JPMorgan: Orient Cables - A Structural Story with Clearer Near-Term Visibility
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JPMorgan attended Orient Cables' fiscal year 2025 earnings call and maintains a highly constructive view on the stock. The firm reaffirmed its Overweight rating and rolled the target price forward to June 2027, raising it by 7% from RMB 68 to RMB 73. This valuation is based on a 12-month forward target price-to-earnings multiple of 21 times. Although the bank lowered its fiscal year 2026 and 2027 earnings estimates by 6% to 9% due to delayed construction schedules, the structural growth narrative has strengthened.
Visibility has improved significantly. Multiple Chinese provinces are accelerating offshore wind tenders in 2026, driving robust order flow for submarine cables. Furthermore, China has established its first national offshore wind capacity target of 100 gigawatts by 2030, enhancing long-term growth certainty. Orient Cables reported a substantial year-end inventory of roughly 819 kilometers of submarine cable. Contract liabilities surged 107% year-over-year to RMB 2.37 billion, serving as a strong leading indicator of accelerating project activity and effectively alleviating market concerns regarding 2026 growth.
Financially, fiscal year 2025 net profit reached RMB 1.271 billion, up 26.1% year-over-year but falling short of the Bloomberg consensus estimate of RMB 1.464 billion. This miss was primarily driven by lower-than-expected fourth-quarter submarine cable revenue recognition caused by slow construction progress. Gross margins for submarine and high-voltage cables expanded by 5.6 percentage points to 33.4%, reflecting a favorable product mix toward high-voltage and overseas sales. The total order backlog remained robust at RMB 19.3 billion as of March 25, 2026.