\u3000\u3000 China Oilfield Services Limited(601808) (601808)
Event: the company issued the announcement of performance pre reduction for 21 years. In 21 years, the company is expected to realize the net profit attributable to the parent company of 230-350 million yuan, a year-on-year decrease of 87% – 91%, and the net profit not attributable to the parent company of – 150 ~ – 30 million yuan, a year-on-year decrease of 101% – 106%. Among them, Q4 is expected to realize a net profit attributable to the parent company of -1.22 ~ – 1.1 billion yuan in a single quarter, a year-on-year decrease of 301% – 323% and a month-on-month decrease of 269% – 288%.
Comments:
Impairment provision of assets detracts from performance: China Oilfield Services Limited(601808) 21 is expected to accrue impairment loss of fixed assets of about 2.01 billion yuan, which is the main reason for performance reduction. Under the influence of multiple factors such as the continuous global New Coronavirus pneumonia epidemic, the international oil and gas industry fluctuation and the accelerated transformation of the energy industry, the international oil companies are still cautious in their investment in oil and gas exploration and development. The operating price and utilization rate of some large equipment in CNOOC oilfield are low, showing signs of impairment. The provision for asset impairment affects the performance of 21 years, with a year-on-year change of more than 80%.
CNOOC’s “seven year action plan” provides guarantee, and capital expenditure helps the company’s long-term development: under the background of the central government’s clear demand for increasing oil and gas exploration, CNOOC, the parent company, actively responded to the national call, formulated the “seven year action plan” on January 20, 2019, and proposed to double the company’s exploration volume and proved reserves by 2025 compared with 2019, The “two 20 million” production targets of oil fields in the West and east of the South China Sea are also put on the agenda. CNOOC, the parent company, recently released its business strategy for 2022. The total capital expenditure budget for 2022 is RMB 90-100 billion, of which the proportion of exploration, development, production capitalization and other capital expenditure is expected to be 20%, 57%, 21% and 2% respectively; In 2022, CNOOC, the parent company, plans to drill 227 offshore exploration wells and collect 3D seismic data of about 17000 square kilometers. China Oilfield Services Limited(601808) drilling, oilfield technology, geophysical acquisition and engineering survey business will fully benefit from the increase of upstream exploration and development capital expenditure, and the future performance is expected to increase. The industry boom recovers and the transformation capacity of scientific research achievements is improved to provide technical support: IEA recently released a monthly report that the impact of Omicron virus strain on oil demand at the end of 2021 is weaker than expected. IEA raised the demand growth forecast of 2021-22 by 200000 barrels per day. It is expected that the global oil demand will increase by 3.3 million barrels per day in 2022, returning to the level of 99.7 million barrels per day before the covid-19 epidemic. The petrochemical industry chain is expected to benefit from the recovery of the industry. The “D + W” system drilog tool independently developed by the company, the new synthetic based drilling fluid and its supporting technology have successfully completed the first show of overseas operation, and quast has been independently developed. The breakthrough of the company’s core technology provides guarantee for oilfield technical services.
Profit forecast, valuation and rating: as the company expects to accrue large asset impairment reserves in 21 years, we will lower the company’s profit forecast for 21 years and maintain the profit forecast for 22-23 years. It is expected that the net profit attributable to the parent company in 21-23 years will be 2.95 (down 88%) / 28.02/3.273 billion yuan respectively, equivalent to EPS of 0.06/0.59/0.69 yuan / share. In the past 22 years, the pattern of crude oil supply and demand is good, the oil price is expected to remain high, and the prosperity of the oil service industry is expected to remain stable. The policy of “increasing reserves and production” continued to be promoted, the company’s capital expenditure continued to grow, and the company’s future development prospects continued to be optimistic, so the “buy” rating was maintained.
Risk tip: the risk of international crude oil price fluctuation and CNOOC’s capital expenditure are lower than expected.
