Incident: The company announced its 2024 semi-annual performance pre-profit announcement. 24H1 expects to achieve net profit of 58-68 million yuan, a year-on-year increase of 0.129-0.139 billion yuan; 24Q2 single-quarter company expects to achieve net profit of 24.2-3 million yuan, turning loss into profit year-on-year, increasing 42.24-52.24 million yuan, with a month-on-month change of -28% -+1%.
Comment:
Key projects have progressed smoothly, and 24H1's revenue and profitability have been greatly improved. 2024H1, the UARUFPSO project implemented by the company progressed rapidly and completed the phased goals in excess of schedule. The company's outstanding performance won high praise from customers; the offshore platform living building module construction project and the FPSO RAIA Topside project were successfully started, and production and construction were on the right track. 2024H1, the company's revenue increased significantly compared with the same period last year. Continuous optimization of production processes has enabled the company's profitability to continue to increase. Thanks to the company's overall efforts, operating performance improved dramatically, turning a loss into a profit in the first half of 2024. As the oil service industry continues to prosper, the company continues to carry out work to improve production and management capabilities, and business performance is expected to grow further.
Seize market opportunities and get multiple high-value orders. In 2023, the company firmly grasped market opportunities and successfully won a number of large contract orders through flexible business strategies. In June '23, the company and MODEC successfully signed the ExxonMobil FPSO project with a contract amount of 0.152 billion US dollars, which is an important milestone in the company's entry into the high-end industry market; in October, the company signed an FPSO RAIA Topside project contract with a MODEC Inc. subsidiary with a contract amount of about 0.14 billion US dollars, further consolidating the company's engineering performance in the FPSO field. The company actively promotes international development strategies, makes more efforts to obtain high-quality orders, and consolidates the company's dominant position in the industry.
The international offshore oil service project is booming, and the company is expected to fully benefit. Driven by the increase in capital expenditure of oil companies in the context of high oil prices, the international offshore oil and gas engineering industry is gradually recovering. According to S&P Global's forecast, global upstream exploration spending is expected to reach 581 billion US dollars in 2024, an increase of 2.1% year over year, including offshore capital expenditure of 201 billion US dollars, an increase of 13.6% year over year. The company closely follows the market context, shares its business focus with industry trends, actively participates in bidding for major projects in various regions of the world, and provides professional subcontracting services for energy facility development to high-end customers in the fields of natural gas liquefaction, offshore oil and gas development, and mining. Against the backdrop of a recovery in the global oil service engineering boom, the company is expected to benefit.
Profit forecast, valuation and rating: The recovery in the overseas oil service market has exceeded expectations, the company's key projects are progressing smoothly, and profitability is gradually increasing. Therefore, we raised the company's 24-26 profit forecast. The company's net profit for 24-26 years is 1.19 (53% increase) /2.62 (112% increase) /3.86 (110% increase) billion yuan, respectively. The corresponding EPS is 0.42/0.93/1.37 yuan/share, maintaining the company's “increase in holdings” rating.
Risk warning: Crude oil prices fluctuate greatly, upstream capital expenditure falls short of expectations, and project progress falls short of expectations.