Jereh Group(002353)2024-12-18 08:28Investment Rating - The report maintains a "Buy" rating for the company [1] Core Views - The potential for conventional oil and gas extraction is declining, with shale oil and gas becoming the mainstay for future reserves and production in China. In 2023, China's shale oil production exceeded 4 million tons, marking a significant increase in its share of total oil production from 0.4% in 2018 to 1.9% [2][17] - The bidding for electric fracturing equipment is primarily led by China National Petroleum Corporation (CNPC), and the company is expected to maintain a winning record due to its technological advantages. In 2023, over 70% of CNPC's fracturing equipment bids were for electric fracturing equipment, with the company being the top candidate for two batches of three sets of electric fracturing equipment for CNPC in the second half of 2024 [2][19] - The company is entering a harvest period for its Middle East market layout, having successfully completed a 2.7 billion yuan project in 2023. It has signed several significant contracts in 2024, including a gas field development contract in Iraq and multiple projects in Bahrain and the UAE, showcasing its growing brand recognition and trust in its capabilities [2][25] Summary by Sections Domestic Oil and Gas Market - Conventional oil and gas extraction potential is decreasing, leading to a focus on unconventional oil and gas development. Shale oil production in China has shown rapid growth, with a compound annual growth rate (CAGR) of 24% from 2015 to 2023 [2][17] Electric Fracturing Equipment - The company is positioned to benefit from the increasing demand for electric fracturing equipment, with a significant portion of CNPC's bids focused on this technology. The company has a clear technological edge over competitors in this sector [2][19] International Expansion - The company is leveraging its EPC (Engineering, Procurement, and Construction) capabilities to expand internationally, particularly in the Middle East. The successful completion of major projects has enhanced its reputation and is expected to improve its overall profitability and cash flow [2][25] Financial Forecast and Investment Recommendation - The report forecasts the company's net profit for 2024-2026 to be 2.7 billion, 3.3 billion, and 3.7 billion yuan respectively, with a corresponding price-to-earnings (P/E) ratio of 13, 11, and 9 times [2][31]