COOEC(600583) 浙商证券·2024-07-29 14:22Investment Rating - The report gives a "Buy" rating for the company with a target price of ¥6.47 per share, based on a 15x PE multiple for 2024 [2] Core Views - The company is the leading EPCI (Engineering, Procurement, Construction, and Installation) player in China's offshore oil and gas engineering sector, with stable growth in both domestic and international revenues [1] - The company is transitioning from an international subcontractor to a general contractor, which is expected to enhance its profitability and competitive advantage [1][3] - The offshore oil and gas industry is expected to remain highly active, with deepwater development becoming a key focus, benefiting the marine oilfield services sector [1][10] Domestic Business - In 2023, the company's domestic revenue reached ¥24.7 billion, with offshore engineering revenue accounting for ¥22.6 billion, a 10.8% YoY increase [1] - The company's domestic revenue is highly correlated with CNOOC's capital expenditures, which are expected to remain high, supporting the company's domestic growth [1][27] - Domestic non-offshore engineering revenue, mainly from LNG receiving station projects, declined by 9.1% in 2023, but the company still has potential for future orders as 11 LNG receiving stations are expected to be operational during the "15th Five-Year Plan" period [1][27] International Business - In 2023, the company's international revenue was ¥6 billion, with new contract awards reaching a record high of ¥14.2 billion, driven by three major EPCI projects in the Middle East [1][27] - The company aims to achieve a revenue target of ¥60 billion by 2035, with a balanced contribution from domestic oil and gas, clean energy, and international businesses [1] - The company is transitioning from a subcontractor to a general contractor in international markets, which is expected to improve its pricing power and profitability [1][51] Industry Outlook - The oilfield services industry is expected to remain robust, with oil prices projected to stay at mid-to-high levels in 2024-2025, supporting upstream capital expenditures [10][12] - Deepwater and ultra-deepwater oil and gas development is becoming a key focus, with global offshore oil and gas capital expenditures reaching 125 billion in 2024 [10][15] - The shift in upstream investment towards offshore projects is expected to benefit the marine oilfield services sector, with offshore exploration and development investments projected to grow at an annual rate of 6.8% from 2022 to 2026 [10][15] Profit Forecast and Valuation - The company is expected to achieve net profits of ¥1.907 billion, ¥2.336 billion, and ¥2.662 billion in 2024, 2025, and 2026, respectively, with EPS of ¥0.43, ¥0.53, and ¥0.60 per share [2] - The company's PE ratios for 2024-2026 are estimated at 12.6x, 10.3x, and 9.0x, respectively, based on the forecasted earnings [2] Competitive Advantages - The company has significant scale advantages, with a total land area of nearly 4 million square meters and a fleet of 19 vessels, including deepwater construction and installation capabilities [53][55] - The company's transition to a general contractor model in international markets is expected to enhance its profitability and market position [51][52] - The company's cost structure is expected to improve as it increases its self-built engineering capacity, reducing reliance on subcontractors and lowering costs [57]