华油能源(01251.HK):Multi-year recovery story still underappreciated,Trading BUY,TP of HK$1.2

机构:信达证券评级:买入目标价:1.2港元Surging workload to support margin improvement  With a rebound in oil price, upstream oil compani

机构:信达证券

评级:买入

目标价:1.2港元

Surging workload to support margin improvement  

With a rebound in oil price, upstream oil companies gradually reactivate their projects, leading to an increase in orders for oil services companies. SPT management expressed that the Company has ~RMB1.6bn orders on hand as of early May 18, up by ~60-70% yoy. As SPT retained most of their talent during the down-cycle (FY15-17), operating margin set to improve amid surging workload.    

Multi year growth opportunities from shale gas projects and underground gas storage facilities in the PRC  

To support domestic gas consumption, PRC government plan to put more effort in developing shale gas throughout 2018-20, and we expect private oil service companies including SPT would take a crucial role in such development. SPT commenced the integrated turnkey project of drilling and well completion services in Sichuan shale gas area in 2Q18. The project covered 14 wells with a contract value of RMB428 million. Management stated that SPT currently employs 4 drilling rigs in that area, and expect the workload to occupy ~10 rigs by 2020. SPT adopt an asset-light approach in the PRC and tend to lease the equipment, hence limited CAPEX is required. 

Moreover, in late Apr 18, NDRC announced a document which required gas upstream suppliers to have a gas storage capacity for >10% of their contracted annual sales volume by 2020. It is expected that such requirement would fuel the development of underground gas storage facilities. Management shared that the Company used to have ~70% market share in well completion of underground gas storage project, and target to obtain RMB200-300mn orders from this area by late 2018 to early 2019, and expect more to come in 2020. 

1H18 results; News flow on new orders 

Multi-year recovery story still underappreciated; Trading BUY  

While global oil price recently retreat from its 3 years high, it is still substantially higher than the trough during 2015-17. Although short term supply-demand balances are relatively dynamic, we argue that global oil market has been stabilized given that OECD crude oil inventories returned to 5-year average, which should provide a normalized business environment for oil service companies. Besides, SPT would also benefit from the development of shale gas and underground gas storage facilities in the PRC. SPT is trading at 11.2X FY18E PER based on our estimation, we view that the multi-year recovery story is still underappreciated. 

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格隆汇声明:文中观点均来自原作者,不代表格隆汇观点及立场。特别提醒,投资决策需建立在独立思考之上,本文内容仅供参考,不作为实际操作建议,交易风险自担。

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