The performance in the first half of 2017 was in line with expectations, and the net profit increased by 403.80% compared with the same period last year.
In the first half of 2017, the company achieved operating income of 1.553 billion yuan / + 177.08%, and net profit of 71 million yuan / + 403.80%. The performance growth rate was in line with the previous performance forecast. Among them, the company's new business development plate achieved income of 1.174 billion yuan, equipment manufacturing sector achieved income of 218 million yuan.
The double inflection point of performance + order has been confirmed.
Although the operation of the relevant oil field service business has improved slowly due to the impact of the downturn in international oil prices, however, the production and sales scale of the company's distributed energy business, petrochemical supply chain financial services business (S2B business), centrifugal compressors and steam turbines and other high-end equipment business is expanding, orders are increasing rapidly, and business income in the first half of the year is significantly higher than the same period last year. The double inflection point of the company's performance and orders has been fully confirmed.
The five major business plates have taken shape, and the whole industry chain has achieved remarkable results.
In the past three years, the company's business structure has been deeply optimized and adjusted, with the healthy and orderly development of the five major business sectors: Groug (Geology and Geophysics), engineering technology, core precision instrument and high-end equipment manufacturing, cloud computing and big data, and new business development (environmental protection business, investment and financing business, etc.). The outstanding embodiment includes: the growth stabilization of traditional business, the rapid growth of new incubation business, the large-scale growth of distributed energy and clean energy and high-end equipment manufacturing business, and the normalization of investment income.
Xiyou United geothermal drilling and completion technology is mature, is expected to benefit from the "Xiongan New area" geothermal development Xiongan New area geothermal resources are unique, or will be its important energy source, China Petroleum & Chemical Corp has expressed his position to vigorously develop. We estimate that the total investment may reach 50 billion yuan, accounting for about 1x3 of drilling and completion. Xiyou United geothermal drilling and completion technology is mature, has a lot of geothermal project experience, especially in high temperature well technology leading the country, with strong competitiveness.
With the acquisition of Xinjinhua and Sichuan Oil Design, the expansion of natural gas business is expected to further boost profits.
New Jinhua has the ability of complete centrifugal compressor and steam turbine testing and overall linkage test. Sichuan Oil Design has signed and is implementing a number of EPC project contracts, which has become an important focus and development platform for the group to expand the development of clean energy and distributed energy industry. From the perspective of industrial trend, in order to optimize the energy structure, the proportion of natural gas in primary energy consumption will rise from 6% at present to 12% in 2020 (the global average is 24%). Investment in natural gas (including pipeline gas, LNG, etc.) will also continue to grow, and entering the natural gas market is expected to become a new growth point for companies in the future.
Maintain earnings forecasts and "buy" ratings
We believe that the company's orders and profits are at an inflection point. From 2017 to 2019, we expect operating income of 20,27 and 3.7 billion yuan, net profit of 2.8,4.0 and 560 million yuan, corresponding EPS of 0.39,0.56,0.79 yuan per share, and corresponding PE of 27,19 and 13 times. We believe that in 2017, the reasonable valuation is 350.38 times, and the reasonable stock price is 13.6514.82 yuan. Maintain a "buy" rating.
Risk hint: international crude oil prices are down; geothermal drilling business and natural gas business expansion are not up to expectations.