\u3000\u3000 Zhongman Petroleum And Natural Gas Group Corp.Ltd(603619) (603619)
Event overview
On January 25, 2022, the company issued the announcement of annual earnings forecast for 2021. It is estimated that the net profit attributable to the shareholders of the listed company will be 60 million yuan to 72 million yuan in 2021. Last year, the company’s net profit attributable to shareholders of listed companies was a loss of 486 million yuan.
Analysis and judgment:
In 2021, the oil price fluctuated upward, and the crude oil output of Wensu oilfield reached 170000 tons. There is still great potential for improvement in the future. In 2021, the Brent oil price increased by more than 50% in the whole year, from $50 / barrel to $80 / barrel. Recently, due to geopolitical influence, it was close to the nearly seven-year high of $90 / barrel.
The company’s crude oil sales price is positively correlated with Brent oil price, and the correlation between exploration and development cost and oil price is low. In the first half of the year, the exploration and development cost is only $21 / barrel. The company significantly benefits from the expansion of the difference between sales price and cost price. In October 2021, the company obtained the mining license of wen7 block, and the crude oil output of the company accelerated. The output in the first half of 2021 was only 50000 tons, and the output in the second half of 2021 reached 120000 tons. According to the planning of the company’s mining license, the output of wen7 block will reach 400000 tons / year, with great development potential in the later stage.
The drilling engineering service business resumed production, and the control of project quality and cost achieved results
In the first half of 2021, with the improvement of the epidemic situation, the company’s overseas engineering projects suspended due to the epidemic situation have fully resumed work and production, and the drilling gross profit margin has recovered to 24.37%, higher than 23.49% and 17.97% in 2018 and 2019, and significantly better than 10.6% in 2020. The company’s drilling engineering services have also entered the high-end markets in Saudi Arabia and Kuwait, and the order quality is expected to continue to improve. In 2021, the contract amount of the company’s drilling and equipment business reached 2.38 billion yuan, a year-on-year increase of 28%, of which the drilling contract amount accounted for 95%.
The company’s drilling business is mainly overseas and will benefit from the growth of overseas oil and gas investment
Rystad energy believes that global natural gas investment will increase by 14% in 2022, from US $131 billion in 2021 to US $149 billion; Global crude oil investment will rise from US $287 billion in 2021 to US $307 billion, an increase of 7%. The company’s drilling business is mainly overseas and will benefit from the growth of overseas oil and gas investment.
Investment advice
In 2021, the company turned losses into profits, accelerated the increase of crude oil production and benefited from the rise of international oil prices. The order amount and gross profit margin of drilling engineering services recovered significantly, maintaining the “overweight” rating. As the company issued profit forecast guidelines, we lowered the net profit attributable to shareholders of Listed Companies in 2021 from 116 million yuan to 67 million yuan. We estimate that the company’s operating revenue from 2021 to 2023 will be RMB 1.975/3.022/3.375 billion respectively, the net profit attributable to the shareholders of the listed company will be RMB 0.67/6.03/687 billion respectively, and the EPS will be RMB 0.17/1.51/1.72 respectively, corresponding to the closing price of RMB 13.65 on January 25, 2022, and the PE will be 81 / 9 / 8 times respectively.
Risk tips
Macroeconomic risks, long-term low international oil prices, changes in overseas oil and gas policies and lagging project progress.
