UBS upgrades Ningbo Orient Wire & Cables to Buy, raises target price to Rmb78

Overview

This is a UBS company research report on Ningbo Orient Wire & Cables (603606.SS). The main change in the report is the rating upgrade from Neutral to Buy and the increase in the DCF target price from Rmb55 to Rmb78. UBS believes that from 2026 onward, offshore wind demand in China and overseas is likely to accelerate, and the company, supported by its high-voltage subsea cable technology, delivery track record, and order backlog, is well positioned for stronger earnings growth.

Core views

UBS's core views are as follows: first, as a leading land cable and subsea cable maker in China, Ningbo Orient Wire & Cables will benefit from China's offshore wind installations rising from 5-7GW per year during 2022-25 to 10-15GW per year in 2026-30E; second, Europe's energy security needs, improvements to the CfD mechanism, and clean energy investment policies will help offshore wind demand recover overseas; third, the company's overseas orders and project delivery record are improving, and overseas sales are expected to rise from about 12% in 2025 to 15-20% in 2026-30E; fourth, the current 18x 2027E P/E is below the peer average of about 23x, while 2027E EPS growth of 25% is above the peer average of about 20%, suggesting that the valuation has not yet fully reflected demand and market share gains.

Analysis framework

The report analyzes order backlog, offshore wind installation and tender trends, overseas policy mechanisms, profitability forecasts by business segment, and peer valuation comparisons. Valuation is based on the DCF method and is cross-checked against 2027E P/E, EPS growth, and PEG metrics for Chinese wind subsea cable manufacturers.

Methodology notes

• Valuation methodsDCF

  discounted cash flow valuation

  UBS used DCF valuation to raise the target price to Rmb78, with key assumptions including an 8.4% WACC and the reflection of stronger offshore wind demand and overseas expansion in long-term EPS.

• Relative valuationPE Comparable Valuation

  peer PE comparison

  Ningbo Orient Wire & Cables currently trades at about 18x 2027E P/E, below the peer average of about 23x; the new target price implies about 23x 2027E P/E, in line with the peer average.

• Industry demand analysisOffshore Wind Installation Forecast

  offshore wind installation and tender forecast

  The report uses forecasts for offshore wind installations and tender volumes in China, Europe, and globally to assess the recovery in subsea cable demand and the company's order growth potential.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Ningbo Orient Wire & Cables (603606.SS)

  Coverage name; a Chinese land cable and subsea cable manufacturer

  Strengths

  Subsea cable market share of about 35%, with technological advantages in high-voltage subsea cables; backlog of Rmb19.3bn as of 2026-03-25; track record of project delivery and winning bids in Europe and Southeast Asia.

  Weaknesses

  4Q25 results missed expectations, mainly due to the timing of offshore wind project revenue recognition and impairment losses; overseas capacity deployment remains unclear.

  Comparison

  The current 18x 2027E PE is below the Chinese wind cable peer average of about 23x, while 2027E EPS growth of 25% is above the peer average of about 20%.

  Risks

  Offshore wind installations slower than expected, higher raw material prices such as copper compressing margins, and port openings creating new entrants and intensifying competition.

• Offshore wind subsea cable supply chain

  Main growth driver for the company

  Strengths

  China's policy targets, Europe's energy security needs, improvements to the CfD mechanism, and support for clean energy investment are jointly driving demand recovery; limited overseas supply may support a strong 30-40% gross margin in the subsea cable business.

  Weaknesses

  Demand is highly sensitive to policy, approvals, tendering, and project construction timing.

  Comparison

  China's average annual installations in 2026-30E are expected to be significantly higher than in 2022-25; European tendered projects are also expected to increase in 2026.

  Risks

  Policy execution falling short of expectations, project delays, weaker tender pricing, or overseas trade and market-access restrictions.

Key data

• Rating changeBuy; Prior: NeutralUBS upgraded Ningbo Orient Wire & Cables from Neutral to Buy.
• Target priceRmb78.00; Prior: Rmb55.00Raised based on DCF valuation; the target price implies about 23x 2027E P/E.
• Current priceRmb61.10Price date is 2026-03-30.
• Total backlogRmb19.3bnAs of 2026-03-25.
• Subsea cable ordersRmb11.8bnSubsea cable orders within the total backlog.
• Offshore engineering ordersRmb3.3bnOffshore engineering orders within the total backlog.
• 2026-28E EPS revision+6%/+8%/+5%Mainly driven by higher subsea cable shipments, improving global offshore wind demand, and greater overseas share gains.
• Forecast overseas revenue mix15-20% in 2026-30EAbove about 12% or 11.6% in 2025.
• 2027E valuation18x PE, 25% EPS growthBelow the peer average of 23x PE, but with earnings growth above the peer average of 20%.
• China offshore wind target100GW cumulative by 2030The 15th Five-Year Plan target; cumulative capacity was about 49.17GW by the end of 2025.

Impact & implications

If UBS's view proves correct, the investment case for Ningbo Orient Wire & Cables will shift from near-term earnings volatility to medium- and long-term growth driven by the recovery in offshore wind and overseas expansion. Order backlog, overseas deliveries, and tender recovery could become catalysts for the share price; at the same time, a higher share of the higher-margin subsea cable business should help improve earnings quality.

Risks

• New offshore wind installations may be slower than expected, leading subsea cable demand to come in below expectations.
• Raw material prices such as copper may be higher than expected, compressing land cable and subsea cable gross margins.
• Government opening more ports or an increase in new entrants could disrupt the competitive landscape and cause average selling prices to decline.
• There is uncertainty around overseas capacity deployment, project execution, and revenue recognition timing.

What to watch

• New overseas orders and the volume of European offshore wind tenders.
• The pace of approval, construction starts, and grid connection for offshore wind projects in China.
• The speed at which subsea cable backlog converts into revenue.
• Copper price volatility and the company's cost pass-through and hedging execution.
• Whether the overseas revenue mix rises as expected to 15-20% in 2026-30E.