德银-中国-石油与天然气行业（个股-中海油）-中海油2018策略前瞻：恢复增长模式；重申买入评级-20180201-13页_1mb
报告摘要
CNOOC 2018 Strategy Summary and Implications for COSL
Core Content
CNOOC Limited (0883.HK) released its 2018 strategy preview on 1 February 2018, signaling a return to growth mode and reaffirming a "Buy" rating. The company's production targets for FY18 and FY19 were raised by 3.3% and 4.3%, respectively, to 470-480mmBOE and ~485mmBOE, reflecting confidence in reserve additions and operational performance. CNOOC achieved a 3% beat on its FY17 volume target, indicating improved execution and efficiency.
The company plans to increase its capital expenditure (capex) by 40-60% year-over-year in FY18, reaching RMB70-80bn, compared to RMB50bn in FY17. This increase is attributed to a low base effect, deferral of capex from the Uganda and Angola projects to 2018, and a strategic focus on new development projects, which account for 65% of capex. CNOOC's capex will continue to be split evenly between domestic and overseas projects, with a growing overseas presence in the Atlantic Ocean, Gulf of Mexico, Guyana, Brazil, the North Sea, and Nigeria.
Despite cost inflation in the second half of 2017 due to higher oil price-related taxes and RMB appreciation, CNOOC aims to keep its all-in cost at around USD35/bbl. The company is expected to maintain flat to declining DD&A costs in FY18, which should help offset other cost increases. CNOOC is also locking in drilling contracts with COSL before the Chinese New Year to secure lower day rates for the full year.
China Oilfield Services (2883.HK), a key supplier to CNOOC, is also recommended as a "Buy" based on its expected growth in utilization rates and improved financial performance. CNOOC's increased capex should positively impact COSL's business, with utilization rates for jack-ups and semi-subs expected to rise by approximately 10 percentage points in FY18. However, no day rate recovery is expected for 2018.
Key Information
CNOOC's Production and Capex Targets
- FY17 Production: 469mmBOE (beat target by 3%)
- FY18 Production Target: 470-480mmBOE (up 3.3% from FY17)
- FY19 Production Target: ~485mmBOE (up 4.3% from FY17)
- Capex for FY17: RMB50bn
- Capex for FY18E: RMB70-80bn (up 40-60% YoY)
- Capex Distribution: 65% for development, 50% overseas
Reserve Life and Cost Management
- Reserve Life in 2017: ~10.5 years (up from 8.1 years in 2016)
- Reserve Life in 2018: Expected to reach 11.2 years
- All-in Cost: Targeted to remain at USD35/bbl
- DD&A Costs: Expected to be flat to down in 2018
Financial Metrics
| Metric | 2016A | 2017E | 2018E |
|---|---|---|---|
| P/E (DB) | 7.3 | 15.9 | 9.5 |
| EV/EBITDA (DB) | 3.9 | 5.4 | 4.3 |
| Price/Book (DB) | 1.0 | 1.1 | 1.1 |
| FCF Yield | 3.2% | 9.1% | 8.6% |
| Dividend Yield | 4.4% | 4.7% | 6.3% |
| Net Debt/Equity | 26.0% | 22.9% | 20.0% |
COSL's Financial Highlights
- Price (1 Feb 18): HKD9.41
- Target Price: HKD12.11
- 52 Week Range: HKD6.18 - 10.32
- Market Cap (HKDm): 44,901 (USDm 5,740.9)
- Utilization Rate Increase: ~10 ppts in 2018 for jack-ups and semi-subs
- Key Financial Metrics:
- Sales Growth: 20.7% (2016A), -29.5% (2017E), 12.0% (2018E)
- EBITDA Margin: 38.2% (2016A), 32.5% (2017E), 40.0% (2018E)
- Dividend Yield: 3.2% (2016A), 0.8% (2017E), 3.9% (2018E)
- Net Debt/Equity: 45.9% (2016A), 69.5% (2018E)
Main Points
- Growth Strategy: CNOOC is returning to a growth mode, with increased production and capex targets for 2018 and 2019.
- Reserve Life: Improved to 11.2 years in 2018, driven by new projects such as Liza phase 1 and Libra.
- Cost Management: CNOOC aims to maintain all-in costs at USD35/bbl despite inflation, with flat to declining DD&A costs.
- COSL's Role: COSL is expected to benefit from CNOOC's increased capex, with rising utilization rates.
- Financial Outlook: Both CNOOC and COSL show positive financial trends, with improved metrics and a "Buy" rating.
Key Projects for 2018
| Project | Location | Expected Startup | Peak Production (boe/d) | Working Interests |
|---|---|---|---|---|
| Stampede oil field | United States | 1H18 | NA | 25% |
| Weizhou 6-13 oil field | Western South China Sea | 1H18 | 6,300 | 100% |
| Penglai 19-3 oil field | Bohai | 2H18 | 36,200 | 51% |
| Dongfang 13-2 gas fields | Western South China Sea | 2H18 | 43,400 | 100% |
| Wenchang 9-2/9-3/10-3 gas fields | Western South China Sea | 2H18 | 14,300 | 100% |
Implications for Investors
- CNOOC: Strong growth outlook, increased capex, and improved financial metrics suggest a "Buy" recommendation.
- COSL: Expected to benefit from CNOOC's increased spending, with potential upside in utilization rates and financial performance.
- Valuation: Both companies are seen as undervalued based on current financials and future growth expectations.
Analysts
- Johnson Wan - Research Analyst, +852-22036163, johnson.wan@db.com
- Vitus Leung - Research Analyst, +852-2203 6158
- Eric Cui - Research Associate, +852-22037443
Disclosures
- Deutsche Bank and its affiliates may own more than 1% of a class of common equity securities.
- Information and opinions are based on public sources and may be subject to change.
- Hyperlinks to third-party websites are provided for convenience only.
- Recommendations may differ based on time horizon and methodology.
- Analysts are partially compensated based on the profitability of Deutsche Bank and its affiliates.
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