\u3000\u3 China Vanke Co.Ltd(000002) 353 Yantai Jereh Oilfield Services Group Co.Ltd(002353) )
Event: the company released the first quarterly report of 2022.
Key investment points
Due to the impact of impairment and exchange loss, Q1 performance is lower than expected and is optimistic about the quarter on quarter improvement
In the first quarter of 2022, the company realized a revenue of 1.825 billion, a year-on-year increase of + 27.27%; The net profit attributable to the parent company was 218 million, a year-on-year increase of – 21.84%; The net profit attributable to the parent company after deduction was 186 million yuan, a year-on-year increase of + 28.83%. The company’s performance in the first quarter of 2022 was lower than our expectation, which was mainly judged as follows: ① the rhythm of order delivery was delayed; ② The provision for impairment in the first quarter of last year was RMB 5.47 million, with a year-on-year increase of 1.83 million, mainly due to the change of long-term impairment of receivables; ③ The devaluation of ruble in the first quarter resulted in exchange losses, and the company’s financial expenses were 52.74 million yuan, up from – 16.11 million yuan in the same period last year, with a year-on-year increase of 68.85 million yuan. It is expected that the downstream customers will recover the impairment losses in the future, and we believe that there is a great possibility of subsequent credit transfer. Under the influence of multiple factors such as the epidemic and the Fed’s interest rate hike, the RMB exchange rate has depreciated since March. By the end of April, the RMB exchange rate against the rupee has returned to the level at the beginning of the year, and the impact of exchange loss has weakened since the second quarter.
The change of product structure leads to the decline of profit margin, and it is expected to recover from the bottom from Q2
In the first quarter of 2022, the company’s gross profit margin was 30.50%, with a year-on-year ratio of -5.95pct and a month on month ratio of -1.43pct. We judged that it was mainly due to the delayed delivery of high gross profit equipment orders and the increase of raw materials and shipping costs; The net interest rate attributable to the parent company was 11.95%, with a year-on-year ratio of -7.51pct and a month on month ratio of -1.60pct, which was at a low point in recent three years. The expense rate during the period was 15.60%, with a year-on-year increase of + 1.89 PCT, of which the financial expense rate was 2.89%, with a year-on-year increase of + 4.01 PCT, mainly due to the exchange loss caused by the depreciation of the Russian ruble. Looking forward to the future, we believe that there is limited room for the subsequent decline of the company’s profit margin. With the delivery of high gross profit equipment orders, the optimization of product structure and the significant decline of exchange losses, the profit margin is expected to be gradually repaired from the second quarter.
The oil service leader is in hand, and the orders are full, waiting for the inflection point of performance growth to be fulfilled
The margin of the company’s orders in hand is better, and the procurement and cost of raw materials are growing rapidly, waiting for the inflection point of the company’s performance growth to be fulfilled. In 2021, the company obtained a total of 14.791 billion yuan of orders, a year-on-year increase of 51.73%. At the end of the year, the stock orders were 8.86 billion yuan, a new high since the listing. The average confirmation cycle of the company’s equipment orders is about 4-8 months, and the orders of the oil service company generally lag behind the oil price. Under the background of high oil price in 2022, the growth rate of the company’s orders is better. In the first quarter of 2022, the company purchased raw materials and paid 1.672 billion yuan in cash for labor services, with a year-on-year increase of + 25% and a month on month increase of + 24%, a record high in the first quarter. The company has full orders in hand, reserves raw materials to meet the delivery of subsequent orders, and waits for the inflection point of performance growth.
Profit forecast and investment rating: considering the uncertainty of the impact of the global epidemic, we carefully lowered the net profit attributable to the parent company from 2022 to 2024 to 2 (original value 25) / 24 (original value 30) / 28 (original value 3.5) billion yuan. The current market value corresponds to 14.11/11.66/9.98 times of PE from 2022 to 2024, maintaining the “buy” rating.
Risk warning: oil and gas prices fluctuate sharply; The epidemic situation affects the order demand and delivery; The prices of raw materials and shipping continued to rise; The North American market expansion was less than expected.
