Incident: On September 19, 2024, the company issued the “Notice Concerning Plans for the Chairman, President and Vice President of the Company to Increase Shareholding”. Chairman Mr. Li Huitao, President Mr. Li Zhiyong, and Vice President Mr. Lu Wei plan to increase their holdings of the company's shares using self-raised capital and centralized bidding within 6 months from September 19, 2024. The total amount of increase in holdings is 7-9 million yuan. There is no price range for this increase plan.

Core executives collectively increased their holdings, demonstrating full confidence in the company's investment value. Prior to the implementation of this plan to increase their holdings, Chairman Li Huitao, President Li Zhiyong, and Vice President Lu Wei each held 0.1062/0.6444/0.1262 million shares, accounting for 0.010%/0.063%/0.012% of the company's total share capital, respectively. The three holdings together accounted for 0.085% of the company's total share capital. This plan to increase holdings shows the management's full recognition of the company's confidence in business development, long-term investment value, and future prospects for sustainable development.

Focus on global development strategies, and have sufficient orders in hand. 1H24 achieved revenue of 2.381 billion yuan in overseas markets, accounting for 48.04%; with changes in overseas sales product structure, overseas market gross margin increased by 1.25 pct year on year, and new orders in overseas markets maintained rapid year-on-year growth. In May 2024, the company signed a preliminary development and production contract with the Central Iraqi Petroleum Company (MDoc) and other relevant partners to jointly develop Iraq's second-largest field, the “Mansuriya gas field”, and actively participated in a landmark leap in global energy development. At the order level, 1H24 signed a new order of 7.179 billion yuan, +18.92% over the same period. At the end of the 1H24 period, the company had an inventory of 9.191 billion yuan, with sufficient orders in hand.

Fracturing equipment is undergoing a renewal cycle, and industry leaders will continue to benefit. 1H24 benefits from the increase in global upstream CAPEX, increasing demand in the oil and gas equipment and service industry, and industry prosperity continues to pick up. In the domestic market, in June 2024, the company successfully won the bid for CNPC's 2024 centralized procurement project for electric fracturing equipment (volume); in the North American market, 1H24 successfully completed the delivery of the first domestic electric drive fracturing equipment in North America, and was favored by old customers in July, winning new orders for electric drive fracturing equipment from customers. The company's brand recognition in the high-end North American market continues to increase, and it is expected that it will continue to benefit from the new wave of fracturing equipment updates.

Investment advice: The company is a leader in private oil service equipment. As overseas high-end markets continue to break through, related orders are gradually implemented, and it is expected to achieve steady growth in performance. The company's net profit for 2024-2026 is estimated to be 2.76/3.28/3.73 billion yuan, corresponding to the current PE of 10.2/8.5/7.5 times, maintaining the “increase” rating.

Risk warning: risk of oil and gas price fluctuations, risk of increased market competition, risk of international operation, etc.