Hengtai Aipu is a comprehensive energy service provider with the layout of the whole industry chain.
In the past three years, we have persisted in continuously optimizing its industrial structure and strengthening competitiveness in the stage of low oil prices, which has laid a solid foundation for the subsequent rebound in performance. Through a large number of industry research and visits to the company's core companies, we believe that it will begin to have a double inflection point of order and performance in 2017, and it is more flexible.
The five major business plates have taken shape, and the whole industry chain has achieved remarkable results.
At present, it has formed five major plates: Groug (Geology and Geophysics), engineering technology, high-end equipment manufacturing, cloud computing and big data, and investment incubation, with an advantageous layout of services and equipment in oil, natural gas, geothermal and other fields. The running-in of the management and technical teams of the core companies is getting better and better, and the synergy effect of the industrial chain appears.
Oil and gas investment rebounded, orders and performance are entering the harvest period
Due to the low surplus capacity in major production areas such as the Middle East and the continued improvement in superimposed oil prices, global oil and gas capital expenditure has entered a new upward cycle, with an annual investment growth range of about 10-20 per cent in the next three years. According to field research and industry verification, orders for equipment and energy services of the company's core companies have improved significantly, and we expect the inflection point of revenue and net profit to begin to show in the second quarter.
The maturity of Xiyou combined geothermal drilling and completion technology may benefit the geothermal development of "Xiongan New area".
With unique resources, geothermal is an important energy source in Xiongxian New area. Relying on the experience of the "Xiongxian model", China Petroleum & Chemical Corp is expected to vigorously promote and develop, we estimate that the total investment may reach 50 billion yuan. According to the field grass-roots research, exploration, drilling and completion, ground source heat pump and other equipment and other three links are more beneficial, among which the drilling and completion business benefits the most. West Oil Union has mature technology in geothermal and rich experience in the project, which may benefit in the future.
The acquisition of Xinjinhua and Sichuan Oil Technology to enter the natural gas market may become a new performance growth pole.
From the perspective of industrial trends, in order to optimize the energy structure, the proportion of natural gas in primary energy consumption will rise from 6 per cent at present to 12 per cent in 2020 (the global average is 24 per cent). Investment in natural gas (including pipeline gas, LNG, etc.) will also continue to grow. The company has previously acquired and integrated Xinjinhua and Sichuan Oil Design, making full preparations for the creation of a new growth pole in the natural gas field.
Earnings in 2017 and 2018 may significantly exceed market expectations and maintain a "buy" rating
It is estimated that from 2016 to 2018, the operating income will be 1.367 billion yuan, 1.953 billion yuan and 2.667 billion yuan respectively, and the net profit will be 86 million yuan, 277 million yuan and 395 million yuan respectively, corresponding to 0.12,0.39 and 0.55 yuan per share of EPS. In 17 years, A-share comparable listed companies estimated the industry average valuation at 42 times according to Wind consensus expectations, and the company was lower than the industry level. In 17 years, the A-share comparable listed companies were given 35-38X with a target price of 13.65-14.82yuan per share, maintaining a "buy" rating.
Risk hint: international crude oil prices fell to a low again; geothermal drilling business and natural gas business expansion did not meet expectations.