SSC(SH:600871) EBSCN·2024-03-12 16:00Investment Rating - The report maintains an "Accumulate" rating for both A-shares and H-shares of the company, with current prices at 1.84 CNY and 0.50 HKD respectively [1][4]. Core Views - The company has shown steady recovery in its performance for 2023, with a year-on-year increase in total revenue of 8.4% to 80 billion CNY and a net profit increase of 23.8% to 589 million CNY [4][6]. - The company is expected to benefit from the ongoing industry upturn and the high upstream capital expenditure from its parent company, Sinopec, which is projected to maintain a high level of investment in oil and gas exploration [5][6]. - The company is positioned as a leader in CCUS (Carbon Capture, Utilization, and Storage) technology, which is crucial for achieving carbon neutrality goals in China, having launched significant projects in this area [5][6]. Summary by Sections Revenue Performance - The company achieved total revenue of 800 billion CNY in 2023, reflecting an 8.4% increase year-on-year [4]. - The fourth quarter of 2023 saw a total revenue of 241 billion CNY, up 5.8% year-on-year and 29% quarter-on-quarter [4]. Market Development - The company has strengthened its market development efforts, resulting in a total new contract amount of 706.9 billion CNY, an 8.1% increase year-on-year [5]. - New contracts signed with Sinopec amounted to 437 billion CNY, up 11.9% year-on-year, while overseas contracts reached 140.4 billion CNY, a 1.9% increase [5]. Industry Outlook - The global oil demand is expected to continue growing in 2024, with upstream capital expenditure projected to exceed 600 billion USD, a 5.7% increase from 2023 [5]. - The domestic market is also expected to see sustained growth due to high oil prices and government initiatives to increase oil and gas reserves [6]. Profit Forecast and Valuation - The report adjusts the profit forecast for 2023 down by 17% to 589 million CNY, while increasing the forecasts for 2024 and 2025 by 4% and 26% respectively, predicting net profits of 848 million CNY and 1.106 billion CNY [5][6]. - Corresponding EPS estimates are adjusted to 0.03 CNY for 2023, 0.04 CNY for 2024, and 0.06 CNY for 2025 [5].