There was a slight year-on-year decline in performance in the first half of the year, turning losses month-on-month into profits
Huayou Energy's 21H1 achieved revenue of RMB 580 million, a year-on-year decrease of 4.6%; net profit of RMB 0.2 million, a year-on-year decrease of 16.4% from 20H1, but turned a loss into a profit compared to 20H2 month-on-month; earnings per share were 0.01 yuan. The EBIDTA rate was 22.6%, down 0.1 percentage points from the previous year; the net interest rate was 2.6%, down 0.5 percentage points from the previous year.
Xinjiang has become a major growth market in the drilling and oil storage sector
In the first half of '21, the company's drilling service segment achieved revenue of 230 million yuan, an increase of 21.6% over the previous year; the reservoir service achieved revenue of 250 million yuan, an increase of 7.7% over the previous year. The company actively lays out the Xinjiang market, continues to promote the development of station operation and maintenance and drilling tools business, and has become a major growth point in the drilling sector and the reservoir sector. The completion service achieved revenue of 110 million yuan, a year-on-year decrease of 43.8%, mainly due to differences in the delivery time of completion tools between Xinjiang and Sichuan and Chongqing.
Demand in the oil service market at home and abroad is recovering, new bids have been added to guarantee performance growth, and the direction of domestic energy security policy has not changed, and the “14th Five-Year Plan” oil and gas development will continue to be strengthened. The company continues to maintain a leading position in the Xinjiang market, and the Sichuan and Chongqing markets are developing steadily. At the same time, the company further developed the coalbed methane market and bid 115 million yuan for compact block drilling services in 21 years. Oil companies will continue their “seven-year action plan” in '21. Upstream exploration and development spending is expected to return to a high level, and the company still has many opportunities in the domestic market.
With the easing of the global epidemic, the company's overseas projects have basically resumed production; with the rise in international oil prices, overseas business demand has fully recovered. In the Kazakh market, the company won bids for several compressor overhaul projects; in the Turkmen market, revenue from well completion services increased sharply by 366.2% year-on-year in the first half of '21. As the global oil and gas market continues to recover, the company's overseas business situation is expected to continue to improve.
Maintaining a “buy” rating
As international oil prices rebounded, demand in the oil services market recovered, but it would take time to fully recover from the boom. We then lowered the company's net profit forecast for 21-23 by 16.8%/18.9%/11.7% to 120 million/160 million/220 million yuan, corresponding to EPS of 0.07/0.09/0.12 million, respectively. The company has taken the initiative to develop new customers, improve refined management, increase efficiency and reduce costs. With the recovery in oil prices and the gradual normalization of overseas construction, future performance is expected to further recover and maintain the “buy” rating.
Risk warning: oil price fluctuation risk, overseas market risk, exchange rate fluctuation risk
