Event: on January 19, 2023, the company issued an announcement of annual performance increase in 2022. The company expects the net profit attributable to shareholders of listed companies to be 500.55 billion yuan in 2022, an increase of 434 million yuan and 484 million yuan over the same period last year, an increase of 655.96% and 731.55% over the same period last year. The net profit attributable to shareholders of listed companies after deducting non-recurring profits and losses was 499 million 549 million yuan, an increase of 435 million yuan and 485 million yuan over the same period last year, an increase of 689.88% and 769.10%.
The net profit of 22Q4 is 128-178 million yuan. According to the announcement, in the fourth quarter of 2022, the company realized net profit of 128 million yuan, an increase of 482.4%, 709.09%,-19.27%, 27.69%, and deduction of 1.27%, 177 million yuan, an increase of 469.06%, 693.10%, and-20.95%, 24.12%, respectively.
The high volume and price of crude oil drives the growth of the company's performance. In 2022, the average price of WTI crude oil was $94.40 per barrel, up 38.86 per cent from 2021, while the average price of Brent crude was $98.60 per barrel, up 39.25 per cent from 2021. Benefiting from the high oil price, the company's crude oil price has increased sharply. At the same time, the company accelerated the oil and gas storage and production of the Wensu project, continued to increase investment and development, and actively did a good job in new well production, crude oil sales and exploration in the new area. In 2022, the company's Wensu project achieved crude oil output of 434000 tons, an increase of 264000 tons over the same period last year, an increase of 155.29% over the same period last year. Compared with the equity incentive target of producing no less than 385000 tons, the target achievement rate of Wensu block alone is 112.73%.
The exploration and development of oil fields at home and abroad continue to speed up, and the growth of the company is considerable. Domestically, Wensu block produced 19.79 and 236100 tons of oil in the first half and second half of 2022 respectively, mainly because the development and production speed of Wen 7 block is faster, and the exploration process of other blocks is progressing steadily. In foreign countries, the company won control of the tenge block in September 2022. The output of the field is 89500 tons in 2021 and 36500 tons from January to July in 2022. In the future, the company will strengthen the development of the block, and there is high room for production release.
Oil service business is gradually restored, business profits are expected to turn into profits. In the first half of 2022, the company's gross profit margin for drilling engineering services was-2.78%, mainly due to the impact of overseas epidemics, the oil service business was difficult to proceed smoothly, and the depreciation of equipment was high, resulting in losses in the business. Since the second half of the year, the company's overseas oil service business has recovered rapidly, with contracts for overseas drilling projects totaling 1.425 billion yuan, an increase of 119.91 percent over the same period last year. For the whole year, the total amount of contracts signed by the company's domestic and foreign drilling projects and equipment sales leases totaled 2.885 billion yuan, an increase of 21.22% over the same period last year. In the future, with the gradual progress of business, it is expected that the gross profit margin of oil service business is expected to become positive.
Investment suggestion: we expect the company's return net profit from 2022 to 2024 to be 5.34max 9.43 / 1.367 billion yuan respectively, corresponding to EPS 1.34Comp2.36Unix 3.42 yuan per share, corresponding to the closing price of January 19, 2023, PE is 14 times, 8 times, 6 times respectively, maintaining the "recommended" rating.
Risk hints: the risk of a sharp drop in oil prices; the risk that the exploration process is not as expected; and the risk that overseas outbreaks repeatedly affect overseas oil field operations.