ZPEC(SH:603619) Xinda Securities·2024-05-15 14:00Investment Rating - The report maintains a "Buy" rating for Zhongman Petroleum (603619.SH), consistent with the previous rating [1]. Core Views - Zhongman Petroleum successfully won the development rights for the East Baghdad Field Northern Extension (EBN Block) and the Middle Euphrates Block (MF Block) in Iraq's recent oil and gas bidding rounds, marking a significant milestone for the company [1][3]. - The company is expected to leverage its integrated exploration and drilling services to enhance profitability from new projects, following its qualification for oilfield development and operations in Iraq [17]. Financial Projections - The forecasted net profit attributable to the parent company for 2024-2026 is projected to be 1.089 billion, 1.351 billion, and 1.523 billion yuan, representing year-on-year growth rates of 34.4%, 24.0%, and 12.8% respectively [5]. - Earnings per share (EPS) for the same period are expected to be 2.72, 3.38, and 3.81 yuan, with corresponding price-to-earnings (P/E) ratios of 9.32, 7.51, and 6.66 [5][19]. Contract Details - The EBN Block covers an area of 231 square kilometers and has seven drilled wells, while the MF Block spans 1,073 square kilometers with six drilled wells. Both blocks are under Development and Production Contracts (DPC) with a development period of 20+5 years [3][4]. - The contracts include terms such as a 15% royalty fee on recognized income and various cost recovery mechanisms for the contractor [1][2]. Revenue and Profitability - The total revenue for Zhongman Petroleum is projected to grow from 3.732 billion yuan in 2023 to 6.250 billion yuan in 2026, with a compound annual growth rate (CAGR) of approximately 24.5% [19]. - The gross profit margin is expected to improve from 45.7% in 2023 to 48.3% in 2026, indicating enhanced operational efficiency [19].