24Q1 net profit without return to mother +69.5% YoY, maintaining the “Accumulation” rating
In the first quarter of 2024, the company achieved a total operating income of 10.148 billion yuan, +20.0% year on year; net profit to mother of 636 million yuan, +57.3% year over year; net profit after deducting non-return to mother of 656 million yuan, +69.5% year on year.
Considering the company's drilling business or being affected by Saudi rents, we adjusted the company's projected net profit to be 39/48/57 (previous value: 44/54/60) billion yuan for 2024-2026, respectively, corresponding 23/18/15 times PE for 2024-2026. Comparable to A-shares, the company Wind agreed to expect an average value of 13x for 24PE. Considering the recovery trend in the drilling platform market, the company was given 25xPE in 24, with a target price of 20.40 for A-shares (previous value:
18.59) yuan, maintaining the “overholding” rating; referring to other Hong Kong energy machinery and equipment companies, Wind agreed to expect an average value of 24PE 10 times, and the HKD exchange rate was 0.91, giving 12xPE H shares a target price of HK$10.76 (previous value: 10.10), maintaining the “gain” rating.
Profitability continues to increase, and the cost rate for the period is well controlled
In the first quarter of 2024, the gross profit margin was 16.4%, compared to +2.62pp. Under the high boom in the oil service industry, the company actively deployed the global regional market, and its profitability continued to increase. In terms of the cost rate for the period, the total cost rate for the period was 7.53%, -0.05pp compared to the previous year. Among them, the sales expense ratio was 0.01%, which was basically the same; the management expense ratio was 2.0%, -0.37pp; the financial expense ratio was 2.2%, -0.19pp; and the R&D expense ratio was 3.3%, +0.50pp. The overall period cost rate was well controlled.
The overall workload is rising steadily. The drilling service sector is expected to pick up in the future, and all sectors are running smoothly in the first quarter, and the overall workload is steadily increasing. 1) Drilling services: 4,388 days of drilling platform operation, 77 days of year-on-year reduction due to the leasing of some platforms in the Middle East, and the year-on-year usage rate of drilling platforms was basically the same; 2) Oilfield technology sector: main business line operations continued to increase year-on-year, and overall revenue scale maintained a growing trend; 3) Ship services: operating 172 ships for 14,000 days, an increase of 532 days over the previous year; 4) Geophysical exploration and engineering survey services: two-dimensional collection operations were 4043 kilometers, a year-on-year decrease of 7960 kilometers; three-dimensional acquisition operations were 6696 square kilometers compared with the same period. An increase of 5,585 square kilometers; the total amount of undersea operations was 241 square kilometers, an increase of 15.3% over the previous year.
Relying on the advantages of a complete industrial chain, all-round layout of overseas markets
The company uses the advantages of a complete industrial chain to build an integrated brand for the entire oil field life cycle guided by customer needs, and actively plans overseas market layout during the period of industry growth. By the end of 2023, the company had 19 drilling platforms in overseas regions, spread across high-end markets such as the Middle East, America, and the European North Sea; oilfield technical services had won multiple overseas contracts, and high-end “Xuanji” system tools further expanded external market share; successfully signed the first overseas high-value ship service contract and launched a “14+10” Oceania ship service project; the geophysical exploration sector had entered the field of three-dimensional seismic exploration and collection in West Africa and Southeast Asia to achieve continuous operation in Southeast Asia.
Risk warning: International oil prices fluctuate greatly; oil companies' capital expenditure falls short of expectations.