Zhongman Petroleum And Natural Gas Group Corp.Ltd(603619) (603619)
The international oil price is at a high level in recent years, benefiting the oil field and oil service sectors
In the early stage, the company extended downstream from drilling rig manufacturing to drilling engineering services, and was listed in 2017. Later, relying on the drilling business, it entered the downstream oil and gas production field in 2018. The profitability of the company’s drilling rig equipment, drilling engineering and oil and gas exploitation business are positively related to the oil price, and the oil and gas exploitation price directly benefits from the rise of oil price; The performance of drilling engineering business lags behind the rise of oil price for about one year.
Wen 7 block has obtained the mining license, and the output of Wensu oilfield is expected to increase rapidly
The company has the exploration right of 1086 square kilometers of Wensu oilfield, of which wen7 block obtained the mining license in October this year, and the output is expected to be 173000, 375000 and 450000 tons from 2021 to 2023 respectively. The cost of crude oil exploitation is about US $21 / barrel, with strong profitability. Hong11, hong26 and hongqipo blocks are expected to submit reserve reports next year.
Rapid recovery of oilfield service business
OPEC + gradually restored crude oil production, and the Middle East oil service business is expected to rebound at the bottom. The company’s overseas engineering business began to resume production in January 2021. All projects suspended due to the epidemic last year resumed production in the first half of the year. In the first three quarters of 2021, the amount of overseas service contracts signed by the company was about 492 million yuan, a year-on-year increase of 93%. In 2021, the company successfully entered the relatively high-end Saudi oil service market, signed a $120 million drilling contract in March, and then signed a $49.8 million workover contract in October. In the future, the company is also expected to enter more high-end oil service markets in the Middle East.
Profit forecast
We expect that from 2021 to 2023, the company’s operating revenue will be RMB 1.975 billion, RMB 3.022 billion and RMB 3.375 billion respectively, the net profit attributable to the parent company will be RMB 116 million, RMB 603 million and RMB 687 million respectively, and the EPS will be RMB 0.29, RMB 1.51 and RMB 1.72/share respectively, corresponding to the closing price of RMB 13.17 on December 7, and the P / E ratios will be 45, 9 and 8 times respectively. The company’s main business drilling engineering business is gradually restored, Wen 7 block is put into production as planned, and tenge and shore projects are expected to contribute to the increment in the future. “Overweight” rating is given for the first time.
Risk statement
Macroeconomic risks, long-term low international oil prices, changes in overseas oil and gas policies and lagging project progress.
