Hilong (1623) H2 2024 earnings summary

Executive summary

• Revenue rose 9.8% year-over-year to RMB4,668.3 million, driven by strong growth in oilfield services and offshore engineering, despite a decline in oilfield equipment manufacturing revenue.

• Net profit attributable to equity owners fell 81.0% to RMB28.3 million, mainly due to higher expenses, increased finance costs, and a net loss from discontinued operations.

• Oilfield Equipment Manufacturing & Services segment revenue decreased by 18.7%, but gained high-end customers and awards for technological innovation.

• Oilfield Services segment revenue rose 35.2%, driven by high-tech integrated turnkey projects, digital management solutions, and increased upstream capital expenditure.

• Offshore Engineering Services revenue surged 105.9%, with successful project completions and new contracts in Southeast Asia, Middle East, and Africa.

Financial highlights

• Total revenue: RMB4,668.3 million (+9.8% YoY); gross profit: RMB1,121.8 million (+22.5% YoY); net profit: RMB28.3 million (-81.0% YoY).

• Gross profit margin improved to 24% from 21.5% in 2023.

• Segment revenue breakdown (2024): Oilfield Equipment Manufacturing & Services 45.6%, Oilfield Services 33.8%, Offshore Engineering Services 20.6%.

• Finance costs increased 62.3% to RMB255.9 million, and effective tax rate rose to 74.0% from 29.3%.

• No dividend was recommended for the year.

Outlook and guidance

• Focus on high-end markets in US/Canada and Middle East, expanding high-value drilling tools and digitalization.

• Plans to secure new contracts and renewals in Nigeria, Ecuador, Iraq, Oman, Brazil, Kuwait, Pakistan, and expand in UAE, Libya, SE Asia, Central Asia, and Europe.

• Offshore Engineering to enhance EPCIC capabilities, digital transformation, and expand in Middle East, SE Asia, and South America.

• Oilfield services to focus on technology-driven, light-asset operations and new business fields.

• Management expects continued growth in oil consumption and stable oil prices, with opportunities in the Middle East, Southeast Asia, and South America.