Company announcement: In the first quarter of 2024, the company achieved operating income of 5.672 billion yuan, a year-on-year decrease of 11.33%; net profit to mother was 475 million yuan, an increase of 5.96% over the previous year; net profit withheld from non-mother was 400 million yuan, an increase of 23.35% over the previous year. The performance was in line with our expectations. In 24Q1, the company's gross margin reached 9.91%, a year-on-year decrease of 1.68pct. The increase in the company's performance is mainly due to improvements in expenses. The company's expense ratio reached 1.02% during the 24Q1 period, down 3.98 pcts year on year. The cost decline was mainly due to a decrease in R&D expenses and financial expenses. Among them, R&D expenses fell 94.18%. It is speculated that it may be due to certain adjustments in research funding, and some expenses are included in operating costs; financial expenses decreased 221.27% year on year due to increased interest income.
Ongoing orders are progressing steadily, and the volume of work remains at a good level. The total number of active orders in 24Q1 was about 40.5 billion yuan, providing strong support for the continuous development of the company's business. 24Q1 The company ran 63 projects in a smooth and orderly manner, 4 of which were delivered. The company's construction business completed 136,000 tons of steel processing, an increase of 13% over the same period last year; it invested 0.48 million ship days in offshore operations such as installation, and the total number of ship days invested decreased by 23% over the same period last year due to differences in workload distribution. It is expected that the company's active projects will continue to advance in an orderly manner in 2024, driving the company's performance upward.
International oil prices are fluctuating at high levels, and the company's orders are expected to continue to rise. 24Q1 achieved a market contract of 6.517 billion yuan, an increase of 11% over the previous year, including domestic oil and gas business commitments of 6.110 billion yuan. The main projects include the EPCI turnkey project for the Bozhong 26-6 oilfield development project and the EPCI turnkey project for the Bozhong 19-2 oilfield development project; the main projects include the Brunei Shell PRP9 maritime management replacement project contract and CNOOC North America's 25kVL512 upgrade project. We expect Brent oil prices to remain in the $80-90 range, and global upstream exploration investment is expected to continue to grow. According to Smart Energy, offshore exploration and development capital expenditure is expected to increase 19% year-on-year in 2024, driving the company's orders to continue to rise.
Pay attention to shareholders' interests and publish shareholder return plans for the next three years (2024-2026). According to the company's announcement, the company plans that when the cash dividend conditions are met, the profit distributed by the company in cash every year for the next three years (2024-2026) (including cash dividends already distributed in the medium term) will be no less than 30% of the net profit of the parent company's shareholders in the consolidated statements achieved in that year. The company shall pay a cash dividend once a year, and if conditions are available, the company can distribute profits for the medium term. It is expected that as the company's performance gradually grows, the level of dividends will continue to rise.
Investment analysis opinion: Maintain the 2024-2026 net profit forecast of the company at 20.15/25.14/3,048 billion yuan, corresponding PE of 14 times/11 times/9 times, respectively, and maintain the “buy” rating.
Risk warning: Fluctuations in international oil and gas prices; upstream capital expenditure falling short of expectations; HSSE risks, etc.