1. The company's profit situation

In the first half of 2023, the company's revenue was 1,882 million yuan, an increase of 34.85% over the previous year, and net profit from the parent company reached 440 million yuan, an increase of 107.18% over the previous year.

2. Aksu Zhongman Oil & Gas

1) Production situation: In the first half of 2023, the company produced 275,100 tons of crude oil, an increase of 77,200 tons over the same period last year, an increase of 39.01% over the same period last year.

2) Profit situation: In the first half of 2022, the company's crude oil sales business revenue was 883 million yuan; according to our calculations, the subsidiary's realized crude oil price was 3,522 yuan/ton, equivalent to 72.59 US dollars/barrel.

3) Cost situation: According to our calculation, the unit cost of the crude oil business is 1154 yuan/ton (including three fees), equivalent to 23.78 US dollars/barrel.

3. Oil service order signing

On July 16, 2023, Zhongman Petroleum Group Co., Ltd. and Basra EnergyCompany Limited signed a drilling engineering service contract. The contract amount is estimated to be about 390 million US dollars, or 2,796 billion yuan. (In 2022, the company's drilling engineering sector signed a total of 2,687 billion yuan in orders)

4. The majority shareholders' holdings reduction plan was terminated early

On August 28, 2023, according to the company's announcement, the company received the “Notice Letter on Early Termination of the Share Holding Reduction Plan” issued by Gongxing Investment, Gongrong Investment, and Gongyuan Investment. According to the regulations of the China Securities Regulatory Commission to further regulate the reduction of stock holdings, and taking into account their own circumstances, Gongxing Investment, Gongrong Investment, and Gongyuan Investment terminated the holdings reduction plan.

5. Profit forecasting and valuation

The company's net profit for 23/24/25 was 7.9/12.8/1.68 billion yuan, corresponding to EPS of 1.98/3.21/4.21 yuan/share, maintaining the “increase in holdings” rating.

Risk warning: 1) The risk that oil prices will fall, causing the company's profits to fall; 2) the risk that the company's crude oil production will fall short of expectations; 3) Crude oil exploration is risk exploration, and there is a risk that future blocks will not produce oil.