Investment Highlights:
1. The OPGW market share ranks second, and the market share increases year by year;
2. The special competitive environment guarantee is much higher than the gross profit rate of other products;
3. The technological advantages will help the company to gain a corresponding market share and increase its share.
Jiangsu Tongguang Electronic Cable Co., Ltd. (hereinafter referred to as “Tongguang Cable”, code 300265) focuses on the research and development of special cable technology, especially in ultra-high and ultra high voltage transmission cables, aerospace high-temperature resistant cables, and communications. The use of high-frequency cables has obvious technological advantages. The main products OPGW, ADSS, OPPC and other power optical cables, sales have been in the forefront of the same industry in the country, which OPGW market share ranked second, and the market share increased year by year. The company is one of the five domestic suppliers of aerospace high-temperature resistant cable military products. The special competitive environment guarantee is far higher than the gross profit margin of other products. With the increase in the proportion of subdivided products, the overall profitability has been improved.
The main business highlights the continuous growth of its performance. Optical fiber cables are mainly engaged in the research, development, production and sales of high-voltage, ultra-high voltage and ultra-high voltage power transmission special cables and wires for transmission lines, high-temperature cables for aerospace, and high-frequency cables for communications. The industry involves electricity, communications, military and so on. At present, the company has comprehensively mastered the core technology of the special cable industry, including the SZ-type line production technology. The products are to fill gaps in the domestic market and replace high-end special cable products abroad, achieving a major breakthrough in the development of high-end special cables in China. Become a major supplier in the special cable industry.
The company's main business is outstanding. Its main business income accounts for more than 98% of its operating income. The main business of the company has experienced a high growth trend in the recent three years. In 2009, the main business income increased by 31.35% compared with 2008, and the year 2010 was more than 2009. The annual growth rate was 28.05%, and the CAGR of the main business revenue in the most recent three years was 29.69%.
Power special cables and aerospace high-temperature cables and communication high-frequency cables are the company's leading products. From 2008 to 2010, these three businesses achieved operating revenues of 89.39%, 89.92%, and 81.30%, respectively, of the total revenue from main operations; the gross margin contribution rates were 93.82%, 91.01%, and 86.06%, respectively, which were the company's main revenues and Source of profit.
The prospect of high-end market is very broad. During the “Eleventh Five-Year Plan” period, due to the rapid development of China’s economy, the wire and cable industry generally maintained a good momentum of growth. The average annual growth rate was 18.77%, far exceeding the GDP growth rate of 9%. The output reaches the first in the world. In the future, the special cable industry will usher in greater opportunities in the context of the rapid development of power, communications, aerospace and other industries.
Through continuous technological innovation, the company has gradually formed four core technologies in the fields of special optical cable product manufacturing and industrial design, and obtained 20 patents. It is one of the few companies in China that has mature OPGW production technology and has formed and established Leading technology in this product area. With the development of large-scale ultra-high voltage power grids, the technical advantages of the company's EHV lines will help the company gain market share in UHV construction. At that time, the market share of the company will further increase.
The newly-increased profits from raised investment projects began in 2008. The company's production capacity of high-temperature cables for aerospace and high-frequency cables for communications has been insufficient. Although small-scale expansions took place in 2009-2010, a large number of market demands still resulted. The bottleneck of the company's production capacity, the capacity utilization of the two products reached 139.60% and 153.33%, respectively.
In this case, the company intends to issue 35 million common shares of RMB, and will raise funds to invest in an annual expansion of 15,000 kilometers of communication and cable expansion projects for electronic equipment; an annual output of 25,000 tons of energy-conserving wire projects for transmission lines; and an annual output of 1 Wanpi long-km OPGW expansion project; marketing network construction project. After the 25,000-ton transmission line energy-saving lead project is put into production, it will become a new profit growth point for the company as the market expands.
Some industry insiders believe that the smooth implementation of fund-raising projects will help upgrade the company's products and extend the industrial chain, enhance the company's competitive advantage and market position in the field of special cables, and further increase profitability to ensure the company's sustained and stable development.
