Nomura: Ningbo Orient Wires & Cables: Revenue recognition accelerates, while expenses and impairment slow profit growth

Why did third-quarter revenue accelerate?

The company reported third-quarter 2026 revenue of 4.301 billion yuan, up 40% year on year and 47% quarter on quarter, driven mainly by its submarine cable and marine engineering businesses.
Revenue from submarine and high-voltage cables was 1.963 billion yuan, up 23% year on year and 124% quarter on quarter; marine engineering revenue was 656 million yuan, up 743% year on year. Revenue from power engineering and equipment cables was 1.676 billion yuan, up 25% year on year but down 7% quarter on quarter.

Third-quarter net profit was 479 million yuan, up just 9% year on year, with a net margin of 11.1%, down 3.3 percentage points year on year. Research and development expenses rose 56% year on year to 165 million yuan; credit impairment losses were 104 million yuan, above the second quarter's 38 million yuan.
Gross margin was 21.6%, down 1.0 percentage points year on year but up 6.3 percentage points quarter on quarter. Nomura attributed the sequential improvement to a change in revenue mix.

As of 26 October 2026, the company's order backlog stood at 15.9 billion yuan, down 13% quarter on quarter, including 7.9 billion yuan in submarine and high-voltage cable orders. Nomura attributed the decline to faster deliveries and revenue recognition.
Nomura expects deliveries for key projects, including Yangjiang Sanshan Island, to continue from the fourth quarter of 2026 through 2027, supporting revenue and earnings growth. Domestic offshore wind tendering was weak in the first half of 2026, but the bank expects deep- and far-offshore development and overseas demand, including from Europe, to accelerate demand in 2027–2028. The company could secure new orders domestically and overseas.

Citing recent delays in offshore wind project deliveries and tendering, Nomura cut its earnings forecasts for 2026–2028 by 20%–27%. The bank still expects demand to improve and margins to recover as more high-voltage products are shipped.
Nomura maintained its buy rating and cut its target price from 79 yuan to 48 yuan, equivalent to 22 times its 2027 earnings per share forecast of 2.18 yuan; this implies upside of about 34% from the 28 October 2026 closing price of 35.76 yuan.