ORIENT CABLE (NBO)(SH:603606)2025-10-27 12:06Summary of Ningbo Orient Wires & Cables Conference Call Company Overview - Company: Ningbo Orient Wires & Cables Co Ltd (603606.SS) - Industry: China Utilities - Market Cap: Rmb45,527 million - Current Stock Price: Rmb66.20 (as of October 24, 2025) - Price Target: Rmb69.63, indicating a 5% upside potential Key Financial Highlights - 9M25 Net Profit: Rmb914 million, down 1.9% YoY - 9M25 Revenue: Rmb7.5 billion, up 11.9% YoY - 3Q25 Net Profit: Rmb441 million, up 53.1% YoY and 129.6% QoQ - Gross Profit Margin (GPM): - 3Q25: 22.6%, up 0.9 percentage points YoY and 6.3 percentage points QoQ - Estimated GPM for submarine and high-voltage cables: 34-35% vs. 25% in 1H25 - Order Backlog: Rmb19.6 billion as of October 23, 2025, including: - Rmb11.7 billion in submarine and high-voltage cables - Rmb3.9 billion in marine engineering - Rmb3.9 billion in medium- and low-voltage land cables Revenue Breakdown - Submarine and High-Voltage Cables: - Revenue: Rmb1,592 million in 3Q25, up 109.4% QoQ - Key projects contributing to revenue: Qingzhou 5 and 7, Fanshi 1 and 2 in Guangdong - Marine Equipment and Engineering: Revenue decreased to Rmb78 million, down 63.2% QoQ - Medium/Low Voltage Land Cables: Revenue: Rmb1,343 million, up 0.5% QoQ with ~10% GPM Strategic Insights - The significant increase in net profit for 3Q25 is attributed to accelerated revenue recognition from high-margin offshore projects in Guangdong - The company has achieved 86% of the full-year earnings forecast for FY25, indicating potential upside risk to the forecast Valuation and Risks - Valuation Methodology: Discounted cash flow analysis with a WACC of 7.4% - Risks to Upside: - Increased offshore wind power installations in China - Higher average selling prices (ASPs) for submarine cables - Improved gross profit margins for both submarine and land cables - Risks to Downside: - Decrease in offshore wind power installations - Decline in ASPs for submarine cables - Unexpected increases in raw material costs Analyst Ratings - Stock Rating: Overweight - Industry View: Attractive Conclusion Ningbo Orient Wires & Cables has demonstrated strong financial performance in 3Q25, driven by key offshore projects and a substantial order backlog. The company is well-positioned for future growth, although it faces potential risks related to market conditions and raw material costs. The current stock rating reflects a positive outlook for the company within the utilities sector in China.