According to the announcement on the official website of the Beijing Stock Exchange, the IPO of Xinjiang Keli New Technology Development Co., Ltd. (hereinafter referred to as Keli shares) will be reviewed at the meeting on August 9, 2024, becoming the third company to be listed on the Beijing Stock Exchange after the release of the new "National Nine Articles".
Since the materials were accepted by the Beijing Stock Exchange, Keli shares have experienced three rounds of inquiries. The stability of the company's performance, product quality risks, procurement disclosure, accounts receivable and inventory are all the focus of attention.
The industry has a strong monopoly and customers are highly concentrated
In the mainland, the oil and gas industry is a strategic monopoly resource industry, and the oil and gas exploitation rights are monopolized by central enterprises such as PetroChina, CNOOC, and Sinopec, while the downstream oilfield technical services are gradually divested in the process of restructuring and restructuring of the three major oil companies, and private capital is involved.
Although under the promotion of the separation of the main and auxiliary industries and the restructuring of the auxiliary industry, the oilfield technical service enterprises have experienced the development process of gradually becoming independent of the oilfield companies from the legal form to the ownership relationship, on the whole, the technical service resources of the mainland oilfield are still concentrated in the hands of the enterprises directly and indirectly controlled by the three major oil groups.
The three major oil companies still have a greater traction and driving role in the oil service industry, and the market space and development prospects of the oilfield technical service industry are closely related to the scale of exploration and development expenditure of major oil companies.
Founded in 2004, Keli Co., Ltd. has been focusing on the research and application of related technologies in the field of oilfield engineering and technical services, and the company has a strong dependence on PetroChina and CNOOC Group.
From 2021 to 2023, the company's main business revenue from the subsidiaries of PetroChina Group and CNOOC Group accounted for more than 90% of the total revenue. The revenue of the top five customers accounted for 97.78%, 98.46% and 97.31% of the main business income respectively.
Among them, the company's main business income from the subsidiaries of PetroChina Group was 226.1534 million yuan, 270.0123 million yuan and 256.7653 million yuan respectively, accounting for 68.68%, 61.19% and 72.72% of the main business income respectively;
The company's main business income from CNOOC Group's subsidiaries was 87.7897 million yuan, 149.7799 million yuan and 76.4023 million yuan respectively, accounting for 26.66%, 33.95% and 21.64% of the main business income respectively.
If there are major adverse changes in the investment plan, bidding or operating conditions of PetroChina Group and CNOOC Group in the future, the production and operation of Keli will undergo major adverse changes.
According to the prospectus, Keli has basically obtained 50.00% of the market share of the conventional oilfield water treatment business in Xinjiang Oilfield. Based on the average bidding amount of 225.07 million yuan for the centralized shortlisted bidding projects of conventional oilfield water treatment in Xinjiang Oilfield Company from 2022 to 2024, if the bidding ranking of Keli Co., Ltd. drops from the first to the second, it is expected to affect the maximum contract amount of about 67.521 million yuan, and according to the average gross profit margin of the conventional oilfield water treatment business in the past three years, it is expected to affect the gross profit of about 24.7037 million yuan, accounting for 20.59% of the total gross profit in 2023.
If it slides from the first place to the third place, it is expected to affect the maximum contract amount of about 78.7745 million yuan, and the gross profit is expected to affect about 28.821 million yuan, accounting for 24.02% of the total gross profit in 2023.
In terms of regional market distribution, most of the domestic oilfield service enterprises are the surviving enterprises of oil groups, and the three major oil companies exist according to the geographical boundaries of oilfields, and each oilfield is a self-sufficient system in history, which also delineates the market area of oilfield service enterprises to a certain extent.
The main products and services of Keli Co., Ltd. are distributed in Karamay Oilfield, Tuha Oilfield, Tarim Oilfield, Changqing Oilfield and overseas oilfields in Kazakhstan, Canada, Chad and other countries and regions.
From 2021 to 2023, Keli's revenue in overseas regions will be 114 million yuan, 194 million yuan and 138 million yuan respectively, accounting for 34.49%, 43.87% and 39.14% of the main business income respectively.
Although nearly 40% of the revenue comes from overseas, the profits of Keli's two overseas subsidiaries, Eurasian Geology and Canada Keli, are low or even loss-making. Data show that in 2022 and 2023, the net profit of Eurasian geology will be -4.9439 million yuan and 4.4753 million yuan respectively, and the net profit of Canada Keli will be 8.6911 million yuan and 2.7909 million yuan respectively.
In contrast, onshore income, although higher, is highly competitive. The parent company of Keli Co., Ltd. is located in Karamay City, the main customer is PetroChina Xinjiang Oilfield, in the local oilfield service enterprises, the company faces Karamay Sanda New Technology Co., Ltd., Karamay Hongdu Co., Ltd., Karamay Xinaoda Petroleum Technology Service Co., Ltd., Karamay Xinkeao Oil and Gas Technology Co., Ltd. and Karamay Zhengcheng Co., Ltd. and many other competitors.
The performance is unstable and there are hidden management concerns
With comparable companies in the same industry, the performance of Keli shares shows certain fluctuations. From 2021 to 2023, the operating income of Keli Co., Ltd. will be 335 million yuan, 447 million yuan and 359 million yuan respectively, the net profit will be 36.464 million yuan, 50.3018 million yuan and 546.154 billion yuan respectively, and the comprehensive gross profit margin will be 30.63%, 23.84% and 33.46% respectively.
From January to March 2024, the company's operating income was 63.1232 million yuan, a year-on-year decrease of 14.75%; net profit was 8.7704 million yuan, up 67.28% year-on-year; The net profit attributable to the owners of the parent company after deducting non-recurring gains and losses was 7.3897 million yuan, an increase of 46.35% year-on-year.
In the face of state-owned enterprises and central enterprise customers, under the continuous growth of Keli's operating income, the ensuing increase in accounts receivable is also looming. From 2021 to the end of 2023, the book value of the company's accounts receivable was 95.0804 million yuan, 151.344 million yuan and 133.2006 million yuan respectively, accounting for 30.55%, 47.00% and 39.54% of the current assets in the same period. If the accounts receivable cannot be collected in time, it will affect the turnover of the company's working capital and lead to a decline in the company's operating capacity.
From 2021 to the end of 2023, the book value of Keli's inventory was 77.5559 million yuan, 76.4672 million yuan and 57.9105 million yuan respectively, accounting for 24.92%, 23.75% and 17.19% of the current assets in the same period. If the market environment changes or competition intensifies in the future, resulting in unsalable products and overstocked inventory, it will cause the company's inventory price loss to increase, which will have an adverse impact on the company's profitability.
The production process of Keli oilfield chemicals involves a variety of chemical reactions, which requires the use of reactors and other production equipment, and some of the raw materials used are hazardous chemicals. In the daily production process, the company has the risk of safety production accidents due to sudden environmental changes, improper operation of employees and other factors, which may cause casualties and property losses.
From 2021 to 2023, Keli and its subsidiaries have been subject to administrative penalties for safety production issues many times.
Keli shares have also had product quality problems.
In 2019, the products sold by Eurasia Geology, a subsidiary of Keli Co., Ltd., to customers had quality problems, containing a large amount of organochlorines, resulting in excessive organochlorine content in the customer's crude oil. After negotiation, Eurasia Geology assumed the economic losses caused to the customer and paid a total of 30.4073 tenge (about 50.2304 million yuan) to the customer before the end of November 2020. The above-mentioned compensation event had a significant impact on the issuer's 2020 annual results, with an impact on the total profit of -1,230.68%.
If the company's products are unqualified again, resulting in the oilfield company's claim for economic losses, it will bring great damage to the company's reputation, trigger litigation, arbitration and compensation with the oilfield company, and adversely affect the company's performance.