialized, refined, and strong". They insist on growing and making progress together with the company for a long time, and ensure the smooth development of overseas engineering projects with high standards and high quality.
On the other hand, a team that is able to fight and has experienced hundreds of battles cannot do without the support of platform operations. With more than 40 years of sustained operating capabilities, Yongding has built a tens-billion-scale platform and introduced a team-shareholding cooperation mechanism to build an "all-employee integration" cooperation system, which has greatly stimulated the subjective initiative and creativity of team members. All parties have formed a long-term trust foundation, achieved full authorization for project execution, and improved market response efficiency and competitiveness.
Company's overseas projects have been operating steadily for a long time. As of the end of June 21, all projects were completed and delivered on time and with high quality, without any disputes. On June 24, 2021, the Nepal Electricity Authority (NEA) Samundratar project undertaken by the company successfully transmitted power and received a letter of commendation jointly signed by the Prime Minister of Nepal, the Minister of Water Resources and Energy, and the President of the National Electricity Authority.
In addition to the Nepal project, Yongding has executive projects in 12 countries along the Belt and Road, some of which have been successfully delivered. There are 42 general contracting projects with a contract value of nearly US$3 billion. For example, the country’s “Two Excellent Projects” were successfully contracted and delivered, China’s first commercial buyer’s credit project in Bangladesh (financing behavior China Export-Import Bank ), Bangladesh’s first 400KV UHV power transmission and transformation project, etc., through high-quality services The successful delivery with high quality and quantity on time has been highly recognized by many owners in the host country.
In the first half of 2021, overseas power engineering revenue and profits increased significantly year-on-year, mainly due to the tenacity and persistence of the execution team to rapidly promote major projects under execution, especially the Bangladesh US$331 million Khulna Power Station Project and the US$1.14 billion Khulna Power Station Project. USD Bangladesh National Grid Upgrading Project.
However, affected by the overall sluggish international economic situation, sharp rise in raw material prices, and fierce competition from a large number of Chinese-funded enterprises going global, the company's new business volume declined significantly in the first half of 2021. Due to the current high degree of uncertainty in the external environment and the risks brought by the epidemic, the progress of the projects being executed has been greatly affected. Under the current situation, the company adjusts its strategy in a timely manner, bids for new projects prudently and securely, stabilizes and taps into existing markets, focuses on existing projects in a refined manner, delivers high-quality projects on time to build reputation, and ensures ample cash flow. At present, the company's major projects on hand are as follows:
(1) The Khulna 200-300MW dual-fuel combined cycle power plant project in Bangladesh started construction in May 2019. Despite the impact of the epidemic, after the hard work of the execution team, it is expected that It will be delivered and completed early next year;
(2) The Bangladesh State Grid Corporation's power grid upgrade project was officially launched in January 2021, and efforts are being made to overcome the impact of the epidemic and be implemented according to the project plan.
As the impact of the epidemic gradually subsides in the future, the company's overseas engineering business is expected to steadily advance, forming an important positive driver for performance. The company has deep accumulation in the field of overseas engineering and Belt and Road projects, with sufficient orders on hand, and new projects are expected to continue to be implemented, laying a foundation for long-term growth.
. Superconducting materials, 5G messaging and other strategic cultivation directions, large-scale applications are expected to be implemented 5.1. Military and civilian applications of superconducting materials are gradually implemented, and industrialization is expected to begin
The company has passed the Suzhou New Materials Research Institute and Eastern Superconducting Technology (Suzhou) Co., Ltd. has deployed new kilometer-level second-generation high-temperature and ultra-high temperature (2G-HTS) strips to realize the industrialization of 2G-HTS strips and the research and development of related application technologies. Suzhou New Materials Research Institute is the world's third and domestic second-generation high-level superconducting enterprise. It has undertaken national 863 projects, Jiangsu Provincial Department of Science and Technology industry-university-research projects, Jiangsu Provincial Department of Science and Technology achievement transformation projects, etc. Eastern Superconducting Technology (Suzhou) Co., Ltd. was established in December 2017, covering an area of nearly 100 acres. It is an industrial base for superconducting applications. It is mainly engaged in superconducting cables, superconducting magnets, superconducting current limiters, and superconducting motors. Industrial development, as well as the research, development and promotion of superconducting transformers and all-superconducting power system integration (superconducting substations).
The superconducting industry is one of the key directions of the company's strategic cultivation. At the key node of technology industry-university-research transformation, the company actively promotes the application of superconducting technology through a multi-pronged approach of "project cooperation, R&D-production-sales, and national policy resource support" Project, continue to expand the two major fields of military and civilian use, and the three markets of industry, power grid and scientific research. Compared with low-temperature superconductors, high-temperature superconductors can be used at liquid nitrogen temperatures, thereby significantly reducing system costs and enabling large-scale, long-distance applications. Compared with traditional conductors (copper, aluminum), the resistance is significantly reduced, the transmission efficiency is high, the engineering current density is greatly increased, and the performance advantages are obvious.
However, because the cost of superconducting materials is higher than other alternative materials, large-scale applications are still difficult to implement except in some specific fields. However, with the intensive introduction of carbon neutral policies such as the National Strategy for Adapting to Climate Change 2035 and the Measures for the Administration of Carbon Emissions Trading, high-temperature superconductors have shown significant potential in many fields such as wind power motors, power cables, metal heating, and magnetic levitation. Advantages, the industrialization of superconducting applications is beginning to dawn.Representative projects of the company's superconducting industrialization include:
1) State Grid 255 Flexible DC Transmission Scientific Research Demonstration Project. The first domestic DC superconducting current limiter has passed all performance type tests of the complete system and will be installed at the Suzhou Nano City Power Station in 2020. Network demonstration operation, achieving zero breakthroughs in superconducting electrical equipment in the field of power systems;
2) Tongli New Energy Town Project, after the company's superconducting cable project completed the first phase of sample cable verification, it continued to develop the second phase of 100-meter-level superconducting cables The system demonstration project provides practical comparative data for comprehensive power upgrading and energy saving and consumption reduction in old urban areas of the power grid system, and promotes the practical application of superconducting cables.
In the future, the industrialization of the company's products in the fields of wind turbines, linear motors, magnetic levitation, and superconducting fault current limiters is expected to continue in the fields of electric power, transportation, medical care, industry, and scientific research equipment, opening up space for the company's long-term growth. (Report source: Future Think Tank)
5.2. 5G messaging focuses on layout, the market space is vast, and applications are gradually expanding.
Focusing on the needs of core customers such as operators and equipment vendors, the company focuses on expanding big data and 5G messaging services, using 5G technology and big data Based on data collection and analysis, Internet security and telecommunications + industry application software, we have launched integrated communication 5G messaging solution products. The application industries cover government affairs, media, finance, logistics, automobiles, education and other fields. In the first half of 2021, the company and Nanjing University of Posts and Telecommunications jointly established the "Nanyou-Yongding 5G Application Technology Research Institute" to strengthen the implementation of 5G messaging technology. In 2021, the company's subsidiary Yongding Xingyuan won the first and second prizes of the "Huawei 5G" messaging competition with its "Guizhou 110" and "Juneyao Airlines" service numbers, and won the Huawei "GTS" Joint Innovation Partner Award.
The company has accumulated rich technology and product experience in the fields of public security, government affairs, enterprises and other fields:
1) "Guizhou 110" service number: The Network Information Center of the Guizhou Provincial Public Security Department has joined forces with the two companies Yongding Xingyuan and Yunshang Guizhou to give full play to 5G messaging has the advantages of no installation, no registration, and real-name system. It is a benchmark 5G messaging solution for the public security industry. This solution creates a full-scenario, one-stop 110 police platform, effectively achieving low-latency and zero-obstacle communication between police and citizens.
2) "Yongding Cloud" is aimed at the automotive industry: For the "SAIC-Wuling Hongguang" marketing promotion and daily business services, a 5G message traffic portal has been created, enabling more convenient service applications for car companies and users and full-process car tracking. , truly realizing the concept of finding people through service.
5G messaging includes personal messaging services, industry messaging services and enhanced call-related messaging services. Both individual users and industry users can get a new messaging service experience, especially the introduction of the concept of MaaP (Message as a Platform), which can provide information The integration of the communications industry with other industries provides new space. 5G messaging not only upgrades SMS to support rich media messages, but also truly realizes messaging as a platform, messaging as a service, and messaging as an application through mini programs, serving the public, thousands of industries, and everything. In December 2020, ZTE released the "5G Messaging Technology White Paper". The white paper pointed out that 5G Messaging serves mass users and various industries. In addition to providing To C and To B services, it can also provide services and applications for IoT. , referred to as To T, serves a massive number of connected things and all walks of life in which they are located.
Operators have opened 5G messaging-related bidding projects, and commercial implementation is just around the corner. On July 31, 2020, China Mobile released a centralized procurement announcement for 5G messaging system equipment from 2020 to 2021. It will use virtualization to centrally build 5G messaging centers and MaaP platform equipment. The procurement content includes SMS processing capacity of 826,000 messages/second, message users The capacity is 100 million households and the MaaP platform processing capacity is 82,600 items/second. On January 20, 2021, Guangdong Mobile 5G message centralized procurement will complete the 2020 5G industry message CSP platform research and development project, requiring a total of 2,067 units to be purchased. In addition, China Telecom and China Unicom issued a bidding announcement for the 2020 5G messaging platform (RCS) construction project joint centralized procurement project on January 8, 2021. The bidding content is 5G messaging system software.The 5G messaging procurement by China Telecom and China Unicom was also finalized on January 29, 2021. The bidding for 5G messaging construction of the three major operators has gradually been launched, and the large-scale commercial use of 5G messaging is expected to be quickly launched. The company is expected to show its talents in the field of 5G messaging.
. Profit forecast and investment analysis 6.1. Profit forecast and core assumptions
The company's three main business sectors have entered a new development trajectory, see for details:
1) Optical cables, cables and communication equipment: look at the latest bidding situation of optical fiber cables, industry chain Ushering in an inflection point of rising volume and price, the company's optical rod-optical fiber-optical cable layout is complete. The price increase is expected to drive revenue growth, and the gross profit margin is also expected to steadily increase. Focus on expanding optical modules and optical chip products to further unlock growth momentum for the optical communications business.
2) Automotive wiring harness: The company has been deeply involved in the automotive wiring harness business for many years, and has worked closely with major automobile manufacturers. It has made key breakthroughs in new energy vehicle wiring harnesses. The demand and value are expected to continue to increase, driving the automotive wiring harness sector’s revenue to usher in rapid growth. The short-term impact of the epidemic will be gradually eliminated, coupled with key breakthroughs in high-value new energy products, future profitability is expected to continue to strengthen.
3) Overseas projects: The company has accumulated a large number of important orders in the overseas engineering field, with a contract value of nearly US$3 billion. As the impact of the overseas epidemic is expected to be gradually alleviated, key engineering projects will be gradually delivered in the future, and the expanding regional market continues to develop, this business segment is expected to grow steadily.
6.2. Investment analysis
The company's three major business sectors have entered the fast lane of development. Referring to the average price-earnings ratio of representative companies in the subdivision industry, the average PE of the fiber optic cable/optical module industry in 22/23 is 20 times/16 times, and the automotive wiring harness (connection The average PE of the equipment) industry in 22/23 was 49 times/36 times, and the average PE of the overseas engineering industry in 22/23 was 24 times/18 times.
(This article is for reference only and does not represent any investment advice on our part. If you need to use relevant information, please refer to the original text of the report.)
Selected report source: [Future Think Tank]. Future Think Tank - Official website
