Soochow Securities·2025-06-11 07:48Investment Rating - The report recommends a strong buy for Jerry Holdings and Neway Valve, highlighting their potential in the Middle Eastern oil service market [2]. Core Insights - The deepening of the "Belt and Road" cooperation presents vast opportunities in the Middle Eastern oil service market, with China's energy sector investments in the region projected to reach $168 billion from 2020 to 2024, including $50.28 billion in oil and gas projects [2][33]. - Jerry Holdings and Neway Valve differ in product and business models, affecting their revenue recognition and customer onboarding speeds. Jerry focuses on high-end equipment and EPC projects with longer delivery times, while Neway specializes in standardized valve products with shorter production cycles [2][39][62]. - Both companies exhibit high management efficiency and technical barriers, with accelerated expansion in the Middle East. They have established strong relationships with major oil companies, enhancing their market positions [2][90]. Summary by Sections 1. Market Opportunities - The Middle Eastern oil service market is valued at over $100 billion, with Chinese companies currently holding a low market share, indicating significant growth potential [10][12]. - China's oil service equipment exports to the Middle East have been increasing, with Neway's revenue from the region expected to grow substantially [75]. 2. Investment Projects - From 2020 to 2024, China has secured numerous energy cooperation projects in the Middle East, with a total investment of $502.8 billion across six countries [33][32]. - Major projects include Jerry's contracts with Kuwait Oil Company and upcoming contracts in Iraq and Bahrain, showcasing the company's growing influence in the region [52][56][59]. 3. Company Comparisons - Jerry Holdings operates on a project-based model requiring extensive customization, leading to longer cash flow cycles but stronger customer loyalty post-verification [78]. - Neway Valve benefits from a standardized product model, allowing for quicker revenue recognition and scalability, with a focus on expanding its market share in the Middle East [75][87]. 4. Future Outlook - The report anticipates continued growth in capital expenditures from major oil companies, providing a stable environment for Jerry and Neway to thrive [15][90]. - Both companies are expected to benefit from the increasing demand for oil service equipment and the ongoing energy transition in the Middle East [22][22].