Incident: The company released its report for the first quarter of 2024: operating income of 10.15 billion yuan (+20% YoY, -31% month-on-month), net profit of 660 million yuan (YoY +57%, -14% month-on-month), net profit of 660 million yuan (YoY +70%, YoY -5%). The operating conditions are good, and the performance has improved significantly over the same period last year.
Lean management of multiple businesses has improved quality and efficiency, and profitability has steadily increased: in the first quarter of 2024, the company's operating profit was 1.01 billion yuan, +340 million yuan over the same period last year. The company grasps the active period of the oilfield service market, gives full play to the advantages of the entire industry chain, and promotes the upgrading of service quality and efficiency. 1) Drilling service: As of 24Q1, due to platform leasing, the company's drilling platform operated for 4,388 days (YoY - 1.7%), of which the jack-up drilling platform and semi-submersible drilling platform had operating days of 3,420 days (-2.6% YoY) and 968 days (+1.6% YoY), respectively. The calendar day usage rates were 80.2% (-1.1 pct) and 76.0% (YoY +0.4 pct), respectively. 2) Oilfield technical services: The company continues to improve its scientific and technological innovation capabilities and scientific research transformation capabilities. As of 24Q1, the operating volume of the main business lines of oilfield technical services has continued to grow year on year, and the overall revenue scale has maintained an upward trend. 3) Ship service: As of 24Q1, the company's ship service business operated and managed 172 workboats, with 14,227 days of operation (+3.9% over the same period).
4) Geophysical exploration and engineering survey services: Affected by the schedule of the operation plan, as of 24Q1, the company's two-dimensional collection operations, 3D collection operations, and subsea operations were 4043 km (-66.3% YoY), 6696 square kilometers (+503.7% YoY), and 241 square kilometers (+15.3% YoY). The increase in the 3D acquisition business was mainly contributed by overseas operations.
The company directly benefited from the increase in CNOOC's offshore oil and gas capital expenditure: CNOOC's total capital expenditure budget in 2024 was 125-135 billion yuan, of which CNOOC estimated that capitalization expenses for exploration, development and production would account for 16%, 63%, and 19% respectively; China and overseas will account for 72% and 28% respectively. CNOOC's increased capital expenditure will increase the workload at sea, which is conducive to enhancing the company's performance.
Profit forecast and investment rating: Based on the development of the company's domestic and foreign projects and the significant increase in workload, we maintained net profit of 38, 4.4, and 5.2 billion yuan respectively in 2024-2026. According to the closing price on April 26, 2024, the corresponding PE of A shares is 23, 20, and 17 times, respectively, and the corresponding PB of A shares is 2.0, 1.9, and 1.7 times, respectively. We believe that the company adheres to the development strategy of “internationalization” and “integration” of technological innovation, and is expected to continue to improve its profitability and maintain a “buy” rating.
Risk warning: macroeconomic fluctuations and downside risks in oil prices; geopolitical risks; risk of exchange rate fluctuations; risk of operations progressing less than expected