\u3000\u3 Shengda Resources Co.Ltd(000603) 727 Bomesc Offshore Engineering Company Limited(603727) )
Performance overview: in 2022q1, the company’s revenue was 440 million yuan, a year-on-year increase of – 24.9%, and the net profit attributable to the parent company was 14.38 million yuan, a year-on-year increase of – 72.5%, reversing losses month on month.
Affected by the epidemic and the conflict between Russia and Ukraine, the progress of revenue recognition of the company slowed down, and the profit of 22q1 turned negative month on month. The epidemic since 2021q4 has led to a slight delay in the company’s completion progress and an increase in the rate cost. The impact of the epidemic is mainly reflected in the following aspects: 1. The industry of the company belongs to a labor-intensive industry. At the peak of construction in 2021, the number of on-site labor personnel reached 1 Rizhao Port Co.Ltd(600017) 000, but due to the epidemic, the number of on-site labor personnel has decreased to 8 Tcl Technology Group Corporation(000100) 00 recently; 2. The epidemic has caused the upstream designers to work at home, reduced the efficiency of communication and coordination, and put pressure on the overall project; 3. The supply cycle of overseas suppliers is prolonged, and the price of bulk commodities increases, which intensifies the pressure on project progress and cost; 4. Strict epidemic control measures were implemented at the company’s wharfs, resulting in a significant decline in the utilization efficiency of human resources for related work, and an increase in the direct costs of detection, disinfection and sterilization, isolation, etc; 5. The schedule lag disrupts the original site resource allocation plan, and the superposition of different project durations affects the construction efficiency and cost. The total expense rate of 22q1 company during the period was 9.7%, with a year-on-year increase of + 1.6pp and a month on month increase of + 4.1pp. The epidemic increased the company’s expenses in the short term. 22q1 company’s gross profit margin was 12.0%, with a year-on-year increase of – 4.2pp and a month on month increase of + 8.2pp; The net interest rate was 3.3%, with a year-on-year increase of -5.6pp and a month on month increase of + 4.9pp. Benefiting from the increase of gross profit margin, the company’s 22q1 profit reversed losses month on month. About 60% of the company’s business structure comes from LNG module engineering business with high gross profit margin, and the rest is mainly FPSO module design, construction and general assembly. In the future, the company is expected to expand to other module engineering businesses such as offshore wind power and strengthen the scope of order receiving.
The newly-built capacity is gradually released, and the subsequent reversal of the company is concerned. The short-term risk points of the company come from two points. On the one hand, it comes from the slow progress of project completion and the increase of rate and cost due to the epidemic and bulk price rise; On the other hand, the conflict between Russia and Ukraine led to the delay of Russian LNG order issuance. We believe that the epidemic and other reasons are mainly short-term risks, and the relevant risks gradually shrink after 2022q1; Although the conflict between Russia and Ukraine has a short-term impact on the rhythm of LNG order awarding, Russia has written LNG Development into its national strategy. Under the current situation of high international oil prices, with the smooth geographical conflict, the demand for oil and gas energy exploitation will continue to increase. At present, the capital expenditure in Brazil where the company’s FPSO is located is gradually increasing. At the same time, the company is also actively expanding oil and gas engineering and offshore wind power business in other blocks. From the perspective of the company’s internal strength, the company has 760000 square meters of production site in Tianjin Lingang Economic Zone, 700m deep-water wharf, and has the ability to undertake the general assembly business of FPSO, flng or fsru projects. At the same time, it has 325m deep-water wharf expansion resources. The site and wharf resources are improved compared with that in 2021 (670000 square meters of site and 700m of Wharf in 21 years), so as to strengthen its future order receiving strength. Focus on the company’s subsequent reversal logic.
Profit forecast: it is estimated that the net profit attributable to the parent company from 2022 to 2024 will be RMB 180 / 2.1 / 340 million, corresponding to pe17 / 15 / 9 times, maintaining the “buy” rating.
Risk warning: the company’s completion schedule is low, the expected risk, the risk of exchange rate fluctuation, and the expansion of LNG production is less than expected.
