occurrences
The company released its 2019 annual report. It achieved annual revenue of 69.87 billion yuan, an increase of 19.6% over the previous year, and net profit attributable to shareholders of listed companies was 914 million yuan, an increase of 543.6% over the previous year.
reviews
There has been a significant increase in the company's business volume and the amount of new contracts signed. In 2019, the company signed a new contract amount of 69.5 billion yuan, an increase of 10.7% over the previous year. Its domestic and external markets signed new orders of 14.5 billion yuan, an increase of 23.9% over the previous year. It mainly served oil and gas fields such as Weirong, Fanling and Shunbei. It also had 55 rigs serving CNPC's southwest shale gas market, winning the bid for 4 billion Qingning gas pipelines, etc.
The drilling and engineering sector maintained a high growth rate for the third year in a row. In 2019, the company's drilling business revenue was 36.49 billion yuan, an increase of 22.1% over the previous year, an increase of 15%, and the team utilization rate reached 82%. Among them, the Shunbei drilling cycle fell by about 30%, and Weirong's drilling cycle fell 35%. In 2020, the company's drilling will focus on serving Shunbei Deep Oil and Gas Field, Southwest Natural Gas, Ordos dense oil and gas, southern Sichuan deep shale gas, etc. In 2019, the company's engineering sector generated revenue of 16.38 billion yuan, an increase of 24.7% over the previous year, and the amount of new contracts signed was 18.4 billion yuan, an increase of 1.8% over the previous year. In 2020, the company will continue to increase its market share of long-distance pipelines. The oil and gas pipeline market in the Jinding National Oil and Gas Pipeline Market will closely track gas, water conservancy, municipal projects, etc.
Breakthroughs have been achieved in research and development, and cost reduction has yielded results. The drilling rotation guidance system independently developed by the company was successfully tested, breakthrough progress was made, and the jointly developed high-temperature MWD instrument was successfully applied. The company reduced costs by 620 million yuan throughout the year, and plans to reduce costs and fees by 300 million yuan in 2020.
Profit forecasting
The company has benefited from increased investment in domestic gas pipeline construction and exploration and development. Since domestic business accounts for more than 80% and overseas business is mainly in Saudi Arabia, its performance is more stable. Revenue is estimated to be 72.5, 82, and 90 billion yuan respectively in 2020-2022, achieving EPS of 0.05, 0.08, and 0.10 yuan/share, respectively. The corresponding PE was 42, 26, and 20 times, respectively, and the “increase in holdings” ratings continued.
Risk warning: OPEC has continued to increase production for a long time, the decline in US shale oil and gas production has not been significant, and international energy demand has declined for a long time.