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洲际油气(600759)年报及季报点评:低油价控成本 未来享受油价弹性

Intercontinental Oil and Gas (600759) Annual report and Quarterly report comments: low oil prices control costs and enjoy oil price flexibility in the future

招商證券 ·  May 5, 2017 00:00  · Researches

Events:

According to the annual report of 2016 and the quarterly report of 2017, the company realized operating income of 1.206 billion yuan in 2016, down 4.34% from the same period last year. The net profit attributed to listed companies was 43.11 million yuan, down 33.48% from the same period last year. The net profit attributed to listed companies was-210 million yuan, down 35.28% from the same period last year, and 0.019 yuan per EPS per share.

In the first quarter of 2017, the company realized operating income of 732 million yuan, an increase of 203.21% over the same period last year. The net profit attributed to listed companies was 12.64 million yuan, an increase of 950.34% over the same period last year. The net profit attributed to listed companies was 6.87 million yuan, an increase of 120.26% over the same period last year, and 0.0056 yuan per EPS per share.

On April 27, 2017, the company announced plans for the controlling shareholder and Dong Jiangao to increase their shareholdings. Guangxi Zhenghe, the company's controlling shareholder, and its controlling subsidiaries will increase their holdings of the company through the Shanghai Stock Exchange trading system in the next six months, with an amount of 50 million to 10 million yuan; all or part of the company's director and key personnel will increase their holdings of the company's shares by 50 million to 10 million yuan.

Comments:

1. Affected by the fall in oil prices, the oil and gas business profits of 2016 companies have declined, and 2017Q1 has rebounded with oil prices.

Despite the impact of falling oil prices, the company's oil and gas sales revenue in 2016 was 1.015 billion yuan, down 3.24% from the same period last year, and the decline was much lower than the average Brent oil price drop. For the whole year, the company sold a total of 597200 tons of crude oil, an increase of 8.54% over the same period last year. The profit of the company's oil and gas business decreased slightly, mainly due to an increase in financial expenses of 140 million yuan in financial expenses. This is due to the financial expenses incurred in the whole of 16 years due to the increase in production and depreciation and amortization based on the production method.

2017Q1 achieved operating income of 732 million yuan, a sharp increase of 203.21% over the same period last year, mainly due to two reasons: first, the company added a new combined transportation company, and second, the average international crude oil price of 2017Q1 reached 55 US dollars per barrel, an increase of nearly 20 US dollars per barrel compared with the same period last year, and the crude oil production of Keshan Company increased. Two factors contributed to a substantial increase in the company's 2017Q1 revenue.

In 2016, the company sold 597200 tons of crude oil, an increase of 8.54 percent over the same period last year. The average sales price of crude oil was about 34.70 U.S. dollars per barrel, down 8.27 U.S. dollars per barrel. The average price of Brent crude oil in 2016 was 45 US dollars per barrel, down 8.7 US dollars per barrel from the same period last year, so on the whole, the decline in the company's average crude oil sales price in 2016 is basically consistent with the decline in international crude oil prices. the company has achieved that the oil price is lower than the international oil price mainly because the company's oil field is located in Kazaka. according to regulations, part of the crude oil produced by the company needs to be sold domestically, while the price sold in Kazakhstan is much lower than the international average price.

2017Q1 achieved operating income of 732 million yuan, a sharp increase of 203.21% over the same period last year, mainly due to two reasons: first, the company added a new combined transportation company, and second, the average international crude oil price of 2017Q1 reached 55 US dollars per barrel, an increase of nearly 20 US dollars per barrel compared with the same period last year, and the crude oil production of Keshan Company increased. Two factors contributed to a substantial increase in the company's 2017Q1 revenue.

2017Q1 Company sold a total of 207000 tons of crude oil, an increase of 64400 tons over the same period last year, and produced a total of 181500 tons of crude oil, an increase of 16.23% over the same period last year. The company's crude oil sales achieved an operating income of 470 million yuan, an increase of 115% over the same period last year, and a net profit of 81.66 million yuan, an increase of 402% over the same period last year. The main reason for the increase in production is the repair of the old wells of Keshan Company and the optimization of oil production plan. The production decline of Mating, Dongke and Kara oilfields belonging to Mateng Company has been delayed by a series of measures such as hole filling, water plugging, layer change and acidizing.

2. The substantial increase in the company's financial expenses has compressed the company's profits.

In 2016, the company's financial expenses reached 324 million yuan, an increase of 136 million yuan over the same period last year, while 2017Q1's financial expenses reached 125 million yuan, an increase of 47.51 million yuan over the same period last year. As of March 31, 2017, the total amount of long-term and short-term loans and bonds payable by the company has reached 6.1 billion yuan. On the whole, the financial pressure is relatively large. If the fixed increase of funds is successfully completed, the financial pressure of the company will be alleviated to a certain extent. At the same time, the company currently holds 104.6 million shares of Jiaozuo Wanfang, a listed company, with a market capitalization of nearly 1 billion yuan, which is one of the options for the company to reduce its financial burden in the future.

3. Low-level oil service company with expected profit improvement in the future.

On December 15, 2016, the company signed the "InterContinental Oil and Gas and Anton Group, HP Deep Cooperation Strategic Agreement" with Andong Group and HP. On the same day, the company signed a share subscription agreement with Anton Group. The company subscribed for 221619604 shares of Anton Group at HK $1.008 per share, accounting for about 8.33% of the issued shares of Anton Group, and the equity was acquired on January 25, 2017. We believe that at present, the oil service industry is at a low point, and the market value of Andong oil service company has also shrunk greatly. at present, investing in oil service company is a better strategic time point, and there is more room for business cooperation between the company and oil service company in the future.

4. Acquire 50% stake in Kazakh oil and gas transportation company to enhance the profitability of the company

Intercontinental Singapore, a holding subsidiary of 2016 Company, signed an equity transfer agreement with Trade Commerce Oil to acquire Trade Commerce Oil's 50% stake in Kazakh Oil and Gas Transportation Company for US $100.3 million. Kazakh Oil and Gas Transportation Company is mainly engaged in oil and liquefied natural gas transportation, tank leasing and entrusted storage services. With a 100% stake in Premium Oil Trans LLP, Ertys Service LLP, Kazykurt South LLP and BatysPetroleum LLP and a 70% stake in DTI-AOR LLP, the company is a major provider of freight services and truck leasing for petroleum products trading in the three major refineries of Kazakhstan. The oil transportation and truck rental services provided by the company have a stable source of customers in the Kazakh market, a large market share and obvious competitive advantage, and occupy a leading position in the entire Kazakh oil transportation industry.

In 2016, the Kazakh oil and gas transportation company made a net profit of 151 million yuan, while 2017Q1 made a net profit of 37.29 million yuan, making a very good profit. in the future, the Kazakh oil and gas transportation company can contribute considerable profits to the company on the one hand, and provide transportation, leasing and other services for the Mateng and Keshan oilfields on the other hand.

5. The company is steadily advancing its acquisition of Luozhou Xinke. After the completion of the reorganization, the company's crude oil reserves and production will rise to a higher level.

According to the revised plan for major asset restructuring announced by the company on March 7, 2017, the company intends to purchase a total of 96.70% of Shanghai Luozhou Xinke held by four trading parties, including Ningbo Huagai Jiazheng, by issuing shares. at present, the company already holds 3.30% of Luozhou Xinke. After the reorganization is completed, the company will hold 100% equity of Luozhou Xinke. As a result, it indirectly controls the underlying oil and gas assets owned by Luozhou Xinke, including 100% equity of Banks and 100% equity of Keao Investment. the two sides agreed that the transaction price of 96.70% equity of Shanghai Luozhou Xinke is 3.3615 billion yuan. the price of shares to be issued by the company is 7.33 yuan per share, and no more than 458594815 shares are to be issued. According to the "Evaluation report" of Tianyuan Evaluation, Banks' net profit from 2017 to 2020 is expected to be-3372.7 US dollars, 756.6 US dollars, 5534.8 US dollars and 144.165 million US dollars, respectively. Changde Jiufu Trading promises that if the total net profit of Banks in 2017-2020 falls short of the total net profit of US $171.352 million in the four years of the evaluation report, Changde Jiufu Trading stocks or cash to make up the difference, the shares of this issue will be locked up for 36 months.

At the same time, the proposed supporting financing will not exceed 3.2 billion yuan, and the supporting funds will be used to pay the taxes and fees of this M & A transaction and the production capacity construction project of Banks Company. the proposed issuing objects of funds to be raised are Shenzhen Anda Chang Industrial Co., Ltd., and the second phase of Golden Brick Silk Road. On September 20, 2016, the company signed a share offering agreement with them, with an issue price of 7.33 yuan per share and no more than 436562073 shares, with a lock-up period of 36 months.

At present, the company has responded to two written feedback from the China Securities Regulatory Commission on this restructuring, and the restructuring is being actively promoted.

At present, the company's oil and gas assets are mainly the previously acquired Mateng and Keshan oilfields. As of December 31, 2015, its 1P reserves are 17.082 million tons, while Banks' current 1P reserves are 19.949 million tons. After the successful restructuring, the company's 1P reserves will increase by 116.8%. In addition, the company's annual crude oil production will also increase significantly. Mateng and Keshan produced a total of 630000 tons of crude oil in 2016, while Banks produced 1.2 million tons of crude oil in 2015. after the completion of the restructuring, the company's crude oil production will increase to nearly 2 million tons per year.

Banks is listed in Canada and the UK and mainly operates Patos-Marinza, Kucova and Block F blocks in Albania, of which Block F is an exploration block and has not yet entered the production stage; Patos-Marinza and Kucova are production blocks, which are the two main blocks owned by Banks. The Patos-Marinza oil field is located in southern Albania, with a mining right area of about 202square kilometers, plain in the north and hills in the south. At present, the main development and production area of the oil field is located in the north-central part of the mining area; the Kucova oil field is located in the southeast of the Duras basin in the center of Albania, with a concession area of 53.5square kilometers; Block.F is an exploration block, adjacent to the Patos-Marinza block, covering an area of about 750square kilometers.

As of December 31, 2015, Banks has 476 production wells in production, the Patos-Marinza field is the largest in continental Europe (excluding Russia), the company's production wells are mainly concentrated here, but also contribute to the main production capacity of Banks; Banks has confirmed + estimated reserves (also known as 2P) of about 200 million barrels and geological reserves of more than 800 million barrels.

Banks Oilfield currently has low reserves production and large remaining recoverable reserves. After the acquisition of Banks, the company will improve the original production technology of Banks and adopt two of the world's latest and most practical oil field development technologies, that is, the previous completion technology will be changed from the original three-and-a-half ordinary screen pipe to FluxRite completion string, and at the same time, the current polymer flooding will be changed into alternative steam flooding. It is expected that the average production life of a single well in Banks will increase from the current 3 years to 15 years, the oil recovery of the oil field will increase from 11% to more than 35%, the average cumulative oil production per well will increase from the current 20, 000 tons to 60, 000 tons, and the average production cost per barrel will drop by 1/3.

The main asset of Shanghai Keeau Investment is the assets in five blocks held by its indirect holding company NCP, and its main business is oil exploration in Kazakhstan through NCP. The contracts for the use of underground resources in five blocks held by NCP are currently in the exploration period and have been approved by the Ministry of Energy of Kazakhstan, which expires on November 14, 2016. After the contract expires, NCP has the right to extend five contracts, which can be extended twice, each for two years; NCP needs to apply for extension three months before the contract expires. According to the latest third-party resource report, the total petroleum geological resources of the five blocks are 1.741 billion tons and the recoverable resources are 609 million tons.

The five oil and gas exploration blocks owned by NCP are located in Balykshi, Karabas, Zharkamys East in the Caspian Basin, Sai-Utes in the North Uthschuld Basin and Aktau in the Mangeshrak Basin, covering a total area of 9849 square kilometers.

Oil discoveries have been made in some blocks, and the exploration results are expected to be further expanded; in addition, there are still large areas without exploration but with great potential, and there is great potential to increase reserves in the future.

6. Major shareholders subscribe for and issue shares to raise more than 90% of the funds and launch plans to increase their holdings, demonstrating their confidence in future development.

Shenzhen Anda Chang Industrial, one of the objects of the company's share issue to raise funds, is a wholly-owned subsidiary of the company's controlling shareholder, which will subscribe for 2.9 billion yuan, accounting for 90.63% of the issuance ratio, demonstrating the confidence of the company's actual controllers and controlling shareholders in the future development of the company. Through this asset acquisition and supporting financing, the shareholding ratio of controlling shareholders and people who have been acting has increased from 29.38% to 36.91%. The increase in the shareholding ratio of major shareholders is conducive to the future capital operation of the company. We believe that the company is determined to take advantage of the strategic opportunity of low oil prices to become bigger and stronger through epitaxial mergers and acquisitions.

At present, the asset-liability ratio of the company has reached 66.14% (up to 2017-3-31). After the issuance of shares to raise matching funds, the asset-liability ratio of the company is expected to decrease significantly, which will not only help to reduce the financial burden of the company, but also help the company to use debt for financing in the future.

On April 27, 2017, the company announced plans for the controlling shareholder and Dong Jiangao to increase their shareholdings. Guangxi Zhenghe, the company's controlling shareholder, and its controlling subsidiaries will increase their holdings of the company through the Shanghai Stock Exchange trading system in the next six months, with an amount of 50 million to 10 million yuan; all or part of the company's director and key personnel will increase their holdings of the company's shares by 50 million to 10 million yuan. The company also launched the controlling shareholder and Dong Jiangao's plan to increase their holdings, and there is no price range, which demonstrates the confidence of the company and management in the future development of the company.

Investment suggestion

Regardless of the company's fixed growth, assuming that the average oil prices in 2017-2019 are $54 / barrel, $60 / barrel and $65 / barrel, we expect the company's net profit from 2017 to 2019 to be 0.80,1.87 and 302 million yuan respectively, with EPS of 0.04,0.08 and 0.13 yuan respectively, corresponding to the current share price of 6.35 yuan and PE of 179.0, 76.9 and 47.6 times, respectively.

At present, the restructuring of the company is progressing steadily. From the perspective of the process, we assume that the restructuring of the company will be completed in the third quarter of 2017 and will be consolidated for four months in 2017, in which the process of asset acquisition may be faster than that of supporting financing. Assuming that a total of 895156888 shares are issued, we expect the company's net profit from 2017 to 2019 to be 2.44,9.84 and 1.286 billion yuan respectively, with EPS of 0.08,0.31 and 0.41 yuan respectively, corresponding to the current share price of 6.35 yuan. The PE was 82.1,20.4 and 15.6 respectively.

At present, the company's acquisition of a 96.7% stake in Shanghai Luozhou Xinke is steadily progressing. After the completion of the acquisition, the company's annual crude oil production will be close to 2 million tons, and it is planned to grow to 5 million tons / year in the next three to five years. The company will change from a small and medium-sized oil and gas company to a medium-sized oil and gas company. We believe that the company is a relatively pure oil price-related target, and the performance of companies with rising oil prices is very flexible. I suggest that we should pay attention to the current low crude oil prices. The profitability of the company is not fully reflected, and the "cautious recommendation" rating is maintained.

Risk Tips:

International oil prices have fallen sharply, and the company's progress has fallen short of expectations.

The translation is provided by third-party software.


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