CNOOC Services' 2024Q1 performance growth exceeded expectations
In 2024, the company's revenue in Q1 reached 10.15 billion yuan, +20% year on year; net profit to mother was 636 million yuan, +57.3% year over year, exceeding market expectations. A stronger net profit growth rate may reflect the high returns brought by the company's high value-added sector and the effectiveness of continuing to drive cost control.
Structural improvements in the drilling sector: The usage rate of semi-submersible platforms with high daily costs increased to 4,388 days of operation in 2024Q1, -1.7%; among them, the number of working days of semi-submersible drilling platforms continued to increase, +1.6% year over year; jack-up platforms declined slightly by 2.6% year on year due to leasing out.
The utilization rates of the 2024Q1 jack-up and semi-submersible drilling platforms were 84.3% and 86.2% respectively, a decrease of 3.9 pct and an increase of 7.7 pct, respectively, over the same period.
As the boom in the oil service industry continues to increase, especially the deep-sea trend, we expect the usage rate of high-cost semi-submersible platforms to increase further. Furthermore, due to the upward trend in the industry, it is expected that suspended platforms in the Middle East will also be digested by the market in the future.
Oilfield technical service sector: Breaking through the new Brazilian market and maintaining year-on-year growth in the oilfield technical service volume and performance of 2024Q1 companies with high growth in the future. The company continues to improve its scientific and technological innovation capabilities and scientific research transformation capabilities, forming a virtuous cycle of independent industrialization of core technology products and R&D and optimization of independent technology products, breaking through the Brazilian market with the strategy of introducing oil field technology services with heavy equipment. COSL Drilling Brasil Ltd., a wholly owned overseas subsidiary, has signed service contracts with Brazilian customers in drilling platform drilling and well repair projects (operation is expected to begin in 2025).
Profit forecast and investment rating: Maintain the forecast net profit for 2024-2026 of 41/59/6.6 billion yuan. A shares correspond to PE 21.3/14.8/13.3 times PE, maintaining a “buy” rating.
Risk warning: the risk that CNOOC's capital expenditure in 2024 will fall short of expectations; the risk that the sharp drop in international oil prices will affect the intention of oil companies to spend capital; overseas order expansion or operation progress falls short of expectations; and the cessation of capacity expansion in the Middle East and Saudi Arabia has put pressure on the daily cost level of the industry for a long time.