24Q1-3 performance has been growing steadily. The company released its 24Q3 financial report. The cumulative revenue for the 1st to 3rd quarter of 2024 was 8.047 billion yuan, a year-on-year decrease of 8.1%, and realized net profit to mother of 1.598 billion yuan, an increase of 2.2% over the previous year. Among them, Q3 achieved revenue of 3.09 billion yuan, a year-on-year decrease of 7.4%, and realized net profit to mother of 0.51 billion yuan, a year-on-year decrease of 2.0%;

Gross profit margins have increased, and foreign exchange has dragged down expenses. The company's 24Q3 profitability increased, with 24Q3 gross profit margin of 33.7%, up 3.74 pct year on year, and net interest rate to mother of 16.5%, up 0.90 pct year on year. We believe that the increase in the company's gross margin is mainly due to the continuous improvement of the business structure. On the cost side, the 24Q3 company's sales expense ratio, management expense ratio, R&D expense ratio, and financial expense ratio were 4.8%, 4.0%, 3.7%, and 2.9%, respectively, up 1.36, 0.97, 0.42, and 1.87 pct year-on-year, respectively. We believe that the increase in the company's Q3 financial expenses was mainly affected by exchange rate fluctuations.

Contract debt is growing, and on-hand orders are plentiful. Looking at contract liabilities, at the end of September '24, the company's contract debt was 1.495 billion yuan, up 68% year on year and 46% month on month. We believe that the rise in the company's contract debt reflects on the one hand that the company is full of orders, and on the other hand, it also reflects a further increase in overseas share.

Recently, the price of Brent oil has remained above $70 per barrel, and we believe that the boom in the oil service industry will continue to pick up. Considering last year's base, the company's Q1-3 revenue declined, but profitability improved, and exchange rate fluctuations affected financial expenses, so we slightly lowered the company's revenue and profit forecast for 24 years. We are still optimistic about the company's growth level in 25-26, given the company's rising contractual liabilities or reflected in full on-hand orders. We forecast that the company's net profit for 2024-2026 will be 2.66, 3.2, and 3.86 billion yuan, respectively, and earnings per share will be 2.60, 3.13, and 3.77 yuan (original forecast 2.68, 3.32, 3.91 yuan), respectively. Referring to comparable company valuations, we will give the company 15 x PE for 24 years, corresponding to a target price of 39.00 yuan, maintaining the purchase rating

Risk warning

Economic recovery falls short of expectations, the risk of oil and gas price fluctuations, increased market competition, increased trade protection policies, and the risk that domestic unconventional energy development falls short of expectations