Citi: Ningbo Orient Wires & Cables’ third-quarter revenue growth outpaces profit growth as falling orders weigh on Citi’s earnings forecasts

Why did profit fail to keep pace with a sharp rise in third-quarter revenue?

In the third quarter of 2026, the company reported revenue of 4.301 billion yuan, up 40.3% year on year. Revenue from submarine cables and high-voltage land cables rose 23.3% to 1.964 billion yuan, while revenue from offshore equipment and engineering increased approximately 7.4-fold to 655 million yuan.
Operating profit was 672 million yuan, up 37.2% year on year. Citi considers this broadly in line with the Bloomberg-compiled market consensus for 39% profit growth in the second half. Net profit rose just 8.6% to 479 million yuan, mainly due to higher impairment provisions for receivables.
Third-quarter impairment losses were 125 million yuan, compared with a gain of 11 million yuan a year earlier. The net profit margin fell 3.3 percentage points year on year to 11.1%. Meanwhile, the overall gross margin fell 1 percentage point to 21.6%, while the gross margin for submarine cables and high-voltage land cables was approximately 28%–29%, above the 26.1% recorded in the first half of 2026.

As of 26 October 2026, the company’s order backlog stood at 15.942 billion yuan, down 18.5% year on year. Orders for submarine cables and high-voltage land cables fell 32.5% to 7.925 billion yuan, while orders for offshore equipment and engineering fell 37.1% to 2.47 billion yuan.
According to Citi, only five public submarine cable tenders were held in the first three quarters of 2026, covering 2.4 gigawatts of offshore wind project capacity. By comparison, tenders covered 7.8 gigawatts for all of 2025. The bank believes preliminary preparations in the first year of a new five-year plan may slow equipment tendering.
There has been new progress in tendering: Citi estimates that offshore wind turbine tenders covered 6.3 gigawatts in the first three quarters, including 2.3 gigawatts in September, and expects more submarine cable tenders may follow the turbine tenders.

Citi cut its net profit forecasts for 2026 and 2027 by 7.3% and 20.2%, respectively, to 1.592 billion yuan and 1.753 billion yuan. The former reflects higher impairments and research and development expenses; the latter reflects pressure from fewer orders. It also cut its 2028 forecast by 11.9% to 2.392 billion yuan.
A distinction is important: Citi’s table actually raises its revenue forecasts for 2026–2028 by 7.5%, 8.7% and 16.1%, respectively, from its previous estimates. Its overall gross margin forecasts for the same period were cut by 2.6, 5.3 and 5.6 percentage points, respectively. Revenue forecasts rose while profit forecasts fell.
The bank lowered its discounted cash flow target price from 60 yuan to 50 yuan per share and maintained its Buy rating. Its net profit forecasts for 2026–2028 are approximately 5%–16% below Bloomberg consensus.

Citi expects profit growth to reaccelerate from 2028, based on China’s target of more than 100 gigawatts of cumulative offshore wind capacity by 2030 and the gradual deployment of deep-water projects, which require more submarine cable per unit of installed capacity.
The Chinese Wind Energy Association expects annual additions of offshore wind capacity to rise from 7.2 gigawatts in 2026 to 10 gigawatts in 2027 and 15 gigawatts in 2028. The first batch of deep-water demonstration projects totals approximately 20.9 gigawatts and is expected to enter operation gradually over the next two to three years.
Project progress remains constrained by timing and economics: the previous five-year plan achieved only 76% of the provinces’ combined targets, with delays including coordination among multiple government departments and lagging deep-water planning. The wind energy association believes projects within approximately 100 kilometres of shore can achieve an equity internal rate of return above 6% under favourable conditions.