Description of the event
The company released its 2023 annual report. In 2023, the company achieved total revenue of 13.912 billion yuan, up 21.94% year on year, and net profit to mother of 2,454 billion yuan, up 9.33% year on year. According to single-quarter data, total revenue for the fourth quarter was 5.156 billion yuan, up 20.02% year on year, and net profit returned to mother for the fourth quarter was 890 million yuan, up 18.78% year on year.
Incident comments
The industry's prosperity continued to improve, and the 2023 results showed positive growth. Despite fluctuations in oil prices, oil prices remained high in 2023 due to multiple complex factors such as frequent geographical conflicts, trade games between major powers, energy transitions, and continued OPEC+ production cuts. Major international oil companies have re-strengthened their upstream business, oil and gas asset mergers and acquisitions continue to heat up, and interindustry mergers and acquisitions and cross-border mergers and acquisitions may become a new trend; domestic exploration and development efforts continue to increase, and the prosperity of the oil and gas industry continues to rise. The company's 2023 performance increased 9.33% year on year. The gross sales margin and net sales margin were 33.0% and 17.9% respectively. The year-on-year decrease was 0.2 pct and 2.1 pct, respectively, and the overall profit level declined slightly. The fee rate for the period increased by 2.1 pct year on year, of which the financial expense ratio increased by 2.3 pct year on year, mainly due to the high exchange earnings for the same period in '22.
Increased storage and production will accelerate in the 14th Five-Year Plan, demand for unconventional oil and gas extraction will continue to increase, and the company will fully benefit as a leader in fracturing equipment. The “14th Five-Year Plan” stipulates, “Strengthen domestic oil and gas exploration and development efforts, insist on putting equal emphasis on land and sea, actively expand exploration and development of unconventional resources, and accelerate the development of shale oil, shale gas, and coalbed methane.” By 2030, China's crude oil production is expected to maintain 200 million tons, natural gas production will increase steadily, and the related oilfield service market will continue to grow. Looking forward to the future, along with increased storage and production and continued growth in oil and gas capital expenditure, the increase in unconventional oil and gas production will make the fracturing equipment industry a blue ocean market. As the leading domestic fracturing equipment leader, Jerry Co., Ltd. will fully benefit.
Major breakthroughs have been made in domestic and international development, and there are sufficient orders in hand. The company won the bid for the centralized procurement project for all CNPC fracturing equipment in mid-year in 2023, maintaining a winning record in the CNPC electric fracturing bidding project, and continued to maintain a leading position in the domestic fracturing market; in overseas markets, the company successfully sold the second 35MW gas turbine generator set in North America; successfully sold China's electric drive fracturing equipment to the North American market for the first time. This is another milestone after the company achieved sales of turbine fracturing and gas turbine generators in the US; next-generation new energy equipment such as electric drive fracturing equipment has become an important support for the company's oil and gas equipment sector. . In terms of order volume, the company added 13.956 billion yuan in orders in 2023, an increase of 9.65% over the previous year. Adequate on-hand orders will positively support future business performance.
The repurchase of shares and the increase in executive holdings are progressing steadily, demonstrating the company's full confidence. In January 2024, the company reviewed and passed the “Proposal on the 2024 Share Repurchase Plan”. The total repurchase capital was not less than 150 million yuan and not more than 250 million yuan, and the repurchase price was no more than 40 yuan/share. In addition, in July 2023, the chairman, president and vice president of the company announced plans to increase their holdings of the company's shares through centralized bidding with self-raised funds within the next 4 months. The total amount of increase in holdings will not be less than 8 million yuan and no more than 9 million yuan, and the final actual total amount will be 8.7838 million yuan. The repurchase of shares and the increase in executive holdings showed the company's full confidence.
Without considering future changes in share capital, the company's 2024-2026 EPS is expected to be 2.96 yuan, 3.61 yuan, and 4.32 yuan. The PE corresponding to the closing price on April 3, 2024 is 11.12X, 9.11X, and 7.61X, respectively, maintaining a “buy” rating.
Risk warning
1. The sharp drop in international oil prices;
2. Part of the company's industrial transformation failed.