Incident: On July 25, the company released its 2024 semi-annual report. In the first half of 2024, the company achieved operating income of 1.061 billion yuan, +17.78% year over year; realized net profit attributable to mother/ net profit of 0.063/0.083 billion yuan, which turned a loss into profit over the same period last year, +0.134/0.15 billion yuan, respectively; achieved net cash flow from operating activities of 0.05 billion yuan, or -80.43% year on year.
2024Q2 performance continues to improve, and on-hand orders are operated efficiently. On a quarterly basis, in the second quarter of 2024, the company achieved operating income of 0.564 billion yuan, or -4.55% year-on-year; realized net profit attributable to mothers/net profit of 0.029/0.034 billion yuan after deduction, turning a loss into a profit, +0.82/+0.076 billion yuan, respectively. Since the second half of 2023, the company's overall performance has improved quarterly. 2023Q3/2023Q4/2024Q1/2024Q2 revenue was 4.40/0.459/0.497/0.564 billion yuan, respectively, and net profit to mother was -0.15/0.011/0.034/0.029 billion yuan, respectively. In the first half of 2024, the UAU FPSO project implemented by the company progressed rapidly and completed the phased goals; the offshore platform living building module construction project and the FPSO RAIA Topside project were successfully started, and production and construction were on the right track.
It is deeply tied to global general contracting giants, and currently has a large number of orders in hand. After more than ten years of international and domestic project execution, the company has established long-term cooperative relationships with MODEC, ABB and other companies. Among them, the company established cooperative relationships with MODEC in 2007, and the two sides have cooperated on more than ten FPSO upper module projects. In 2023, the company signed a number of large contract orders, totaling 0.512 billion US dollars, which can basically guarantee the performance of the next two years: successfully signed a UAU FPSO project order in June, with a contract amount of 0.152 billion US dollars, which is the first time that the company and MODEC participated in the ExxonMobil FPSO project; in September, the company signed a contract with Servizi Energia Italia S.p.A for the construction of an offshore platform living building module, with a contract amount of about 0.22 billion US dollars. Entered the Middle East market quickly; in October, the company signed a contract with the MODEC subsidiary for the FPSO RAIA Topside project, with a contract amount of approximately $0.14 billion.
The offshore oil and gas extraction market continues to prosper, and offshore module experts are expected to continue to benefit. Currently, global oil prices remain high. On July 29, the spot price of Brent crude oil was 80.28 US dollars/barrel. In the short term, international oil prices are under pressure due to expectations such as the easing of the geographical conflict between Palestine and Israel, the rise of Trump, and the weakening of China's energy demand, but they are expected to remain above 70 US dollars/barrel throughout the year. In the context of high oil prices, due to the remarkable economic advantages of deep-sea petroleum resource development, it is expected that the offshore oil and gas extraction market will continue to be booming in 2024. The company is a leading international offshore module enterprise with strong project management and excellent product development capabilities. Past engineering performance is sufficient, and it is expected that it will continue to benefit in the context of the boom in the offshore industry market.
Profit forecast: First coverage, giving the company an “gain” rating. We expect that in 2024-2026, the company will achieve operating income of 2.656/3.86/5.463 billion yuan, net profit to mother 0.117/0.227/0.34 billion yuan, and corresponding PE of 26.37x/13.56x/9.04x, respectively.
Risk warning: crude oil prices fluctuate greatly, exchange rates fluctuate greatly, upstream capital expenditure falls short of expectations, project progress falls short of expectations, profit forecasts and valuation models fall short of expectations