On March 21, the well-known wire and cable enterprise in South China, Xinya Cable, made its debut on the Shenzhen Stock Exchange. The stock, issued at 7.4 yuan per share, opened significantly higher at 37 yuan per share. By around 14:20 on March 21, Xinya Cable was trading at 31 yuan per share, a surge of 318.9%.
(Xinya Cable's performance as of around 14:20 on March 21)
On the evening of March 20, Xinya Cable released a risk warning announcement for its first day of listing: With the approval of the Shenzhen Stock Exchange (Document No. [2025] 222), the initial public offering of RMB ordinary shares of Guangdong Xinya Optical Cable Co., Ltd. was listed on the Shenzhen Stock Exchange, with the security abbreviation "Xinya Cable" and the security code "001382". All 62 million newly issued RMB ordinary shares were new shares, without any existing shareholders selling their shares. 60,139,493 RMB ordinary shares from this public offering will be tradable on the Shenzhen Stock Exchange starting from March 21, 2025. The tradable time for the remaining shares will follow relevant laws, administrative regulations, CSRC rules, Shenzhen Stock Exchange business rules, and commitments by the company's related shareholders. The company solemnly reminds investors: Investors should fully understand the risks of the stock market and the risk factors disclosed by the company, enhance their risk awareness, and avoid blindly following the trend to "chase new stocks" in the early stages of the new stock listing. They should make prudent decisions and invest rationally.
Xinya Cable also provided an overview of the main financial data from the income statement and cash flow statement in the announcement:
In 2024, the company's revenue was 2.8336889 billion yuan, a decrease of 5.94% compared to the same period last year, mainly due to a slight decline in the sales volume of wire and cable products; operating profit was 178.7249 million yuan, down 18.22% from the previous year, primarily for the following reasons: First, the fulfillment period of power grid orders fluctuated, and more overhead conductors were delivered to power grid customers in 2023, leading to a significant change in the sales volume of wire and cable products in 2024; second, affected by market demand fluctuations and the rapid rise in the market prices of major raw materials such as copper and aluminum, the sales volume of products to civilian customers fluctuated; third, due to the increase in raw material market prices (SHFE copper rose 11.59% and SHFE aluminum rose 7.33% in 2024 compared to the previous year), the comprehensive gross margin decreased to 9.90%. As a result, the company's total profit, net profit, net profit attributable to the parent company, and net profit attributable to the parent company after deducting non-recurring gains and losses all declined compared to the previous year. In 2024, the net cash flow from operating activities was -43.2887 million yuan, up 72.03% YoY, mainly due to the following reasons: First, the amount of non-6+9 bill discounting by the issuer was 69.9314 million yuan, a reduction of 100.5923 million yuan, leading to an increase in cash inflow from operating activities; second, the issuer strengthened customer receivables management and collection efforts, resulting in a decrease of 38.2293 million yuan in accounts receivable, which also contributed to an increase in cash inflow from operating activities.
Xinya Cable also announced the expected performance for the first quarter of 2025:
Based on actual operating conditions and orders on hand, the company's preliminary estimates for the first quarter of 2025 are as follows:
Xinya Cable expects: In the first quarter of 2025, the company is expected to achieve revenue of 580 million yuan to 606 million yuan, up 1.13% to 5.66% YoY; net profit attributable to the parent company is expected to be 31.4 million yuan to 34.7 million yuan, up 7.26% to 18.54% YoY; The expected net profit attributable to the parent company, after deducting non-recurring gains and losses, is 31.05 million yuan to 34.35 million yuan, up 16.14% to 28.49% YoY.
A research report by Huajin Securities commented that Xinya Cable is a representative enterprise in the power cable sector for the power grid in South China, deeply tied to leading enterprises such as China Southern Power Grid. The company has been focusing on the wire and cable industry in South China for over two decades, forming a strong leading advantage in the power grid sector, and has established long-term stable cooperative relationships with leading enterprises such as China Southern Power Grid, gradually accumulating experience in several national key projects, including the "Ningxia-East ±660kV DC Demonstration Transmission Project" and the "Yunnan-Guangdong ±800kV UHV DC Transmission Project." China Southern Power Grid holds a monopoly in Guangdong, Guangxi, Yunnan, Guizhou, and Hainan provinces. Benefiting from the good economic development in South China, its investment in power grid construction increased continuously from 2012 to 2023, with the investment amount rising from 67.1 billion yuan to 96.6 billion yuan. Since 2000, the company has established a cooperative relationship with China Southern Power Grid. In 2022, among nearly 350 winning cable companies nationwide, the company ranked in the top 5% in terms of winning bid amounts and was the first in South China, supplying products covering three major categories: power cables, electrical equipment wires and cables, and overhead conductors, making it one of the most comprehensive product series suppliers in South China. During the reporting period, the revenue from China Southern Power Grid accounted for about 40%, firmly placing it as the company's largest customer. Leveraging cooperation with high-quality clients, the company has been listed in the Top 100 Most Competitive Enterprises in China's Wire and Cable Industry for many years, and in 2024, it was once again rated as one of the "Top 100 Most Competitive Enterprises in China's Wire and Cable Industry." 2. The company actively strengthens the R&D and manufacturing of special wire and cable products and further expands into new application areas such as automobiles and robots. 1) Compared to traditional cables, special cables can meet complex usage requirements, including wear resistance, heat resistance, cold resistance, tensile strength, bend resistance, flame retardancy, radiation resistance, and electromagnetic compatibility. Guided by market demand, the company actively increases R&D reserves for special cables. According to the prospectus, the company's ongoing R&D projects include "NS system flame-retardant and fire-resistant series cables," "cold-resistant wires and cables," and "corrosion-resistant high-conductivity steel-core aluminum stranded wire." Additionally, the company plans to implement the "wire and cable intelligent manufacturing fundraising project" to further expand the capacity and variety of low-smoke halogen-free cables, flame-retardant and fire-resistant cables, and mineral-insulated cables, thereby optimizing the company's product structure. 2) According to the prospectus, for the automotive sector, the company intends to develop "electric vehicle charging cables," which are mainly used for connections between charging devices and power sources, as well as between battery packs. In the robotics sector, the company's R&D robot cables, in addition to having superior electrical and weather resistance, can withstand prolonged bending and large-angle twisting while maintaining normal operation.
When reminding investors to pay attention to the following risk factors, Xinya Cable mentioned the risk of fluctuations in the prices of major raw materials. Xinya Cable stated: The wire and cable industry is a typical "material-intensive, labor-light" industry. During the reporting period, raw materials accounted for over 90% of the company's main business costs, mainly including copper and aluminum. Fluctuations in their prices will affect the company's operating performance and working capital arrangements.
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In 2024, copper prices ended the year with an overall increase, with LME copper rising 2.6% and SHFE copper rising 6.96% for the year, and SMM #1 copper cathode rising 6.59% for the year. Although the final copper price increase was not as impressive as that of precious metals, the volatility of copper prices in 2024 was quite dramatic! Driven by macroeconomic tailwinds, growing expectations of tight copper ore supply, rising expectations of production cuts in copper cathode, increased expectations of copper consumption for AI, and COMEX copper short squeezes, the futures prices of the three exchanges all hit record highs in May 2024! For example, the volatility of SHFE copper in 2024 saw it reach a high of 88,940 yuan/mt and a low of 67,380 yuan/mt, with a difference of 21,560 yuan/mt! Such severe volatility posed significant challenges to the operations of companies along the copper industry chain.
Since entering 2025, copper prices have continued to rise under the influence of mixed macro and fundamental factors. Previously, concerns over the US imposing additional tariffs on copper and the "siphoning" effect of the US on global copper, leading to tight copper supply in other regions, caused COMEX copper to reach a high of $5.1485/oz on March 20, LME copper to reach a high of $10,046.5/mt on March 20, and SHFE copper to reach a high of 81,810 yuan/mt on March 21. However, on March 21, due to the rebound of the US dollar and some profit-taking, copper prices on the three exchanges experienced a slight correction. For the future trend of copper prices, attention should be paid to changes in the price spread between the New York and London markets. If the spread continues to widen, it may continue to push up copper prices; conversely, if the spread narrows, the impact of arbitrage on copper prices will weaken. Future developments in the fundamentals also need to be monitored. Currently, concerns over tight copper ore supply have not eased. It remains to be seen whether the relaxation of export policies for copper concentrates in Indonesia and Panama will alleviate these concerns. After the continuous rise in copper prices, the "fear of heights" sentiment has suppressed resilient downstream consumption. In a situation of weak supply and demand, attention should be paid to whether increased exports and reduced imports can continue to drive destocking in domestic copper inventories. If destocking is sustained, it may provide further support for copper prices. Additionally, vigilance is needed regarding the potential impact of recurring geopolitical conflicts on market risk appetite and copper prices, as well as the possible re-emergence of concerns about a "stagflation" in the US economy and a "Trump recession trade" that could suppress the market performance of copper.
We are in the grand context of the Fourth Industrial Revolution, where emerging fields such as smart cities, NEVs, and 5G communications are rapidly evolving. As an indispensable infrastructure, the technological innovation and ecosystem construction of wire and cable are particularly urgent. Under the dual circulation pattern, China's wire and cable industry needs to focus on developing new quality productive forces, set new goals, and shape new advantages to achieve high-quality development.
To strengthen the exchange and cooperation among peers in the wire and cable industry and to address future industry changes, enhance collaboration along the industry chain, and gain a deeper and more comprehensive understanding of relevant policy directions and market developments, SMM will host the 2025 SMM (3rd) Wire and Cable Industry Development Conference and Wire and Cable Industry Exhibition on May 22-23, 2025! 2025 SMM (3rd) Wire and Cable Industry Development Conference and Wire and Cable Industry Exhibition We look forward to joining hands with our colleagues to jointly plan the future development blueprint of the industry!
