Oil Chai: The performance of the unexpected variables

Investment points as the only internal gas manufacturer within the petroleum and petrochemical system, the company has monopolized 90% of the market share, considering the characteristics of the rigid demand for oil and gas capital expenditure, the diesel engine business is expected to maintain a steady growth in the near future.　　Along with the domestic oil and gas pipeline construction into the golden development period, Baoji Petroleum steel Pipe Company as PetroChina's main steel pipe supply enterprise, in recent years, the performance is expected to appear explosive growth.　　In the policy and the support of PetroChina to increase coal seam gas mining, 2011 years later the gas machine business will become the company's new profit growth point.　　The company's earnings for 2009-2011 are expected to be 0.63, 0.77 and 1.02 respectively, maintaining a "recommended" investment rating. Petroleum Chai (000617) has now developed into a major oil drilling power manufacturer in the world. Special diesel engine and supporting parts, gas machine and generator set contributed 85% of the main business income and profits. As PetroChina's only one of the power equipment research and development enterprises, in addition to focus on internal combustion engine operation, but also shares two of oil steel pipe and wire rope manufacturing enterprises.　　In the past 3 years, equity investment income accounted for more than 50% of the company's net profit, and the company's performance had a high sensitivity to equity investment income. Diesel engine business remained stable by the fall of oil prices and demand, PetroChina 2009 capital expenditure decline reached 16%, of which the larger fall in the field of oil and gas exploration, oil and gas recovery in the field of capital expenditure remained stable. Petroleum drilling diesel engine industry entry barrier is high, as the only internal gas manufacturer within the petroleum and petrochemical system, the company monopolized 90% of the market share, considering PetroChina and Sinopec's oil and gas exploration capital expenditure has the rigid demand characteristic, At the same time, the company launched 3000 series of products also led to the 2000 series of diesel engine replacement needs, the oil production is expected to maintain the demand for diesel engine 5-10% growth. In addition to the whole product, the special diesel engine spare parts business is expected to become a new profit growth point, PetroChina Group in 2008 further strengthened the internal procurement of spare parts business financial audit, which led to the company 2008 Diesel engine parts business exploded growth,　　We expect the spare parts business to maintain 15-20% growth in 2009-2010 years.　　Oil and gas pipeline business explosion-type growth company oil and gas pipeline business from the shares of Baoji Petroleum steel Pipe Company and Xianyang steel Wire Rope company, as the Baoji steel pipe investment income far more than Xianyang rope, we will focus on the former. With the west-east gas transmission two and Sino-Russian crude oil pipeline, domestic oil and gas pipeline construction has entered the period of gold development, we are expected to add 40,000 kilometers of oil and gas pipelines in 2008-2012, steel pipe demand of about 100.012 billion tons, PetroChina as the main oil and gas pipeline construction Engineering, 2009-2012 Oil and gas pipelines in the construction scale reached 24,500 kilometers, steel pipe demand of about 6.508 billion tons, Baoji petroleum steel pipe as PetroChina's mainSteel pipe supply enterprises, the internal market share of about 40%, 2009-2010-year performance is expected to appear explosive growth.　　We expect the company 2009 net profit growth is expected to reach 120% (Qinhuangdao Bovishun new production capacity production and increased demand for capacity utilization), 2010 with some key projects into the completion of the settlement cycle, the company's net profit growth is expected to reach 25%. Gas machine business will become a new growth point company gas machine business includes gas engine and generator set, gas machine is mainly used in coal-bed methane power generation. PetroChina is expected to become a leader in coal-bed methane mining and application in China, and its CBM production will rise from less than 100 million cubic meters in 2007 to 2 billion cubic meters in 2010 and more than 25% in 2010, according to long-term development plans. As PetroChina's only gas generator set supplier, PetroChina to increase the coal seam gas mining sector investment, will be strong support for the company's gas machine business. Overall, under the impetus of the policy, the company gas machine business is expected to become a new profit growth point in 2011.　　We initially anticipate that the company's gas machine and generating unit business is expected to achieve a revenue of 6.7 billion yuan, that is, the expansion of the existing scale of 3-4 times. In addition, the company's main business also includes civilian diesel engine and generator unit business.　　Civil diesel engine applications, including railway locomotives, small marine engines and mining locomotives, in order to further expand the civil market share, the company may be in 2009 to adopt a competitive strategy to reduce prices; with the gradual recovery of the domestic economy, the company's generator set market demand is expected to gradually rebound. Earnings forecasts and ratings of the company 2009-2011 earnings per share of 0.63, 0.77 and 1.02 yuan, although short-term valuation does not have a clear advantage, but Baoji steel tube company 2009-2010 years of high probability of performance exceeding expectations; The company's 2009-2010 performance will obviously benefit from the national key oil and gas transportation project, the performance growth is strong, while the oil price rebound and the relevant policies of CBM mining will bring the company's performance of the super expectations. Therefore, we maintain a "recommended" investment rating for the company.