For the first time coverage, give an overweight rating. Combined with the judgment that oil prices will enter the medium-high oil price of 70-80 US dollars/barrel in the next 2-3 years and the natural gas infrastructure investment will grow every year, we expect the net profit of the company to be 1.21/2.10/275 million yuan in 2018-2020, respectively. It is 0.20/0.35/0.46 yuan. Give the industry average PB of 3.3 times in 2019, corresponding to the target price of 11.52 yuan.
The company benefited from the increase in investment in the entire industrial chain of natural gas development, and its competitive advantage is obvious. Subsidiary Four Machine Co., Ltd., four-machine Saiwa, Sanji Branch is a leading enterprise in fracturing equipment, cementing and fracturing equipment, and compressor equipment; Jiang Drill has a monopoly advantage in the field of oil drill bits, Shashi Steel Pipe The company is the only professional manufacturer of oil and gas pipelines. The company's business covers the entire industrial chain of natural gas development. The future growth of industry infrastructure and oil and gas development investment is highly certain, and the company's business will pick up across the board.
China has a large space for unconventional oil and gas production, and there are new demands for fracturing equipment. In 2017, China's shale gas production was 9 billion cubic meters. According to the "Shale Gas Development Plan (2016-2020)" issued by the National Energy Administration, the goal of shale gas production of 30 billion cubic meters will be achieved in 2020, and the space for increased production will be larger. Only PetroChina still needs to drill more than 700 wells by 2020, and we expect to bring more than 120 new pressurized split trucks.
China's natural gas infrastructure investment is highly certain, and future gas storage and natural gas long-distance pipelines are the focus of investment and construction. There is still a big gap between our natural gas infrastructure and developed countries. PetroChina is expected to invest 21 billion yuan in the Sichuan-Yunnan region to build gas storage, and the investment in oil and gas pipelines during the 13th Five-Year Plan is expected to reach 910 billion yuan. Equipment, steel pipe and engineering service providers will benefit from increased industry sentiment.