Event: on the 24th, the company released its 2017 mid-year report, with operating income of 854 million yuan in the first half, up 66.89% over the same period last year; operating profit of 52.8501 million yuan, down 33.90%; and net profit of 57.2494 million yuan, down 22.90% from the same period last year. In addition, the company reported that the net profit of the parent company from January to September this year will be 1.05-158 million yuan, an increase of 0% 50% over the same period last year.
The oil price stabilized and rebounded, and the company's multi-project progress was smooth. Although many fluctuations tired the net profit, the operation improved the profit and revenue.
International oil prices stabilized and rebounded in the first half of 2017, fluctuating around US $50 per barrel, a marked improvement from the level of US $40 per barrel in the same period last year. Against the background of the pick-up in the industry, the company's overseas oil and gas projects in Pakistan, Kazakhstan and other places are progressing smoothly, driving the growth of the company's two main businesses, oil and gas field equipment and engineering, and the development and utilization of oil and gas resources. The year-on-year growth rate of operating revenue is as high as 52.92% and 135.43%, contributing more than 95% of the total revenue. However, due to the fluctuation of the market value of Andong Group stock invested by the company and the change of US dollar exchange rate, it caused a fair value change loss of about 36.32 million yuan and a foreign currency exchange loss of about 15.6 million yuan respectively. In addition, the company also set aside 13.75 million yuan in bond interest, resulting in a substantial increase in financial expenses over the same period last year. Due to the above reasons, although the company achieved positive revenue growth during the reporting period, the company's net profit declined compared with the same period last year. If the above factors are excluded, the company's net profit will increase by 65.54% compared with the same period last year.
The new bid won the US $400 million Iraq EPCC project, with sufficient orders on hand and guaranteed future performance.
During the reporting period, the newly signed contract value of the company was 267 million yuan, and the contract amount at the end of the period was 641 million yuan (excluding oil and gas resources business). In addition, the company issued an announcement on the 25th confirming that the company was the winning bidder for the EPCC project for the third phase of crude oil gathering and transportation in Iraq's Garraf oil field, with a contract amount of US $59.481 million (about RMB 400 million), with an implementation period of 36 months from the beginning of the contract validity on September 1, 2017, and is expected to contribute 44 million yuan in revenue this year if converted on a straight-line basis. This project is the first time for the company to participate in the service project of an international first-tier oil company, and it is of great significance to the development of the company's international EPC business. Cooperation with well-known international oil companies will help to further open the international market, improve the company's international standard system, accumulate international EPC project service experience, and speed up the construction of EPC professional management team, so as to build an internationally influential Hewlett-Packard brand. With the international oil price rebounding to about US $50 / barrel, oil and gas investment in the Middle East and Central Asia, the company's key markets, continues to rise, and project opportunities are greatly increased. It is expected that the company's overseas oil and gas EPC projects along the Belt and Road will continue to blossom in the future.
Profit forecast: the operating income of the company from 2017 to 2019 is expected to be 1.807 billion yuan, 2.559 billion yuan and 3.344 billion yuan, the net profit attributed to the parent company is 211 million yuan, 444 million yuan and 569 million yuan respectively, and the EPS is 0.20,0.42,0.53 yuan respectively.
Risk hint: the economy is in the doldrums, oil and gas prices are falling, and the progress of overseas projects is blocked.
