United Energy Group (short for “UEG”) is a leading independent exploration and production company listed on the HKEX. The Company achieved proved and probable (2P) working interest of 1.07bn barrels of oil equivalent (“boe”) by end- 2020, successfully growing into a medium-sized independent oil & gas company.
We think UEG offers a unique investment angle on oil and gas development in reputable emerging markets. Initiate BUY with a TP of HK$1.70.
A Fast-Growing Independent Oil & Gas Company. UEG has business presence in emerging countries like Pakistan, Iraq and Egypt, and is dedicated to upstream oil and gas exploration and production. The Company located its headquarters in Hong Kong, regional center in Dubai, UAE, and also an operating center in Beijing. By end-2020, UEG had working interest 2P reserve of 1.07bn boe and a reserve-production ratio of 31.6. In 1H21, UEG achieved average working interest production of 91,435 boe per day (“boed”).
High-quality assets portfolio in emerging markets. UEG had established high-quality assets portfolio in the past decade through a series of strategic assets acquisition. Among UEG’s valuable assets portfolio, Block 9 in Iraq is the crown jewel of the Company. UEG made long term development for the field, and it will be a key earnings growth driver in the coming few years.
Excellent operating efficiency leads the way to success. We are quite impressed by UEG’s earnings performance in the past nine years. We think outstanding cost contol measures, high efficienct resouce development, and prudent financial planning are the key aspects leading to UEG’s excellent operating efficiency. We believe those aspects will pave the way for UEG’s long term success.
Net profit to surge with 44.0% CAGR in 2020-23E. UEG realized strong 1H21 earnings of HK$959mn, exceeding that of FY20. On the back of production growth strategy in Block 9 and strict cost control measures, we expect 2021-23E net profit to be HK$1,741/2,366/2,580mn respectively, reflecting a net profit CAGR of 44.0% in 2020-23E. Based on 18.8x FY22 PER, we derive a TP of HK$1.70, implying 58.5% upside. Initiate BUY.
Risk factors: 1) country risk; 2) unfavorable oil price movement.
聯合能源集團(簡稱“UEG”)是一家在港交所上市的領先的獨立勘探和生產公司。到2020年底，該公司已探明和可能的(2P)工作權益達到10.7億桶油當量(“BOE”)，成功成長為一家中型獨立油氣公司。
我們認為，UEG為信譽良好的新興市場的油氣開發提供了一個獨特的投資角度。啟動買入，TP為1.70港元。
一家快速成長的獨立油氣公司。UEG在巴基斯坦、伊拉克和埃及等新興國家開展業務，致力於上游油氣勘探和生產。公司總部設在香港，區域中心設在阿聯酋迪拜，運營中心設在北京。截至2020年底，UEG的工作權益2P儲量為10.7億boe，儲採比為31.6。在21小時內，UEG實現了每天91,435 boe(“boed”)的平均工作權益產量。
新興市場的優質資產組合。在過去的十年裏，UEG通過一系列的戰略性資產收購，建立了優質的資產組合。在UEG的寶貴資產組合中，伊拉克的第9號區塊是該公司皇冠上的明珠。UEG為該領域進行了長期發展，它將是未來幾年收益增長的關鍵驅動力。
卓越的運營效率是成功的必由之路。UEG過去九年的盈利表現給我們留下了相當深刻的印象。我們認為，卓越的成本控制措施、高效的資源開發和審慎的財務規劃是UEG取得優異運營效率的關鍵因素。我們相信，這些方面將為UEG的長期成功鋪平道路。
2020-23E年度淨利潤將以44.0%的複合年增長率激增。UEG在21財年上半年實現了9.59億港元的強勁收益，超過了20財年。根據第9座的產量增長策略及嚴格的成本控制措施，我們預計2021-23E年度的純利分別為1,741/2,366/2,580百萬港元，反映2020-23年度的純利複合增長率為44.0%。基於18.8倍的22財年每股收益，我們得出的TP為1.70港元，意味着58.5%的上行空間。啟動購買。
風險因素：1)國家風險；2)不利油價走勢。
