CNOOC Engineering (600583): All overseas project risks are released in 2Q19; industry recovery is clear and price increases are expected

CNOOC Engineering (600583): All overseas project risks are released in 2Q19; industry recovery is clear and price increases are expected

The 2Q19 results were lower than our expectations. CNOOC Engineering announced the 2Q19 results: revenue of RMB27.

7 ppm, an increase of 19% in ten years, in line with our expectations; and a net decrease of 4 in the current period.

500 million, a year-on-year profit of 1.

The 8 billion retracement of tensions exceeded our expectations.

The company’s significant decrease in profits was mainly due to the implementation of the Saudi 3648 marine transportation installation project during the reporting period. Due to the late inspection of the ship in Saudi Arabia, the owner and relevant departments had passed the review and approval.1.

6.6 billion; meanwhile, due to prudent consideration, the company decided to accrue contract reduction losses3.

94 ppm, which affects the total profit of the current period up to 5.

6 billion.

1H19’s new long-term unit amount increased by 13% to 112 in ten years.

4 trillion, of which the unit amount in the overseas new decade has increased 9 times to 94.

6 ppm, 80% to 17.

800 million.

The company disclosed that in July, the contract value of LNG projects in the northern region of China exceeded USD 4 billion.

We maintain our initial judgment and expect the company’s new long-term single expectation this year to exceed 20 billion.

As of the end of 1H19, the company’s orders on hand reached 25.2 billion U.S. dollars, an increase of 43% in the future, and a record high.

Development Trend The one-time adverse impact of the Saudi project has been included, and other overseas projects are progressing smoothly.

At present, the ship survey of 成都桑拿网 the Saudi 3648 project operation vessel has been approved and construction at sea has begun smoothly. We expect that the possible adverse effects of the incident have been fully accounted for.

The progress of other important overseas projects being implemented by the company has been more than half, and the revenue is confirmed smoothly. We judge that the company does not have similar and significant operational risks in the subsequent overseas projects.

The recovery trend of global offshore oil and gas activities is clear, and price changes may have entered a critical period.

Similar to the situation of CNOOC Engineering, in the second quarter of 19, the average growth in revenue and new orders of global offshore oil and gas engineering giants McDermott, Saipem and Technip FMC reflected the current trend of significant 重庆耍耍网 recovery in industry demand.

We judge that through the orders of engineering companies tend to be saturated, the site resources tend to be tight, and the bargaining power of engineering companies for oil companies is rapidly improving.

We do not rule out the possibility of changing the contract price of the 2H19 CNOOC project to the owner. At the same time, we expect that the new contract price in the next two years is expected to show an upward trend.

Earnings Forecasts and Estimates Taking into account the one-time adverse impact of the Saudi project, we have lowered our FY19 earnings forecast by 95% to breakeven and kept the FY20 earnings forecast unchanged.

We maintain the company’s outperform industry rating and target price of 7.

7 yuan is unchanged, corresponding to 1.


4x FY19 / 20 PBR and 43% upside.

The current consensus of the company corresponds to 1.


0x FY19 / 20-year P / B ratio.

Risk Oil price fluctuates sharply, contract price changes exceed expectations, and gross margin recovery is slower than expected