Orient Cable Secures RMB 5.2 Billion in New Orders; J.P. Morgan Maintains Overweight Rating

Overview

J.P. Morgan released a commentary report on Orient Cable, analyzing the company's latest announced RMB 5.2 billion in new orders and recent significant stock pullback. The core conclusion is: although market concerns regarding EU trade friction and sector rotation have caused the stock to fall 30% since mid-May, this adjustment is not reasonable. With the NDRC explicitly setting a 100GW offshore wind installation target for 2030 and new orders being secured, domestic growth visibility has significantly improved. Institutions maintain the "Overweight" rating and RMB 61 target price, believing current valuations are attractive and suggesting investors monitor potential submarine cable order catalysts in the second half of the year.

Core views

On Recent Stock Performance and Logic for Mispricing: The report points out that Orient Cable's stock fell cumulatively by 30% from mid-May to June 10, far exceeding the Shanghai Composite Index's同期 4% decline. Although the market expresses concern over EU trade tensions, the company's exposure to the EU market is negligible; even considering potential risks to UK orders (accounting for approximately 17% of backlogged submarine cable orders), the current stock decline already fully reflects, or even exceeds, the reflection of this negative news. Institutions believe the recent weakness stems more from a market style shift to other themes rather than deterioration in fundamentals. New Order Structure and Catalytic Significance: The company announced on the evening of June 10 new contracts totaling RMB 5.2 billion. While core submarine cable orders amounted to only RMB 400 million, with the remainder coming from power engineering and land cables (RMB 3.4 billion), high-voltage land cables (RMB 700 million), and marine engineering equipment (RMB 760 million), the report deems this announcement still holds significant signal value. It not only verifies business activity levels but may also mark a technical short-term bottom, helping to attract previously观望 investors to focus on the stock again. Increased Visibility of Domestic Offshore Wind Growth: Even without considering overseas markets, the prospect of China's domestic offshore wind is very clear. In March 2026, the NDRC explicitly announced its first-ever national offshore wind installation target of 100GW for 2030. Looking back at the past 15 years, once regulatory bodies set renewable energy capacity targets, actual development has often exceeded these targets by an average of 90%. This top-down promotion model provides extremely high certainty for industry growth over the next five years. Expectation of Project Launches in the Second Half of the Year: The timing of this 2030 offshore wind target announcement predates the rhythm of previous five-year plans (typically, specific new energy targets are issued in the second year of the plan). The report interprets this as reflecting regulators' recognition of the long-cycle nature of offshore wind construction, inferring that local governments, to achieve the 2030 target, may start rolling out new projects as early as the second half of 2026. This aligns with feedback from company management during recent research visits, implying more submarine cable orders may be secured in the second half, becoming the next key catalyst.

Analysis framework

The report employs a comprehensive analysis framework combining 'Event-Driven + Policy Cycle + Valuation Anchoring'. First, it deciphers the structure of new orders, distinguishing between high-value submarine cables and ordinary land cables to precisely assess the substantive impact of the announcement on fundamentals; second, it uses historical data backtesting (past 15 years of renewable energy target fulfillment rates around 90%) to verify the probability of policy target realization, thereby quantifying the certainty of domestic growth; finally, combined with overseas exposure checks and horizontal valuation comparisons (current PE vs. historical averages and earnings growth rates), it argues the irrationality degree and recovery space of the stock pullback.

Methodology notes

• Industry/Industrial Analysis FrameworkPenetration S-curve

  National capacity targets as confirmation signals for the acceleration phase of the industry S-curve

  The report cites the historical pattern that "actual installations exceed national renewable energy targets by an average of 90% after the state sets them," indicating that when top-level planning is clear, the industry often enters an acceleration penetration stage driven strongly by policy. This helps investors understand why the establishment of the 100GW 2030 offshore wind target significantly enhances performance visibility for the next 5 years.

• Valuation MethodPE/PEG valuation

  Valuation judgment based on the matching degree of historical P/E median and compound earnings growth

  The report compares the company's current 14x FY27E P/E ratio with its three-year historical average forward P/E, while considering a compound earnings growth rate of over 30% for 2025-2027. This method aims to judge whether current valuation deviates from the long-term reasonable range; if significantly below the historical mean accompanied by high growth, it is viewed as an undervalued signal.

• Event Game Theory and Behavioral FinanceExpectation Gap / Expectation Management

  Identifying excessive pricing of geopolitical risk by the market disconnected from fundamentals

  By analyzing the company's actual overseas revenue exposure (negligible EU exposure, limited UK proportion), the report points out that the 30% plunge driven by emotions of "EU trade friction" constitutes irrational panic. This analysis teaches investors to return to specific business structures of individual stocks to verify if risks have been wrongly amplified when facing macro noise.

Asset mapping & comparison

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

• Orient Cable (603606.SS)

  Core Beneficiary: Domestic leader in offshore wind, directly benefiting from the 100GW 2030 installation target and potential project tenders in the second half of the year

  Strengths

  Leading position in submarine cable manufacturing, high barriers and concentration; synergies in marine engineering capabilities; export potential; extremely high domestic growth certainty

  Weaknesses

  Of the newly signed RMB 5.2 billion orders, high-value submarine cables account for only RMB 400 million; short-term earnings elasticity depends on subsequent large contracts

  Comparison

  Compared to other segments of the wind power industry chain, submarine cables possess higher market concentration and entry barriers, resulting in stronger profitability

  Risks

  Offshore wind development progress lags behind expectations; deteriorating competitive landscape in the submarine cable industry leading to overcapacity; declining average product selling prices; costs rising unexpectedly

Key data

• Total Signed OrdersRMB 5.2 BillionAnnounced after market close on June 10, including RMB 400 million in submarine cables, RMB 3.4 billion in land cables and engineering, etc.
• 2030 Offshore Wind Installation Target100 GWExplicitly confirmed by the NDRC in March 2026, enhancing long-term growth visibility
• Recent Stock Drawdown Magnitude-30%Decline from mid-May to June 10; Shanghai Composite Index fell only 4% during the same period
• FY27E Forward P/E Ratio14xBased on market consensus estimates, lower than the three-year historical average
• 2025-2027E Compound Earnings Growth Rate>30%Performance foundation supporting current valuation recovery space
• UK Order ProportionApproximately 17%Proportion of backlogged submarine cable orders, used to assess the upper limit of geopolitical risk

Impact & implications

For Orient Cable, the RMB 5.2 billion in new orders, though primarily land cables, played a role in stabilizing market confidence and confirming operational rhythm. More importantly, the early establishment of China's 2030 offshore wind target means the industry has shifted from "waiting for policy" to "execution and implementation." Local governments are expected to launch new rounds of project tenders in the second half of 2026, which will directly translate into future high-margin submarine cable orders for the company. For investors, the report hints that current stock prices have priced in excessive pessimistic expectations; with fundamentals unharmed and the long-term growth path clearer, the current position may be a worthwhile window to re-evaluate for allocation.

Risks

• Offshore wind construction and development progress slower than expected
• Deterioration of competitive landscape in the submarine cable industry, leading to overcapacity
• Average selling prices (ASP) of products below expectations
• Raw material or operating costs higher than expected

What to watch

• Launch status of local government offshore wind project tenders in the second half of 2026
• Signing scale and pace of subsequent new submarine cable orders
• Detailed implementation of supporting policies for the domestic 2030 offshore wind target