SSC(600871) 光大证券·2024-06-07 10:31Investment Rating - The report maintains a "Buy" rating for both A-shares and H-shares of Sinopec Oilfield Service Corporation (600871 SH/1033 HK) [2] Core Views - Sinopec Oilfield Service Corporation secured a significant EPC contract worth RMB 7 956 billion with Saudi Aramco for the Saudi National Gas Pipeline Phase III project marking a major breakthrough in the Middle East market [1] - The contract amount represents 9 95% of the company's 2023 revenue and signifies a strong recognition of the company's construction capabilities by international clients [2] - The company is actively expanding its overseas market presence with a 7 1% YoY increase in overseas contract value in 2023 reaching RMB 16 7 billion [2] - The oilfield services industry is experiencing a recovery driven by increased capital expenditures from oil companies under high oil prices with global upstream exploration and development capital expenditures expected to grow by 5 7% in 2024 [2] - The company is expected to benefit from sustained high upstream capital expenditures by its parent company Sinopec which plans to maintain upstream capital expenditures at RMB 77 6 billion in 2024 [2] Financial Projections - The company's revenue is projected to grow from RMB 79 981 billion in 2023 to RMB 99 331 billion in 2026 with a CAGR of 7 19% [3] - Net profit attributable to the parent company is expected to increase from RMB 589 million in 2023 to RMB 1 320 billion in 2026 with a CAGR of 19 37% [3] - EPS is forecasted to rise from RMB 0 03 in 2023 to RMB 0 07 in 2026 [3] - ROE (diluted) is projected to improve from 7 34% in 2023 to 11 68% in 2026 [3] Market Performance - The company's total market capitalization is RMB 33 223 billion with a total share capital of 18 984 billion shares [4] - The stock's 1-year relative performance is -8 17% and absolute performance is -13 37% [6] Industry Context - The oilfield services industry is benefiting from increased capital expenditures by oil companies driven by high oil prices [2] - Global upstream exploration and development capital expenditures are expected to reach USD 607 9 billion in 2024 a 5 7% increase YoY [2] Company Strategy - The company is focusing on expanding its overseas market presence particularly in the Middle East where it has a strong competitive advantage [2] - It is transitioning towards integrated contracting services and has consistently ranked highly among drilling contractors for major oil companies in the region [2] - The company is expected to secure more contracts in overseas markets as the Belt and Road Initiative deepens [2]