Incident: The company issued the “Voluntary Notice on Wholly-owned Subsidiaries Receiving Project Award Letters”, and the company received a project award letter for the EPC project for the digital transformation of the wellsite of the Abu Dhabi National Petroleum Company Onshore Company of the United Arab Emirates.

Company reviews:

The company has been deeply involved in the Middle East market for a long time and ushered in a harvest period. Since this year, the company has successively received large orders:

1) On November 5, the company received an official award from the Abu Dhabi National Petroleum Corporation Onshore Company (ADNOC) for the EPC project for the digital transformation of the well site. The project amount reached 0.92 billion US dollars (approximately RMB 6.555 billion), breaking the company's record for the highest amount of a single project. The project involves more than 2,000 oil and gas production wellhead facilities and more than 40 different types of well sites. The execution period of the project is 42 months and is expected to be completed in 2027.

2) On October 31, the company officially signed a development and production contract with the Central Iraqi Petroleum Company to jointly develop the Mansuriya gas field. The Mansouria gas field is the second largest field in Iraq. The gas field is 20 km long, 3-4 km wide, and has an estimated reserve of 4.5 trillion cubic feet. After the commercial production of the project, the Iraqi Ministry of Petroleum will buy back all natural gas, liquefied petroleum gas and condensate products to guarantee Jerry's anticipated cost recovery and equity distribution. For the first time, the company participated in the mining and operation project of a key oil and gas field in the Middle East as a developer, which is a landmark.

3) On September 25, the company and the Bahrain National Petroleum Company signed 7 general contracting projects for gas pressurization stations, totaling 0.316 billion US dollars (about 2.2 billion yuan), covering a full range of construction and services from overall project design, procurement, equipment supply, construction, commissioning and trial operation. The total construction period of the project is 34 months. Among them, all 27 compressor units in the project will be designed, manufactured and supplied by Jerry, indicating the customer's recognition of the company's equipment manufacturing and project general contracting capabilities.

Continued breakthroughs in the Middle East market represent the recognition of the company by the international high-end oil service market, and there is great potential for future global expansion.

The company continues to break through in the Middle East market. On the one hand, due to the high degree of openness of the Middle East market to China, the “Belt and Road” policy promoted the deepening cooperation between the two sides; on the other hand, because the company has been deeply involved in the Middle East market for a long time, received a large order from Kuwait EPC in 2021 and successfully delivered in 2023, establishing a reputation in the Middle East market and opening up the market. Looking forward to the future, the Middle East is rich in oil and gas resources and is one of the largest oil service markets in the world; in addition, the company continues to expand in other regions such as North America and Central Asia, and the global market space is broad, and the company has long-term growth potential.

The profit forecast was lowered and the “buy” rating was maintained. Looking ahead to the whole year, the company is full of orders and the overseas oil service market is booming. The company will further advance its international strategy and continue to increase overseas contributions. Considering the pace of revenue recognition, we lowered our 24-year profit forecast and raised our 25-26 profit forecast. We expect net profit to mother for 24-26 to be 2.744, 3.316, and 3.976 billion yuan (previously 2.793, 3.263, 3.827 billion), corresponding to PE of 14, 12, and 10X, maintaining a “buy” rating.

Risk warning: the risk of large fluctuations in international oil prices, the risk that the pace of order delivery falls short of expectations, and the risk of adverse overseas expansion.