\u3000\u3000 Yantai Jereh Oilfield Services Group Co.Ltd(002353) (002353)
Dimension 1: the oil price center rebounded to more than $50 / barrel, optimistic about the upward boom of the oil service industry
At the macro level, when the oil price is stable above the cost line of US $50 / barrel, the "three barrels of oil" represented by PetroChina, Sinopec and CNOOC can achieve profits, drive the increase of downstream capital expenditure and the prosperity of the oil service industry. In the history of Jerry's recovery, the oil price is stable at more than $50 / barrel, with excellent performance, and the upward oil price provides greater flexibility. At the meso level, China's energy supply policies such as natural gas and oil continue to be strengthened, and the capital expenditure of "three barrels of oil" is expected to maintain a growth rate of more than 10% in 2022. From a micro perspective, Yantai Jereh Oilfield Services Group Co.Ltd(002353) orders on hand have begun to pick up since the second half of 2021. Based on the average 6 months of the company's order revenue recognition cycle, the company will meet the performance inflection point from 2022.
Dimension 2: China's shale oil and gas development speeds up, and the leader of domestic fracturing equipment is expected to rise
Different from the mainstream view of the market: we believe that under the background of carbon neutrality, natural gas and oil are expected to become China's beneficial energy sector in the next 5-10 years. According to the Research Report on China's carbon peak before 2030 released in 2021, the proportion of natural gas and oil in China's final energy consumption structure in 2019 / 2025 will be 8% / 9% and 19% / 18% respectively. However, in 2020, China's dependence on natural gas and oil imports will reach 43% and 72%. Considering the national energy security and supply factors, the exploitation will continue during the 14th Five Year Plan period.
Referring to Halliburton, a bull stock born in the shale oil and gas revolution in North America, the domestic oil service leader is expected to rise under the general trend of shale oil and gas development in China. According to EIA statistics in 2017 and 2015, China's proven shale oil and gas reserves rank third and first in the world respectively, with proven reserves of 4.4 billion tons and 32 trillion cubic meters. However, in 2021, the exploitation volume is only 2.4 million tons and 23 billion cubic meters. With the economic highlights, the exploitation is expected to speed up during the 14th Five Year Plan period and become the main force for increasing reserves and production. We estimate that the market scale of fracturing equipment in China will increase from 7.8 billion yuan in 2021 to 13.9 billion yuan in 2025, with CAGR of 15% from 2021 to 2025.
Dimension 3: the world's largest oil service market welcomes recovery, and North America expands beyond the valuation ceiling
The world's largest oil service market welcomes recovery. In 2020, the total power of fracturing equipment in use in the United States reached 29.4 million HHP (about 7 times that of China's 3.98 million HHP in 2019), of which 1 / 3 of the equipment has nearly 10 years of service life, and will meet the trend of renewal and replacement in the next three years. In the North American market, Jerry alpha comes from turbine / electric drive fracturing equipment. The self-made core component plunger pump can reach 5000hhp for a single pump and more than 10000 HHP for a single double pump. The technical level is leading in the world. Under the general trend of cost reduction of oil service, turbine / electric drive fracturing equipment has significant advantages in replacing traditional diesel drive, and the cost reduction of "initial investment + labor + energy consumption" is up to 33%. In 2021, the penetration rate of electric drive / turbine equipment is only 3%. We estimate that it is expected to accelerate to more than 50% in the next 3-5 years. From 2021 to 2025, the turbine / electric drive fracturing equipment in the North American market will increase from 800 million to 10.4 billion yuan, and the CAGR will reach 91%. North America is expected to become the largest incremental market of the company in the future.
Dimension 4: march into lithium battery cathode materials, "oil and gas + new energy" strategy two wheel drive
On September 28, 2021, Yantai Jereh Oilfield Services Group Co.Ltd(002353) signed an agreement with Tianshui municipal government of Gansu Province to invest 2.5 billion yuan in the integration project of cathode materials for lithium ion batteries with an annual output of 100000 tons; On November 4, 2021, Jerry new energy, the project company, was officially established. After completion, it will become one of China's large lithium battery cathode material production bases and open Jerry's dual main business development mode of "oil and gas + new energy".
Profit forecast and investment rating: Based on the upward boom of oil service, the acceleration of shale oil and gas exploitation and the recovery trend of North American market, we expect the net profit attributable to the parent company to be RMB 1.8/25/3 billion from 2021 to 2023, and the current market value corresponding to PE is 24 / 18 / 15 times respectively. We give a valuation of 25 times in 2022, with a target market value of RMB 62 billion and a target price of RMB 65, maintaining the "buy" rating.
Risk warning: macroeconomic downturn; Oil prices fell sharply; Lower than expected downstream capital expenditure; China's shale oil and gas expansion process is slow; The North American market expansion was less than expected.
