Core views

Company announcement: In the first half of 2024, the company achieved net profit of about 1.197 billion yuan, up about 22% year on year; realized net profit without return to mother was about 0.839 billion yuan, up about 7% year on year. Of these, Q2 realized net profit to mother was about 0.722 billion yuan, an increase of about 52% month on month, and realized net profit without return to mother was about 0.439 billion yuan, an increase of about 10% month on month.

R&D expenses have declined in stages, and net interest rates have increased. The company's 24H1 R&D expenditure was 0.323 billion yuan, a year-on-year decrease of 0.235 billion yuan, a decrease of about 42%. The main reason is that the company's R&D for deepwater, new engineering, and intelligent product technology projects was still in the initial stages during the reporting period. In addition, due to factors such as consumption tax rebates of 0.233 billion yuan, the company's 24H1 net interest rate increased 2.1 pct year-on-year to 9.13%.

The industry boom has recovered, and the workload has reached a new high during the same period. Driven by the increase in capital expenses of oil companies in the context of high oil prices, the international offshore oil and gas engineering industry is gradually recovering. As CNOOC continues to carry out a “seven-year action plan” to increase storage and production, it has formed large-scale energy engineering construction requirements, providing strong support for the company's workload. Among them, the 2024H1 construction business completed 0.2713 million tons of steel processing, a year-on-year increase of 16%; completed the onshore construction of 35 conduit racks and 11 blocks, offshore installation of 22 conduit racks and 9 sets of offshore installations, and the laying of 168 km of submarine pipelines and 42 km of submarine cables.

Overseas markets continue to expand, and there are plenty of orders in hand. The company is actively promoting global market development. The overall market situation is good. 2024H1 signed a new contract amount of 12.518 billion yuan. Among them, the amount of new overseas contracts was about 4.975 billion yuan, accounting for 39.74% of the total amount of new contracts signed in the first half of the year. The newly signed overseas projects include the Pohang Steel Phase IV development turnkey project, CNOOC North America's MSA EPC framework agreement, and Saudi Aramco's CRPO125/126 conduit rack transportation and installation project. At the same time, the company has sufficient orders. By the end of the reporting period, the total number of orders in hand was about 38.8 billion yuan, providing strong support for the long-term development of the company's business.

Investment advice

We believe that in the context of the recovery of the global offshore oil and gas engineering industry, and relying on CNOOC's “seven-year action plan” to increase storage and production, the development of the company's traditional business has been firmly guaranteed. As the layout of LNG projects and emerging businesses such as offshore wind power accelerates, the company's performance is expected to usher in two-wheel drive. We maintain the company's profit forecasts for 2024-2026 at 2.058, 2.381, and 2.783 billion yuan, respectively, and the corresponding PE is 12, 10, and 9 times, respectively, maintaining a “buy” rating.

Risk warning

Large fluctuations in oil prices, risk of international operation, risk of exchange rate changes, etc.