Jereh Group(002353) 长江证券·2025-04-27 13:41Investment Rating - The investment rating for the company is "Buy" and is maintained [9]. Core Views - The company reported a robust performance in Q1 2025, achieving revenue of 2.687 billion yuan, a year-on-year increase of 26.07%. The net profit attributable to shareholders reached 466 million yuan, up 24.04% year-on-year, while the net profit excluding non-recurring items was 462 million yuan, reflecting a 28.37% increase year-on-year [2][6]. - The change in delivery structure has impacted the gross margin, but the company has effectively controlled its operating expenses. The internationalization strategy is being executed successfully, with significant breakthroughs in overseas markets. The company has a sufficient backlog of orders, and both the company and its controlling shareholders are actively increasing their holdings, indicating confidence in future performance. The domestic demand for unconventional oil and gas extraction is rising, and as a leading provider of fracturing equipment, the company is expected to benefit significantly [2][6]. Summary by Sections Financial Performance - In Q1 2025, the company achieved a gross margin of 31.43%, a decrease of 0.26 percentage points quarter-on-quarter and a decline of 4.29 percentage points year-on-year. The net profit margin was 17.79%, down 1.75 percentage points quarter-on-quarter and 0.2 percentage points year-on-year. The decline in profitability is attributed to the large-scale delivery of lower-margin conventional cementing equipment. However, as higher-margin fracturing equipment is gradually delivered, profitability is expected to normalize [12]. - The company maintained a good control over its operating expenses, with an expense ratio of 10.75% in Q1 2025, a year-on-year decrease of 2.74 percentage points [12]. International Expansion - The company has made significant progress in its internationalization strategy, with core products in the oil and gas field equipment and technology services experiencing sustained demand. Key international contracts include: 1. A preliminary development contract for the Mansuriya gas field in Iraq signed in May 2024. 2. Successful delivery and application of the first set of Chinese electric fracturing equipment in North America, with new orders secured in July 2024. 3. A total engineering contract for seven gas booster stations with BAPCO in Bahrain, valued at approximately 3.16 billion USD (about 22 billion yuan). 4. Winning a digital well site transformation project with ADNOC, with a contract value of approximately 6.555 billion yuan, setting a record for the company [12]. Order Backlog and Shareholder Confidence - The company secured new orders worth 18.232 billion yuan in 2024, a year-on-year increase of 30.64%, with overseas orders growing by 65.37%. As of the end of 2024, the backlog of orders stood at 10.155 billion yuan, providing strong support for future operational performance. Additionally, the company announced a stock buyback plan of 150-250 million yuan and the controlling shareholder plans to increase holdings by 50-70 million yuan, reflecting confidence in future growth [12]. Industry Outlook - The demand for unconventional oil and gas extraction in China is expected to increase, supported by the "14th Five-Year Plan" for modern energy systems, which emphasizes the exploration and development of unconventional resources. The company, as a leading provider of fracturing equipment, is well-positioned to benefit from the anticipated growth in the oilfield services market [12].