Event
On February 26, the company released its 2017 results, KuaiBao. During the reporting period, the company achieved a total operating income of 660 million yuan, an increase of 54% over the same period last year. The operating profit was 84.28 million yuan, an increase of 26.8% over the same period last year. The net profit belonging to shareholders of listed companies was 65.8 million yuan, up 11.38% over the same period last year.
Comment
2017 the operating income increased significantly, and the net profit attributed to the shareholders of the parent company was lower than expected. In 2017, under the background of the gradual rise in oil prices and the large-scale development of Xinjiang oil fields, the company's operating income increased by 54% compared with the same period last year. In order to grab more market share at the beginning of the industry recovery, the company's gross profit declined compared with last year, and operating profit in 2017 increased by 26.8% year-on-year, lower than the year-on-year growth rate of operating income. Considering that the company's non-operating net income from government subsidies increased by 10 million yuan in 2016, the revenue was not realized in 2017, and the total profit growth rate was 9.63% year-on-year, which was lower than expected.
The drilling workload has obviously rebounded and the gross profit margin is expected to be repaired. International oil prices rose 22 per cent year-on-year in 2017, Petrochina Company Limited and China Petroleum & Chemical Corp grew 27 per cent and 28 per cent respectively in the first three quarters, and CNOOC announced plans to increase upstream capital expenditure by 35 per cent in 2018. The company's operating income increased by 54% over the same period last year, which also shows that the substantial increase in capital expenditure in Petrochina Company Limited Xinjiang oil field, especially the large-scale development of Mahu oil field, will ensure the company's workload in the next three years. It is expected that as the industry continues to recover, drilling prices will rise, and the company's gross profit is expected to be repaired.
Profit forecast
In 2018, the company signed two new orders for non-Xinjiang regions, totaling 529 million yuan, of which the Ukraine project is ready to be completed, and the Sichuan shale gas drilling project will start after the Spring Festival. The company is expected to achieve a net profit of 0.91 yuan and 114 million yuan per share belonging to the parent company in 2017-2019, respectively, equivalent to EPS0.78, 0.97 yuan per share, and the corresponding PE is 28.05,22.55 times, respectively, continue to give "overweight" rating.
Risk hints: the implementation rate of OPEC production limit agreement is too low, the situation in Ukraine has undergone a major change, the production of shale oil and gas in the United States is much higher than expected, and exchange rate risk.