Main points of investment
Performance overview: 2022Q1 company income 440 million yuan, year-on-year-24.9%, return to the mother net profit of 14.38 million yuan, year-on-year-72.5%, month-on-month turnaround.
Affected by the epidemic and the conflict between Russia and Ukraine, the progress of revenue recognition of the company slowed down, and 22Q1 profits reversed losses compared with the previous month. The epidemic since 2021Q4 has led to a slight delay in the completion schedule of the company and an increase in the cost of the fee. The impact of the epidemic is mainly reflected in the following aspects: 1. The industry to which the company belongs is a labor-intensive industry. At the peak of construction in 2021, the number of workers in the field reached 16000-17000, but due to the epidemic, the number of workers in the field recently dropped to 8000-10,000. 2. The epidemic causes the upstream designers to work at home, and the communication and coordination efficiency decreases, which puts pressure on the project as a whole. 3. The supply cycle of overseas suppliers is prolonged, and commodity prices rise, which aggravates the project schedule and cost pressure. 4. The company's wharf implements strict epidemic control measures, resulting in a significant decline in the efficiency of human resource utilization in related work, and an increase in direct costs such as testing, eliminate virus, isolation and so on. 5. The schedule lag disturbs the original site resource allocation plan, and the superposition of different project periods affects the construction efficiency and cost. The total expense rate of 22Q1 company during the period is 9.7%, year-on-year + 1.6pp, month-on-month + 4.1pp, and the epidemic increases the company's expenses in the short term. 22Q1's gross profit margin is 12.0%, year-on-year-4.2pp, month-on-month + 8.2ppm; net margin-3.3%, year-on-year-5.6pp, month-on-month + 4.9pp.
Benefiting from the increase in gross profit margin, the company's 22Q1 profit reversed its loss compared with the previous month. About 60% of the company's business structure comes from LNG module engineering business with high gross profit margin, while the rest is mainly from FPSO module design, construction, final assembly and so on. In the future, the company is expected to expand the business of other modules such as offshore wind power and strengthen the scope of receiving orders.
New production capacity is gradually released, pay attention to the company's follow-up reversal. The short-term risk point of the company comes from two points, on the one hand, due to the epidemic, large price increases and other reasons, the completion of the project slows down and the cost increases; on the other hand, the conflict between Russia and Ukraine leads to the postponement of the award of LNG orders in Russia. We believe that the epidemic and other reasons are mainly short-term risks, and the related risks gradually shrink after 2022Q1; although the conflict between Russia and Ukraine affects the rhythm of LNG orders in the short term, Russia has incorporated the development of LNG into its national strategy. Under the current situation of high international oil prices, with the easing of geographical conflicts, the demand for oil and gas energy exploration will continue to increase. At present, the capital expenditure in Brazil, where the company FPSO is located, is gradually increasing, and the company is also actively expanding oil and gas engineering and offshore wind power business in other blocks. From the point of view of the company's internal skills, the company has a production site of 760000 square meters in Tianjin Lingang Economic Zone, has its own deepwater wharf 700m, has the ability to undertake the final assembly business of projects such as FPSO, FLNG or FSRU, and has 325m deepwater wharf expansion resources, which are higher than those in mid-2021 (670,000 square meters in mid-21 and 700m in wharf), strengthening its future order acceptance strength. Pay attention to the subsequent reversal logic of the company.
Profit forecast: the company's net profit from 2022 to 2024 is expected to be 1.8 billion yuan, corresponding to PE17/15/9 times, and maintain the "buy" rating.
Risk hint: the company's completion schedule is low expected risk, exchange rate fluctuation risk, LNG production expansion is not as expected.
