ZPEC(SH:603619)2019-05-21 16:00Financial Performance - The company's operating revenue for 2018 was CNY 1,389,738,514, a decrease of 21.59% compared to CNY 1,772,378,874 in 2017[36]. - The net profit attributable to shareholders for 2018 was CNY 29,968,563.74, reflecting a significant decline of 92.40% from CNY 394,515,182.02 in the previous year[36]. - The net profit after deducting non-recurring gains and losses was CNY 3,158,841.66, down 99.17% from CNY 381,627,815.87 in 2017[36]. - The net cash flow from operating activities was CNY 106,444,735.39, a decrease of 57.70% compared to CNY 251,669,301.20 in 2017[36]. - As of the end of 2018, the net assets attributable to shareholders were CNY 2,372,143,674.09, a decrease of 5.65% from CNY 2,514,298,948.47 at the end of 2017[36]. - Basic earnings per share decreased by 93.40% to CNY 0.07 in 2018 from CNY 1.06 in 2017[37]. - Diluted earnings per share also fell by 93.40% to CNY 0.07 in 2018 compared to CNY 1.06 in 2017[37]. - The weighted average return on equity dropped to 1.23% in 2018, down 21.23 percentage points from 22.46% in 2017[37]. - The company reported a cash dividend of 0.23 CNY per share, totaling 9,200,002.30 CNY, which represents 30.70% of the distributable profits for the year[10]. Business Strategy and Transformation - In 2018, Zhongman Petroleum's performance significantly declined, prompting a focus on "transformation and upgrading" as a key strategy[4]. - The company aims to become a comprehensive energy enterprise, focusing on business development and compliance management[4]. - Despite facing financial pressure and increased leverage, the company believes its long-term development potential remains strong[5]. - The company is committed to continuous transformation and embracing changes to navigate external competition and performance fluctuations[4]. - The company is transitioning from reliance on a single client to a diversified client base, which is expected to improve profit margins over time[89]. - The company is implementing an integrated development strategy, focusing on three areas: wellbore technology services, oil equipment manufacturing, and exploration and development integration, aiming to enhance overall advantages and profitability[150]. Market Presence and Client Base - The company successfully transitioned its client base, now including major clients such as BP, Shell, and Saudi Aramco, enhancing future growth prospects[4]. - The company expanded its market presence in Iraq and Russia, adapting to competitive pressures and increasing its market share in low-temperature drilling[66][67]. - The company formed strategic partnerships with major international firms, including BP and Schlumberger, enhancing its global footprint[63]. - The company is expanding its market presence in countries such as Pakistan, Ukraine, and Russia, and has passed the financial audit of Saudi Aramco[80]. - The company has approximately $35 million in contracts for the Iraq Shell well repair project, $27.6 million for the Iraq Block 8 project, and $60.66 million for the Iraq Rumaila oilfield project, among others, indicating a strong pipeline of international projects[155]. Operational Efficiency and Management - The company established a project management department (PMO) to improve project execution and resource allocation, achieving better efficiency and service levels[73]. - The company conducted 63 training sessions for 864 personnel, achieving a training pass rate of over 97%, enhancing the team's professional skills and safety awareness[74]. - The company aims to enhance systematic management to maximize integrated advantages, focusing on improving execution and rapid response capabilities across various systems, including procurement, logistics, and human resources[165]. - The company acknowledges high management, drilling, and equipment manufacturing costs, committing to break previous management models and implement refined management practices in 2019[167]. Equipment and Technology Development - Zhongman Petroleum's drilling equipment is shifting from traditional to high-end intelligent manufacturing, aligning with industry trends[4]. - The equipment manufacturing segment reported a significant revenue increase of 317.10% year-on-year, reaching 54.47 million RMB[84]. - The company launched new drilling equipment, including a 40 low-temperature drilling rig, which received positive user feedback[70]. - The equipment segment will focus on enhancing technology research and development, improving market sales effectiveness, and providing high-quality customer service to drive profitability[161]. - The company is committed to conducting technical research to develop efficient drilling technologies tailored to specific blocks, leveraging internal and external expertise[164]. Financial Management and Shareholder Relations - The company has established a cash dividend policy, proposing a cash dividend of 0.23 yuan per share, totaling approximately 9.2 million yuan for the 2018 fiscal year[181]. - The company did not propose a cash profit distribution plan for the reporting period despite having positive distributable profits[186]. - The company has committed to a 36-month lock-up period for major shareholders following the IPO, ensuring stability in shareholding[186]. - The company plans to maintain communication with related parties to ensure the interests of minority shareholders are protected[196]. Risks and Challenges - The company faces operational risks in overseas projects due to a lack of international experience and the complexity of local regulations, which it plans to address by optimizing human resource allocation and conducting thorough market research[172]. - The company is focused on an integrated development strategy to counteract risks associated with volatile oil prices, aiming to extend its industry chain into higher value-added segments[171]. - The company noted that geopolitical events, such as those in Iran and Venezuela, could increase oil price volatility in 2019[145].