CNOOC Engineering (600583) Quarterly Report Review 2019: Offshore Operation Drives Q1 Performance LNG Module to Boost Performance

CNOOC Engineering (600583) Quarterly Report Review 2019: Offshore Operation Drives Q1 Performance LNG Module to Boost Performance

Event: On the evening of April 25, 2019, the company released the first quarter report of 2019.

The core of the report, the company’s operating income17.

94 ‰, an increase of 43% in ten years, and the net profit attributable to shareholders of listed companies was -2.

61 ‰, a reduction of 1 ‰ compared with the same period last year.

Comments: (1) Offshore operations drive Q1 performance, industry trends ensure high levels of workload growth The company’s operating income growth is mainly due to the increase in workloads such as land construction and offshore installation.

In particular, the number of days for offshore operation vessels increased by 59%, a significant increase.

In terms of profits, the net profit attributable to shareholders of listed companies was -2.

61 ‰, a reduction of 1 ‰ compared with the same period last year.

Mainly because the company’s previous orders were mainly based on the price fluctuations in the industry’s downturn, and the gross profit margin decreased, it still takes some time to digest these orders.

However, with the gradual execution of new orders, we expect the company’s gross profit to improve in the future.

(2) Led by the order of LNG module, contradictions in improving profit structure of several key projects have been reported, and the company has achieved domestic and foreign market contracting amounts51.

1.4 billion.

The contracted value of overseas markets is 50.

2.4 billion.

The company took advantage of the construction in the highest field. In March 2019, the company’s wholly-owned subsidiary broke the LNG module construction contract, which is another land LNG contract after the successful delivery of the Russian Yamal project.

The company is also closely 失败:重查 tracking key projects in China and in Canada, Russia and other regions.

As of the end of the reporting period, the company has 17 key projects still under implementation. The steel work volume for construction business has increased by 10% over the previous year, and the average daily growth rate of offshore installation vessels has increased by 59%. Jackets and installation work are progressing smoothly.

Another 7 jackets and 6 blocks are under construction.

(3) The policy guarantees that capital expenditure will increase, and domestic projects will boost future performance. Considering the huge domestic demand for LNG and the market potential of increasing the prosperity of overseas LNG sectors, the bidding of some existing companies’ LNG projects is expected to continue in 2019.The results are announced and the project construction phase is gradually entered. The LNG market development is expected to usher in a significant growth in 2019.

In addition, CNOOC formulated a “seven-year action plan” for strengthening domestic exploration and development, and proposed that the exploration workload and proven reserves should be doubled by 2025, and capital expenditures will grow rapidly.

Therefore, both the project and policy support are favorable factors to ensure the company’s future revenue.

Earnings forecast and investment advice: The company is currently full of orders and the boom in the oil service industry is gradually recovering. Therefore, we maintain our earnings forecast for the company.

It is estimated that the company’s net profit attributable to mothers for 2019-2021 will be 6.

60, 12.

23, 16.

86 trillion, EPS is 0.

15, 0.

28, 0.

38 yuan.

We maintain our assessment of the company and maintain a target price of 7.

15 yuan / share, maintaining the “overweight” rating.

Risk factors: the risk of falling international crude oil prices, the risk of international market operations, the risk of exchange rate changes, the risk of project implementation, the risk of sudden natural disasters and severe weather.