Incident: On September 25, Jerry Oil & Gas Engineering Co., Ltd., a wholly-owned subsidiary of Jerry Group, and Bahrain National Petroleum Company (BAPCO) signed a general contract project for 7 gas booster stations. The total amount of the contract including tax reached 0.316 billion US dollars, or about 2.2 billion yuan.

The total gas processing capacity of the project is nearly 900MMSCFD. The project includes 6 pressurization stations and 1 central compression station, covering a full range of construction and services from overall project design/procurement/equipment supply/construction/commissioning and trial operation. The total natural gas processing capacity of the project is nearly 900MMSCFD, and the total construction period is 34 months. In addition, all 27 compressor units in the project will be designed, manufactured and supplied by Jerry, which fully demonstrates the high level of trust of international high-end oil companies in Jerry's ability to manufacture natural gas equipment and contract the project.

This is the first large-scale natural gas EPCC cooperation project after the establishment of diplomatic relations between China and Brazil. After completion, the project will serve as Bahrain's energy infrastructure, provide a stable gas source for industrial facilities such as the Bahrain Power Plant/BAPCO Refinery/Bahrain LNG, and play an important role in promoting the development, utilization, and guaranteed supply of natural gas resources in Bahrain. After the project was signed, Jerry became the first Chinese company to successfully enter a large-scale EPCC project in the oil and gas sector in Bahrain since the establishment of diplomatic relations 35 years ago, which is a landmark.

The Middle East market has repeatedly received major orders, and overseas markets have continued to break through. In May 2024, the company signed a preliminary development and production contract with the Central Iraqi Oil Company (MDoc) and other relevant partners to jointly develop the “Mansuriya gas field”, the second largest field in Iraq. This Bahrain project is another oil and gas engineering project undertaken by the company from the Middle East and North Africa oil companies, such as Kuwait Petroleum Company (KOC), UAE National Petroleum Company (ADNOC), and Algeria National Petroleum Company (SONATRACH). The overseas market is progressing smoothly.

Focus on global development strategies, and have sufficient orders in hand. 1H2024 achieved revenue of 2.381 billion yuan in overseas markets, accounting for 48.04%; with changes in the structure of overseas sales products, the gross margin of overseas markets increased by 1.25 pct year on year, and new orders in overseas markets maintained rapid year-on-year growth. At the order level, 1H2024 signed a new order of 7.179 billion yuan, compared with +18.92% over the same period. At the end of the period, the 1H2024 company had a stock order of 9.191 billion yuan, with sufficient orders in hand.

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 10.7/9.0/7.9 times, maintaining an “incremental” rating.

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