The strategic goal of Far East in 5 years: to increase the share of the cable market and accelerate the promotion of new energy business

Author:fegroup Published: 2021-05-21 Hits:

Recently, at the investor communication meeting, Shao Liang, the secretary of the board of directors of Far East Co., Ltd., introduced that Far East will continue to focus on the development of the three core businesses in 2021: smart cable network, smart battery and smart airport.

Based on this, Shao Liang revealed that Far East has formulated a strategic plan: First, in the smart cable network sector, accelerate the increase of market share, strengthen the submarket in detail, and branches such as clean energy, smart grid reach the first; Second, in the smart battery sector, we will focus on breaking through the market segments such as power tools, light travel and high-end digital, establish strategic cooperation with each segment leader, accelerate the promotion of automotive electronics service and energy storage business, and accelerate the investment and release of new capacity such as lithium battery and copper foil; Third, in the smart airport sector, consolidate advantages, upgrading from one-time business to sustainable business.

Integration in the cable industry accelerated and The market share of top enterprises increased

Wire and cable is one of the largest supporting industries in the national economy, with a market size of over one trillion yuan. China is the world's largest cable demand country and producer.

According to the data of Guotai Junan and Foresight Industry Research Institute, the sales revenue of China's wire and cable industry reached 1.3 trillion yuan in 2020, and it will reach 1.69 trillion yuan in 2025. The compound growth rate will reach 5.4% in 2020-2025. New growth points come from brand new industries such as smart distribution grid, clean energy, 5G infrastructure, data center, AI, new energy vehicles and so on.

Shao Liang said that the original cable market homogenization competition is harsh, and non-standard products run rampant. At the same time, the industry pattern is very scattered. The market share of the top 10 cable companies is about 12%. Compared with developed countries, the market share of the top 4 enterprises in the United States is about 80%, the market share of the top 7 enterprises in Japan is about 86%, and the market share of the top 5 enterprises in France is about 90%. In the future, there will be the trend of domestic industry integration towards the top enterprises. After Xi 'an Aokai Cable Incidents, the state has strengthened the rectification of the cable industry, and standardized the industry constantly. In the future, the industry will accelerate the integration, and the market share of the top enterprises in the industry will increase rapidly.

According to the financial data, as one of the leading enterprises, the current intelligent cable network is the pillar business of Far East. In the first quarter of 2021, the revenue of Far East Group reached 3.767 billion yuan, up 48.78% year on year; Net profit belonging to the owner of the parent company was 120 million yuan, up 277.77% year on year. Among them, the operating revenue of smart cable network reached 2.777 billion yuan, up 19.58% year on year, accounting for 73.66% of the revenue; The business achieved a net profit of 76 million yuan, a year-on-year decrease of 12.04%; In the first quarter, the accumulative winning or signing of contracts and orders exceeded 10 million, nearly 3 billion yuan.

In the strategic planning of Far East, it hopes to accelerate the increase of market share, and continue to deepen the segmentation of the market, continue to maintain a leading position in segments such as clean energy, smart grid and so on; At the same time, try our best to achievethe first in subdivision products like wind power, photovoltaic, nuclear power cable and so on.

In addition, global commodity prices have set off a wave since this year, so how to deal with the rising prices of major raw materials? Wan Jun, chief financial officer of Far East said that, first of all, we should strengthen cooperation with strategic suppliers on the supply side. Second, make a agreement with customers that work together to deal with commodity price fluctuations and enter into open contracts where the purchase price of raw materials will fluctuate in line with market prices over an agreed benchmark price. Finally, in the internal control side, strengthen corresponding tracking management on advance payment, order issuance, product manufacturing, product transportation and so on.

The global market for lithium batteries may exceed one trillion

In addition to the cable business, intelligent battery is also a very important part of Far East. According to the first quarter report, the company achieved operating income of 312 million yuan, a year-on-year increase of 267.91%, and net profit reached 47 million yuan, up 65.51% year on year.

According to the disclosure in the investor exchange meeting, the company adheres to the high safety and high durability of the cylinder cell to meet the needs of customers in the light travel market, and has become the supplier of, Ninebot and other enterprises. In January 2021, the Mavericks Neo Capital Group secured a three-year order contract of 150 million units from 2021 to 2023, which is expected to generate operating revenue of no less than 900 million yuan.

According to the data compiled by Far East Co., Ltd., driven by the sustainable development goal of energy, the scale of the global lithium battery market will exceed one trillion in 2025, and the average growth rate of the segment market will reach 20-30%.

According to the above data, the global market scale of power battery system is expected to exceed RMB 800 billion in 2025, the global market scale of lithium battery cell for light travel market like electric bicycle, electric motorcycle, electric balance vehicle, scooter and so on is expected to exceed RMB 50 billion, and the global market scale of lithium battery cell for power tools is expected to exceed RMB 40 billion. The global market size of lithium battery systems for energy storage is estimated to exceed 110 billion yuan.

In this regard, Far East shares will strive to cooperate with 2-3 global leading vehicle manufacturers in the future. In terms of energy storage, cooperate with 2-3 energy storage system integrators and cell manufacturers; Cooperate with at least 5 global top 10 and China top 5 power tool companies in the power tool market; Cooperate with at least 5 of the top 10 companies in the light travel market.

It is worth noting that the company continues to invest in research and development. In 2020, the R&D investment will increase by more than 50 million yuan year on year, and the R&D investment will account for 1.75% of the revenue, and the number of R&D personnel will account for 5.19% of the total number of the company.

In addition, lithium battery and copper foil are also its advantageous business. The company will accelerate the 7500 tons of 4.5μm lithium battery and copper foil project in the second phase and ramp up production, so it can reach 15,000 tons of production capacity in 2021.

The annual growth space of civil airports is nearly 100 billion yuan

Smart airport is also one of the key business of Far East. According to the first-quarter report, the smart airport business achieved operating income of 662 million yuan, up 443.97% year on year, and net profit achieved 120 million yuan, up 1399.78% year on year.

As the core enterprise of the airport business segment of Far East Corporation, Jing Hang 'an's operating income and net profit have maintained a continuous growth since joining Far East Corporation in 2017. In 2020, Jinghang 'an achieved operating income of 1.611 billion yuan, 31.94% year-on-year growth, and net profit achieved 177 million yuan, 2.00% year-on-year growth, both of which hit a record high. The annual contract amount of Jinghang Safety exceeded 2 billion yuan for the first time, and the single contract amount exceeded 500 million yuan for the first time. It contracted 113 airport projects in the whole year.

According to the data compiled by Far East Corporation, China's airport construction still lags behind, with huge development potential in the next 5-10 years. It is estimated that the annual growth will be nearly 100 billion yuan, and the comprehensive market total value will be one trillion yuan in the next 5 years.

"After high-speed rail, the country's next infrastructure investment direction is airport construction." Shao Liang mentioned. According to data, the number of civil airports in the US reached 555 in 2018, while, the figure in China in 2020 was only 241. If 10 new airports are added every year on average, it is expected that the number of civil airports in China will reach 400 in 2035.

Under this background, Jiang Chengzhi, chairman of Far East Co., Ltd., said that in the next few years, they will consolidate the advantages of airport business and actively expand to the field and intelligent product business. At the same time, we strive to make breakthroughs in the design and construction of general contracting, professional equipment research and development production and other business fields, and gradually expand the market share. The company is committed to becoming the world's leading intelligent airport service provider. 

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