1. IPO purchase proposal:
The company's business is divided into three parts: oil field project services, consulting services and manufacturing and sales tools and equipment. By the end of September 2012, the company's revenue from oilfield project services, consulting services, manufacturing and sales tools and equipment was 483 million yuan, 47 million yuan and 40 million yuan, respectively, an increase of 25%, 33% and 155% over the same period last year. In 2009, 2010, 2011, the first nine months of 2011 and the first nine months of 2012, the company's largest customer (China Petroleum & Chemical Corp) accounted for 82%, 97%, 90%, 94% and 77% of the company's revenue, respectively.
According to the Spears report, based on its outlook for world oil prices, global drilling activity is expected to grow from an average of 5525 onshore and offshore drilling rigs in 2011 to an average of 7868 operating rigs in 2020, a compound annual growth rate of 4.0 per cent. In 2011, the number of new onshore and offshore drilling was 98651 and 3717 respectively, and is expected to increase to 135349 and 6069 respectively by 2020. North America and China will continue to be among the top two regions with the most active drilling activity. According to the Spears report, annual global expenditure on drilling and completion of new oil / gas wells on land and offshore is expected to increase from $316.2 billion in 2011 to $587.4 billion in 2020 due to expected growth in upstream activity.
Drilling services, completion services and stimulation services account for the vast majority of the total upstream expenditure arising from drilling and completion. According to the Spears report, it is estimated that the global market for drilling services, completion equipment and services, and production increase services totaled US $57.6 billion in 2011, accounting for about 18% of the total expenditure on onshore and offshore drilling and completion upstream. Revenue from the three components is expected to increase from $57.6 billion in 2011 to $97.4 billion in 2020, including drilling services from $13.2 billion to $26.2 billion, completion equipment and services from $9 billion to $19.2 billion, and increased production services from $35.4 billion to $52 billion.
According to the preliminary IPO document, Tianli Baiqin Oil Service expects the full-year net profit to be no less than 170 million yuan (RMB) by the end of December 2012, of which there is about 40 million one-time income. The IPO price is equivalent to 13.3-16.3 times the forecast price-earnings ratio. After deducting one-time earnings, the forecast price-earnings ratio is 17.4-21.3 times, and the valuation is between Andong Oil Service and China Oil Energy. It is recommended to participate carefully in the subscription.