Oil&Gas/ China Jutal (3303 HK) - Oriental Patron (3303 HK) Multiple...Equity Research Jutal (3303...

Tue, 04 Jun 2013

Equi ty Research Jutal (3303 HK) Oi l&Gas/ China

Multiple growth pillars rising from seabed

Jutal manufactures oil and gas processing and subsea equipment in China. It has

grown from 18 years ago, a small oil & gas equipment and ship-building technical

service provider, to an OEM partner to international oil companies. In recent years,

Jutal further expanded itself into an EPC manufacturer; focused on developing

equipment employed in offshore oil production. Expecting Jutal to experience 52%

3-year CAGR growth from FY13E- FY15E, We initiate Jutal at Buy, with price target

HK$3.0 implying 33% upside.

Rebounded oil price during 2009-2012 & new discoveries by CNOOC induced

pent up demand on offshore infrastructure & equipment; support by sizeable

order book. Jutal’s order book at mid-March reached historical hike of RMB 600mn;

similar to revenue of FY12A. Its 30%-held JCE, PJOE, has additional order book of

RMB 700mn. We expect Jutal to recognize revenue of RMB 843mn in FY13E, at 38%

YoY growth. Assuming PJOE to deliver RMB 1,400mn sales and achieve 10% net

margin, we expect PJOE’s FY13E earnings contribution to reach RMB 42mn. In

conclusion, we estimate Jutal’s FY13E net profit to rise by 118% YoY to RMB 90mn,

followed by 36% YoY in FY14E to RMB1,038mn, and 19% YoY in FY15E to RMB

1,291mn.

Enhanced product design capability; from OEM to EPC. Through acquisition of

patents and recruitment of experienced engineers in the past 3 years, Jutal had

established its in-house product engineering team; enabled them to improve product

design and margins.

Subsea equipment is the new growth pillar. Since 2010, Jutal partnered FMC

Technologies, a global leader in subsea equipment, in manufacturing subsea

equipment. They completed a subsea equipment production line in Phase II of Jutal’s

Zhuhai base in mid-2012. Jutal was awarded a US$20mn contract for subsea manifold

to be employed in Chevron’s Australian Wheatstone project.

Initiate at Buy, target price HK$3.0. Our target price implies 19.5x FY13E P/E and

14.4x FY14E P/E, being 11% and 3% above peers trading at 17.6x and 13.9x,

respectively. This is justified by Jutal's EPC capabilities in oil & gas processing

equipment and its leading position as the sole subsea equipment manufacturer in

China.

Alan Lau

Analyst

+852 2842 5820

[email protected]

Initial Coverage

BUY

Close price: HK$2.25

Target Price: HK$3.00 (+33%)

Key Data

HKEx code 3303

12 Months High (HK$) 2.40

12 Month Low (HK$) 0.45

3M Avg Dail Vol. (mn) 14.68

Issue Share (mn) 701.50

Market Cap (HK$mn) 1,578.37

Fiscal Year 12/2012

Major shareholder (s) Wang Lishan (57%)

Source: Company data, Bloomberg, OP Research

Closing price are as of 3/6/2013

Price Chart

1mth 3mth 6mth

Absolute % 17.2 9.8 181.3

Rel. MSCI CHINA % 18.2 12.6 182.5

Company Profile

Jutal is an integrated oil and gas equipment

provider focuses on providing offshore

oilfield equipment used in China and

overseas. It also provides shipbuilding and

other technical services.

Exhibit 1: Forecast and Valuation Year to Dec (RMB mn) FY11A FY12A FY13E FY14E FY15E

Revenue 493.3 608.6 842.6 1,037.6 1,291.1

Growth (%) 15.3 23.4 38.4 23.1 24.4

Net profit 9.3 41.4 90.3 122.5 145.9

Growth (%) (86.2) 344.8 118.1 35.7 19.1

Diluted EPS (RMB) 0.015 0.062 0.123 0.167 0.198

Change to previous EPS (%) N/A N/A N/A

Consensus EPS (RMB) 0.110 0.140 0.170

EPS growth (%) (89.0) 318.0 96.6 35.7 19.1

ROE (%) 1.1 4.7 8.8 10.8 11.5

P/E (x) 120.5 28.8 14.7 10.8 9.1

P/B (x) 1.4 1.4 1.3 1.2 1.0

Yield (%) 0.0 0.8 0.7 0.9 0.0

DPS (RMB) 0.000 0.015 0.012 0.017 0.020

Source: Bloomberg, OP Research

0.0

0.5

1.0

1.5

2.0

2.5

Jun/12 Sep/12 Dec/12 Mar/13 Jun/13

HK$3303 HK MSCI CHINA

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Table of Contents

Jutal’s Background ....................................................................................................................................... 3

Ride on the capex growth rise from CNOOC ............................................................................................... 11

Growth pillar from subsea equipment ..........................................................................................................12

Financial analysis ........................................................................................................................................16

Valuation .....................................................................................................................................................18

Risks ...........................................................................................................................................................19

Appendix 1: Management and shareholding structure.................................................................................20

Appendix 2: Chevron Wheatstone LNG Project...........................................................................................22

Appendix 3: Subsea equipment market .......................................................................................................25

Financial Summary .....................................................................................................................................27

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Jutal’s Background

Jutal is China’s pioneering oil and gas processing equipment and subsea

equipment manufacturer. Currently, they are the only domestic company capable

of manufacturing subsea equipment.

Back in June 1998, Mr. Wang Lishan, Chairman of the company, obtained 55%

stake and become the major shareholder of the company. Jutal began its oil and

gas equipment manufacturing business as an OEM partner to the 3 NOCs and

also provide maintenance and consulting services in shipbuilding. Its key

management was prior employees of the manufacturing arms of CNOOC.

The company was listed on the Main Board of Hong Kong in September 2006. In

the following year, the company acquired 30% of PJOE, a JCE mainly provides

offshore structures, such as jackets and production modules, for offshore oil

platforms. PJOE is based in Penglai, Shandong. It had consistently contributed

50-66% of the company's profit before taxation through FY08A-FY12A, with

exclusion to year 2011.

Through acquisition of patents and recruitment of experienced engineers from

pioneering companies in offshore equipment, Jutal established its product

engineering team. This enabled Jutal to design its own products and be able to

improve product performance and margins, given that oil and gas processing

equipment are highly customized products employed in distinct geological

environments in the world.

In 2011, Jutal established its Zhuhai plant after injection of a piece of land

including a port in Gaolan Port, Zhuhai, Guangdong. Jutal leveraged on Gaolan's

beneficial geographical location and began entered the subsea equipment market

from provision of jumpers for Saipem to be used in Husky's Liwan project for

Saipem, and manifolds for FMC Technologies to be used in Chevron's

Wheatstone project in 2012.

Exhibit 2: Company milestone

Year Major event

1995 Established

Jun 1998 Mr. Wang Lishan became major shareholder with 55% stake of the company

Sep 2006 Listed on the Main Board of Hong Kong at per share price of HK$1.38

Jun 2007 Placed 83mn shares at per share price of HK$2.98; raised net proceeds of HK$242mn

Sep 2007 Acquired 30% of Penglai Jutal (PJOE) from Chairman Mr. Wang at consideration of

HK$338mn

Jul 2011 Acquired Zhuhai Prospering from Chairman Mr. Wang at consideration of RMB16mn.

The major asset held by Zhuhai Prospering is a piece of land at 400,000 sqm, located in

Gaolan Port, Zhuhai, Guangdong. This land was later developed into Zhuhai Jutal

Sep 2012 Placed 6mn new shares at per share price HK$0.60 and 34mn warrants at exercise price

of HK$0.70 with 24 months maturity

2012 Established long-term relationship with FMC Technologies in subsea equipment.

Awarded Chevron Wheatstone LNG project subsea manifold contract of US$20mn.

Completed construction of phrase II of Zhuhai Jutal for the production line of subsea

equipment

May 2013 Placed 50mn shares at per share price HK$1.73; raised net proceeds of HK$34mn

Source: Company, OP Research

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Company structure

Jutal operates mainly through its 4 major subsidiaries located in Zhuhai, Dalian,

Tianjin and Shenzhen.

Exhibit 3: Company structure of Jutal

Source: Company

Exhibit 4: Summary of operations of Jutal

Subsidiaries Short Name Major product and services

Shenzhen Jutal

Machinery Equipment

Shenzhen Jutal Oil and gas platform and relevant equipment’s

fabrication, upgrade, repair and maintenance

Jutal Oilfield Services

(Tianjin)

Tianjin Jutal Oil and gas platform and relevant equipment’s

fabrication, upgrade, repair and maintenance

Jutal Offshore

Shipbuilding Services

(Dalian)

Dalian Jutal Jacket, drilling module, shipbuilding and related

coating, consultancy and other technical services

Jutal Offshore Oil

Services (Zhuhai)

Zhuhai Jutal Drilling modules, platform and equipment. Oil and gas

processing equipment, and subsea equipment


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Product and services

Jutal’s business are classified into 4 major segments, namely:

(a) Technical support for oil and gas equipment;

(b) Oil and gas facilities and processing skid equipment;

(c) Technical support for shipbuilding; and

(d) Civil engineering.

Exhibit 5: Revenue mix of Jutal’s 4 major segments (FY06A-FY15E)

Source: Company, OP estimate

Exhibit 6: Gross margin of Jutal’s 4 major segments (FY06A-FY15E)


0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

FY06A FY07A FY08A FY09A FY10A FY11A FY12A FY13E FY14E FY15E

Technical support for oil and gas equipment

Oil and gas facilities and processing skid equipment

Technical support for shipbuilding

Civil engineering

-60.0%

-40.0%

-20.0%

0.0%

20.0%

40.0%

60.0%


Overall

Technical support for oil and gas equipment

Oil and gas facilities and processing skid equipment

Technical support for shipbuilding

Civil engineering

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Oil and gas facilities and processing skid equipment made the largest revenue

contribution amongst business segments; reached 77% in FY12A from 49% in

FY06A.

Exhibit 7: Oil and gas facilities and processing skid equipment

Oil Processing Water Treatment Gas Treatment

Source: Company

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Customer profile

Jutal has an extensive customer base comprised of 3 NOCs (CNOOC, CNPC

and Sinopec), international oil companies, and other shipbuilding companies.

Its sales are concentrated on its top five customers. During FY10A-FY12A, top

five customers accounted for 54-55% of total revenue.

In FY11A, Jutal established cooperation with FMC Technologies, and was

awarded subcontract orders for subsea equipment for Chevron's Wheatstone

LNG Project in Australia. Jutal and FMC Technologies have further tied up their

relationship from established long-term cooperation agreement in October 2012,

and become a major supplier to FMC Technologies. We expect FMC

Technologies' share in revenue for Jutal to increase significant from 2013

onwards.

Exhibit 8: Summary of major customers

CNOOC / COSL CNOOC Engineering CNPC / PetroChina

Sinopec FMC Technologies Eni Saipem

BP Chevron ConocoPhillips

Technip Dalian Shipbuilding CSSC

AMEC Anadarka Emerson

CPECC ExxonMobil Shell

Halliburton Prosafe Petreco


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Penglai Jutal Offshore Engineering (PJOE)

PJOE mainly produces modules and infrastructure employed in offshore drilling,

such as jackets, topsides, and floating structures, etc. It was acquired by Jutal in

Sep 2007 from Chairman Mr. Wang.

Exhibit 9: Major products of Penglai Jutal

Jacket Topside

Floating structure

Source: Company

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PJOE is a significant earnings contributor to Jutal. It consistently accounted for 50

to 66% of the company’s profit before taxation from FY08A-FY12A, with exclusion

of FY11A, where contribution was only 13%.

Exhibit 10: Share of profit from PJOE and PBT (FY06A-FY15E)


PJOE is jointly operated by 4 parties, namely Jutal (30%), CNOOC (26%),

SembCorp (22%) and Shenzhen Chiwan Petroleum Supply Base (22%).

Currently, PJOE’s major client is COOEC, a subsidiary of CNOOC, and CNOOC.

Exhibit 11: Shareholding structure of PJOE

Source: Company

0%

20%

40%

60%

80%

100%

0

50

100

150

200


Share of profit of JCE Profit before taxation % of PBT

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Exhibit 12: Summary of PJOE Track Record

Project Name Project Type Vendor Construction

begin

Completion

date

Weight

(Tonnes)

SZ36-1 WHPC Jacket EPC COOEC 15 Feb 12 1 Aug 12 1,900

SZ36-2 WHPM Jacket EPC COOEC 23 Apr 12 30 Aug 12 4,411

SZ36-3 WHPN Jacket EPC COOEC 15 May 12 15 Sep 12 3,347

Qinfen N389 Tube Project EPC COSL 15 Oct 11 28 Apr 12 2,000

Laizhou Bay Wind Speed Measurement Tower

Foundation

C NOED 17 Sep 11 15 Oct 11 294

161Module Seawater Processing Tower Fabrication

and Platform Reconstruction

PC CNOOC 15 Jul 11 30 Oct 11 N/A

WZ11-1 Wellhead Rack and Topside EPC CNOOC 15 Jun 11 15 Sep 11 1,300

PY34-1 Jacket EPC CNOOC 11 Nov 11 15 Jun 13 31,309

PY4-2 Living Module EPC CNOOC 16 Mar 11 28 Apr 12 1,250

PY5-1 Living Module EPC CNOOC 6 May 11 28 Apr 12 1,250

RIYADH PP11 Module C Hyundai 27 Dec 10 25 Aug 11 3,036

Neptune N538 Steel Pilings C Neptune 2 Aug 10 30 Nov 10 368

Cheviot-Octabuoy Project Wellhead Structure

Fabrication and Installation

PCI COSCO Shipyard 23 Feb 11 28 Sep 11 2,900

BZ25-1/S Oilfield Recovery Project C COOEC/CNOOC 23 Dec 09 25 Mar 10 620

Subsea Pipeline Rotary Base C CNOOC 1 Jul 09 30 Jul 09 68

Jinzhou 25-1 Living Module EPC CNOOC 30 Dec 08 8 Aug 09 523

Jinzhou 25-1 WHPA Jacket EPC COOEC/CNOOC 5 Dec 08 30 Mar 09 4,849

Jinzhou 25-1 CEP Jacket EPC COOEC/CNOOC 15 May 09 15 Sep 09 4,305

Jinxian 1-1 WHPB Jacket EPC COOEC/CNOOC 15 Nov 08 15 Mar 09 3,998

Jinxian 1-1 CEPA Jacket EPC COOEC/CNOOC 30 Nov 08 26 Apr 09 6,411

Suizhong 36-1 CEPK Jacket E & C COOEC/CNOOC 10 Jan 09 5 Jul 09 3,740

Suizhong 36-1 WHPL Jacket E & C COOEC/CNOOC 25 Oct 08 5 Mar 09 1,980

Luda 5-2 WHPB Jacket E & C COOEC/CNOOC 1 Dec 08 30 Mar 09 2,090

绥中 36-1 WHPK Jacket E & C COOEC/CNOOC 10 Jan 09 30 Apr 09 2,200

Bozhong 29-4 WHPA Jacket EPC COOEC/CNOOC 29 Jul 08 15 Nov 08 2,800

Bozhong 34-1N WHPC Jacket EPC COOEC/CNOOC 29 Jul 08 17 Nov 08 2,800

Bozhong 28-2SN WHPA Jacket EPC COOEC/CNOOC 28 Sep 08 18 Mar 09 1,750

Suizhong 29-4 BOP Jacket EPC COOEC/CNOOC 28 Sep 08 10 Apr 09 1,270

FPSO Qinghai Spot Repairs (Bozhong 28-2) N/A COOEC/CNOOC 6 Mar 08 25 Jan 09 320

Cozhong 13-1 Jacket EPC COOEC/CNOOC 10 Dec 08 5 Jul 09 1,596

Caofeidian 18-2 Jacket EPC COOEC/CNOOC 21 Apr 08 29 Jul 08 1,391

Luda PSP Jacket EPC COOEC/CNOOC 19 Dec 08 4 Jun 09 4,800

Luda 27-2 WHPB Jacket EPC COOEC/CNOOC 22 Feb 08 10 Jun 08 2,475

Luda 32-2 WHPA Jacket EPC COOEC/CNOOC 18 Jul 08 24 Mar 09 2,860

Jinzhou 25-1S WHPA Jacket EPC COOEC/CNOOC 14 Apr 08 7 Nov 08 3,670

Jinzhou 25-1S CEPA Jacket EPC COOEC/CNOOC 11 Oct 08 30 May 09 4,200

Bozhong 28-2S Jacket EPC COOEC/CNOOC 20 Sep 07 20 Jan 08 6,569

Jinzhou 9-3 WHPE Module EPC Neptune 15 Mar 07 15 May 07 135


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Ride on the capex growth rise from CNOOC

Given Brent Crude have rebounded from US$40/barrel to above US$100 from

2009, and CNOOC’s to ramp up 30 projects between 2013-2015, we estimate

CNOOC to increase its capex by 41% in FY13E and remain high over

FY14E-FY15E.

Up to 1Q13, CNOOC has 24 projects in progress. Its largest projects Liwan 3-1

and Suizhong 36-1 are scheduled to be completed by end 2013.

These aggressive targets induce large demand for Jutal’s oil, gas and water

processing equipment, as well as PJOE’s jackets, topsides and other offshore

infrastructures through FY13E-FY15E.

Exhibit 13: Capex plan of CNOOC (FY08A-FY13E)


Exhibit 14: CNOOC’s development plan in East and and South China Sea


33.7%

21.4%

-18.8%

26.7%

43.1% 41.4%

-20%

0%

20%

40%

60%

-4,000

0

4,000

8,000

12,000

16,000

FY08A FY09A FY10A FY11A FY12A FY13E

Exploration Development Production Others YoY (%)

CNOOC aims to build a “Deep

Water Daqing” with annual output

of 50mn barrels of oil in 2020.

In order to achieve this target,

they plan to invest RMB 200bn in

the coming 10 years.

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Growth pillar from subsea equipment

Subsea equipment system are employed in deep sea environment (wells below

water depth of 300m/1,000 feet), where fixed platform are generally unfeasible to

establish.

Exhibit 15: Subsea equipment system

Source: Offshore Energy Today

In 2012, Jutal became a pioneering subsea equipment manufacturer in China,

through cooperation with FMC Technologies. FMC Technologies is a leader in

subsea equipment with 47% market share according to Douglas-Westwood and

Quest Offshore Resources.

Exhibit 16: Subsea equipment market share (2007A-2011A)

Source: Douglas-Westwood, Quest Offshore Resources, OP Research

FMC Tech47.0%

GE15.0%

Aker10.0%

Cameron21.0%

Dril-Quip7.0%

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Long-term relationship with FMC Technologies

Long-term cooperation was established between Jutal and FMC Technologies’

Asian Pacific Operation on subsea equipment manufacturing in 2012. In the

same year, Jutal was subcontracted at US$20mn, an order of 3 subsea manifolds

from FMC Technologies, to be employed in Chevron’s Wheatstone LNG project

located in Australia. The contract was scheduled to deliver in 2013.

Exhibit 17: Jutal’s HSE regulations at Zhuhai Plant in compliance with FMC

Jacket Topside

Source: OP Research

The beginning of the cooperation with international oil equipment leaders is

recognition on Jutal’s corporate governance and management on health, safety,

and environmental standards (HSE), were up to international standards. We

believe Jutal to continue to improve on its corporate governance as they continue

to partner with international oil equipment companies such as FMC Technologies

and Eni Saipem going forward.

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Demand for subsea trees and deepwater capex outlook

According to Quest Offshore Resources, the demand of global subsea trees

remained low during 2009-2011, after the global financial crisis broke out in 2008.

We see 2012’s subsea tree orders received pent up demand from the rebound of

oil prices due to gradual recovery of global economy.

Quest Offshore Resources believe the high growth in subsea tree awards to

continue during 2013 and 2014. They estimate subsea tree awards to grow by 26%

in 2013 followed by 10% YoY growth in 2014, and then stay flat in 2015.

Exhibit 18: Subsea tree market - units awards (2007A-2015E)

Source: Quest Offshore Resources, OP Research

Infield Research also estimates that global deep water capex will reach a hike

annual spending of US$53bn to US$55bn between 2013-2015.

Exhibit 19: Global deepwater capex (in US$mn)

Source: Infield Research

-30%

-20%

-10%

0%

10%

20%

30%

40%

0

100

200

300

400

500

600

700

2007A 2008A 2009A 2010A 2011A 2012A 2013E 2014E 2015E

Unit orders YoY growth (%)

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In December 2012, FMC Technologies foresee multiple offshore projects will

induce large demand for global subsea production equipment of US$150mn in

the coming 15 months.

Exhibit 20: Offshore production infrastructures

Operator Project Location No. of trees

Total S.A. Egina Nigeria 40

Enquest Kraken Phase 1 UK 25

BP Block 31 Phase 2 Angola 40

Chevron Gendalo/Gehem Indonesia 29

Tullow T.E.N. Ghana 21

ENI Jangkrik Indonesia 11

Total S.A. Moho North Congo 17

BP Greater Plutonio Infill Angola 10

Premier Oil Catcher UK 24

ENI Block 15/06, East Hub Angola 25

ExxonMobil Hadrian North Phase 1 GOM 12

CNOOC Liuhua 16-2 China 16

BP Azeri Subsea Azerbaijan 6

Hess Equus Australia 7

Chevron Rosebank UK 14

Hess Stampede (Pony) GOM 14

Chevron Lucapa Angola 17

Maersk Chissonga (Block 16) Angola 44

Total Block 32 Angola 66

Reliance Reliance R-Series India 8

Total S.A. Zinia Phase 2 Angola 9

Total projects 455

Source: FMC Technologies, OP Research

We believe the strong industry growth in subsea equipment will benefit FMC

Technologies given its solid leadership position in the subsea market, and will

also benefit Jutal as FMC Technologies outsources its orders to its partner in

China.

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Financial analysis

Revenue

We expect Jutal oil & gas facilities and processing skid equipment segment to

continue to be the major growth driver of the company, supported by CNOOC’s

rapid development to East and South China Sea, and new orders from FMC

Technologies and Saipem. We expect revenue mix from oil and gas facilities and

processing skid equipment to grow from 70.4% in FY12A to 77.1% in FY13E,

further to 81.4% in FY14E.

Based on having RMB 600mn orders on hand at end March 2013, we estimate

Jutal’s FY13E revenue to reach RMB 843mn, representing 36% growth YoY.

Gross and operating margins

We expect the above 30% high margin is not sustainable for the technical support

segment for oil and gas equipment. We lowered the segment gross margin

expectation from 31.9% in FY12A to 30.0% in FY13E and 28.0% in FY14E.

On the other hand, as Jutal had ramped up its in-house engineering and design

team for its oil and gas processing equipment, we expect the company’s gross

margin on oil and gas facilities and processing skid equipment to increase from

19.5% in FY12A to 24.0% in FY13E and 25% in FY14E, after factoring upsides

from the manufacturing of subsea equipment as well.

Overall, we estimate Jutal’s margin to improve from 21.7% in FY12A to 24.4% in

FY13E and 24.9% in FY14E, due to the improvement from gross margin on oil

and gas facilities and processing skid equipment segment and improvement in

product mix.

We anticipate Jutal’s SG&A ratio (SG&A over sales) to reduce from 17.7% in

FY12A to 16.0% in FY13E and 15.0% in FY14E, as a result of the improvement in

plant utilization of Zhuhai Plant in FY13E and FY14E. As a result, our estimate for

Jutal’s operating margin improves from 4.2% in FY12A to 8.5% in FY13E, and 9.9%

in FY14E.

Share of profit from JCE (PJOE)

Given PJOE have over RMB 700mn orders on hand as at end March 2013, we

expect PJOE to deliver RMB 1,400mn sales in FY13E and RMB 140mn net profit,

assuming 10% net margin.

We estimate that share of profit from JCE (PJOE) for Jutal will increase from

FY12A’s RMB 31mn to RMB 42mn (34% YoY growth) in FY13E, further to RMB

50mn (20% YoY growth) in FY14E, on the back of the high growth in the demand

for jackets and topsides for new projects in East and South China Sea for

CNOOC or COOEC.

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Net profit and margin

Anticipating (i) revenue growth from raising demand from CNOOC for oil and gas

processing equipment, as well as jackets, topsides, and offshore infrastructures;

(ii) revenue growth from subsea equipment; (iii) improvement in revenue mix; (iv)

improvement in gross margin and reducing SG&A; and (v) growth in share of

profit from JCE (PJOE), we estimate Jutal’s net profit to double FY12’s RMB

41mn to RMB 90mn in FY13E, further reach RMB 123mn in FY14E (36% YoY

growth).

Exhibit 21: Summary of major assumptions

RMB mn FY06A FY07A FY08A FY09A FY10A FY11A FY12A FY13E FY14E FY15E

Revenue from technical support

for oil & gas equipment

61 84 74 108 82 90 124 136 136 136

YoY growth (%) -32.0% 38.2% -12.0% 46.4% -24.2% 9.1% 38.5% 10.0% 0.0% 0.0%

Revenue from oil & gas facilities

and processing skid equipment

145 209 159 218 278 330 428 650 845 1,099

YoY growth (%) 42.4% 43.4% -23.5% 36.9% 27.3% 18.9% 29.6% 51.7% 30.0% 30.0%

Revenue from technical support

for shipbuilding

46 62 79 60 66 73 56 56 56 56

YoY growth (%) 59.2% 33.1% 27.1% -23.1% 9.8% 10.6% -23.4% 0.0% 0.0% 0.0%

Revenue from civil engineering

services

45 69 52 9 2 0 0 0 0 0

YoY growth (%) 63.8% 53.8% -24.0% -82.4% -81.6% -100.0% N/M N/M N/M N/M

Total Revenue 297 423 364 396 428 493 609 843 1,038 1,291

YoY growth (%) 19.9% 42.3% -13.9% 8.8% 8.1% 15.3% 23.4% 38.4% 23.1% 24.4%

Gross profit from technical

support for oil & gas equipment

16 16 11 36 23 35 40 41 38 34

Gross profit from oil & gas

facilities and processing skid eq

27 46 24 39 56 56 84 156 211 275

Gross profit from technical

support for shipbuilding

19 28 30 20 16 10 9 9 8 8

Gross profit from civil engineering

services

11 4 0 (5) 1 (0) 0 0 0 0

Total gross profit 72 94 65 90 96 100 132 206 258 317

GP margin on technical support

for oil & gas equipment (%)

25.7% 19.0% 15.0% 33.3% 28.1% 38.9% 31.9% 30.0% 28.0% 25.0%

GP margin on oil & gas facilities

and processing skid eq (%)

18.7% 22.2% 14.7% 17.7% 20.1% 16.9% 19.5% 24.0% 25.0% 25.0%

GP margin on technical support

for shipbuilding (%)

40.7% 44.8% 38.5% 33.4% 24.6% 13.2% 16.1% 16.0% 15.0% 15.0%

GP margin on civil engineering

services (%)

24.3% 6.0% 0.9% -53.6% 34.3% N/M N/M 0.0% 0.0% 0.0%

Overall gross margin (%) 24.4% 22.2% 18.0% 22.7% 22.4% 20.3% 21.7% 24.4% 24.9% 24.6%

Operating profit 48 69 18 46 44 19 26 72 103 124

YoY growth (%) 7.3% 42.6% -74.5% 162.3% -3.8% -57.0% 34.2% 180.3% 43.5% 20.7%

Operating margin (%) 16.2% 16.3% 4.8% 11.6% 10.3% 3.9% 4.2% 8.5% 9.9% 9.6%

Share of profit from JCE (PJOE) 0 12 16 41 42 2 31 42 50 55

YoY growth (%) N/M N/M 39.3% 155.5% 1.9% -94.6% 1265.1% 34.4% 20.0% 10.0%

Net income 43 68 30 67 67 9 41 90 123 146

YoY growth (%) 7.8% 59.5% -56.6% 125.8% 1.1% -86.2% 344.8% 118.1% 35.7% 19.1%

3 year CAGR (FY13E-FY15E) 52.2%

Net margin (%) 14.4% 16.1% 8.1% 16.8% 15.8% 1.9% 6.8% 10.7% 11.8% 11.3%

Capex spending (PPE) (5.598) (42.911) (21.540) (140.150) (11.036) (32.701) (78.095) (80.000) (80.000) (50.000)


Tue, 04 Jun 2013

Jutal (3303 HK)

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Valuation

Our price target of HK$3.00 was based on assumption of 19.5x FY13E P/E and

14.4x FY14E P/E. Our target P/E on Jutal is 10% and 3% above its peers trading

at 17.7x FY13E P/E and 14x FY14E P/E.

We gave a valuation premium to Jutal based on our estimate that Jutal will

experience high growth of 52% 3-year CAGR growth over FY13E-FY15E versus

peers’ average at 23%.

We also believe Jutal deserve a higher valuation on its EPC capabilities on oil

and gas processing equipment, as well as being the sole manufacturer in

manufacturing subsea equipment in China.

There may also be possibilities that FMC Technologies or other international oil

equipment companies to jointly produce other subsea equipment in addition to

manifolds and jumpers, or even acquire stakes in the company.

Exhibit 22: Peer Group Comparison

Company Ticker Price

Mkt cap

(US$m)

3-mth avg

t/o (US$m)

PER

Hist

(x)

PER

FY1

(x)

PER

FY2

(x)

EPS FY1

YoY%

EPS FY2

YoY%

3-Yr

EPS

Cagr

(%)

Div

yld

Hist

(%)

Div

yld

FY1

(%)

P/B

Hist

(x)

P/B

FY1

(x)

EV/

Ebitda

Hist

EV/

Ebitda

Cur Yr

Net

gearing

Hist (%)

Gross

margin

Hist (%)

Net

margin

Hist (%)

ROE

Hist

(%)

ROE

FY1

(%)

Sh px

1-mth %

Sh px

3-mth

%

Jutal 3303 HK 2.25 203 3.7 28.8 14.7 10.8 118.1 35.7 52.2 0.8 0.7 1.36 1.30 30.4 N/A 2.1 21.7 6.8 4.7 8.8 17.2 15.4

HSI 22,282.19 10.3 10.6 9.7 (3.0) 8.8 5.0 3.2 3.7 1.40 1.31 13.7 12.4 (1.8) (2.6)

HSCEI 10,548.13 8.6 7.7 7.0 11.9 9.3 10.5 3.5 4.1 1.26 1.16 14.6 15.0 (2.7) (7.0)

CSI300 2,602.62 12.9 11.0 9.3 17.7 17.4 2.0 2.5 1.75 1.60 13.6 14.6 4.4 (2.5)

Adjusted sector avg* 23.7 17.6 13.9 35.5 27.3 23.4 1.8 1.0 2.81 2.64 13.1 10.3 12.2 32.8 8.9 12.8 16.5 2.9 6.2

TSC 206 HK 3.07 271 0.7 36.3 N/A N/A N/A N/A N/A N/A N/A 1.76 N/A 13.3 N/A 0.6 34.1 4.1 11.9 N/A 13.7 67.8

Honghua 196 HK 3.71 1,546 20.0 17.7 10.7 9.5 64.7 12.5 27.8 1.6 2.5 2.12 1.80 13.3 7.5 25.9 34.5 10.4 12.4 18.1 (4.4) (7.0)

Offshore Oil Engineering 600583 CH 8.11 5,144 33.1 36.9 25.8 20.6 42.7 25.2 24.5 0.4 0.2 3.00 2.82 17.4 12.6 21.2 14.8 7.0 10.5 11.6 24.6 28.5

Jereh 002353 CH 68.08 6,629 30.3 48.6 42.6 30.8 14.3 38.3 31.5 0.3 0.4 9.49 9.87 56.7 33.2 0.0 42.3 27.2 24.7 24.6 5.4 34.5

NOV NOV US 70.30 30,038 270.7 12.0 12.5 10.6 (4.2) 17.7 7.3 0.7 0.8 1.46 1.34 7.7 7.4 0.0 26.6 12.4 12.3 11.2 5.1 5.0

FMC Technologies FTI US 55.66 13,218 89.1 31.1 25.7 18.8 20.9 36.9 28.4 N/A 0.0 7.07 5.81 19.5 15.3 70.1 21.4 7.0 25.3 24.8 0.5 8.1

Dril-Quip DRQ US 90.45 3,671 27.1 30.6 24.0 18.7 27.1 28.3 20.9 N/A N/A 3.34 3.02 17.8 14.2 0.0 38.4 16.3 12.6 13.2 3.3 11.8

Aker Solutions AKSO NO 86.25 4,039 21.6 10.4 11.5 8.0 (9.9) 42.9 15.2 4.6 4.3 1.88 1.78 7.2 7.3 54.1 N/A 5.1 16.8 16.3 2.8 (22.9)

Cameron CAM US 60.87 15,099 135.0 20.0 16.6 12.3 20.2 34.8 23.5 N/A 0.0 2.67 2.33 11.9 9.6 6.7 26.1 8.8 14.5 15.3 (3.7) (3.2)

General Electric GE US 23.32 241,132 896.6 18.1 14.0 12.8 28.7 9.6 15.3 3.1 3.3 1.95 2.21 9.5 8.1 1.5 38.6 9.4 11.6 13.6 3.3 0.6

Outliners and "N/A" entries are in red and excl. from the calculation of averages


Tue, 04 Jun 2013

Jutal (3303 HK)

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Risks

Performance of JCE, PJOE

Although Jutal is the largest stakeholder of PJOE, with 30% stake, it does not

have significantly control over the operating and financing decisions of PJOE.

While share of profits from PJOE historically accounts a significant portion of

50%-67% of profit before taxation over FY08A-FY12A, excluded year FY11A

(13%), a significant drop in the financial performance of PJOE will incur

significant downside risk to Jutal.

Relationship with FMC Technologies

As Jutal does not yet have capabilities to independently obtain orders in subsea

equipment, any breaks in the relationship with FMC Technologies may cause

significant drop in revenue and orders in subsea equipment. This may include the

underperformance of subsea equipment to be delivered for Chevron's

Wheatstone Project and non-compliance of 'health, safety, environmental' (HSE)

standards set forth by FMC Technologies.

Concentrated sales on top customers

Jutal heavily relied its sales from the 3 NOCs (CNOOC, CNPC and Sinopec) and

FMC Technologies. In the past 3 years, sales from top 5-customers have

constantly accounted for 55-56% of its full year sales from 2010-2012. Order

delays or capex spending cuts by 3 NOCs can incur significant earnings

variations for Jutal.

Potential entrants

Given Jutal is the pioneer and sole manufacturer for subsea equipment in China,

the entry of potential peers may affect the pricing power, margins, and market

share of Jutal in subsea equipment manufacturing. Potential entrants include

COOEC (600583 CH, NR), Jereh (002353 CH, NR) and other offshore equipment

manufacturers.

Currency risks

Jutal overseas sales has increased from 12-13% along FY08A-FY11A to 33% in

FY12A, and is on the uptrend going forward; given its increasing orders from

FMC Technologies, Saipem, and other international oil companies. The

increasing overseas sales increase Jutal's exposure to losses in foreign

currencies' depreciation against Reminbi.

Tue, 04 Jun 2013

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Appendix 1: Management and shareholding structure

Exhibit 23: Management profile

Name Position Background

Mr. Lishan Wang

王立山先生

Chairman and Executive Director - Responsible for overall business strategy formulation

- Previously worked with Bohai Petroleum Company Platform Manufacturing Factory and

China Offshore Oil Company of Bohai Oil Company

- Over 20 years of management experience in oil and gas equipment manufacturing

Mr. Yunsheng Cao

曹云生先生

CEO and Executive Director - Responsible for the assistance of overall management of the company

- Previously served as the supervisor of the finance department and Chief Accountant of

the China Offshore Oil Platform Construction Company

- Previously served as Financial Controller at CNOOC Engineering

Mr. Daniel Chen

陈国才先生

Executive Director and President - Responsible for the assistance of overall management of the company and

management of Zhuhai Jutal

- Previously served as an VP, Operation Manager at CNOOC

- Joined Yacheng 13-1 gas project in joint venture with Arco (later merged with BP) as

Chief Representative of CNOOC

Mr. Wuhui Zhao

赵武会先生

Executive Director, Vice President,

and Vice Chief Accountant

- Responsible for finance, accounting, and human resources

- Previously worked with Kerry Oils & Grains and Everbright Timer Shenzhen

Mr. Rugang He

贺汝刚先生

Vice President - Responsible for commercial and marketing of offshore engineering projects

- Previously worked with CNOOC Platform Fabrication Company

Mr. Jing Li

李靖先生

Vice President - Operation Manager at New Star System Formwork Company and Deputy Manager of

PJOE

- Previously worked with CNOOC Platform Fabrication Company, Shenzhen Chiwan

Offshore Engineering, and Shenzhen Chiwan Sembawang Engineering

Mr. Yong Guo

郭勇先生

Vice President - Responsible for commercial and marketing, R&D and design of the process skid

equipment fabrication business

- Previously worked with Beijing Petrochemical Engineering, Technip Engineering

Shanghai, and Nanjing Yingke

Mr. Chunyi Li

李纯毅先生

Assistant to President - Responsible for commercial and marketing of the Bohai region

- Administration Manager and Deputy Manager of Tianjin Jutal

- Previously served as a government official

Mr. Yan Jin

金焱先生

Assistant to President - Responsible for investors' relations and expansion of Zhuhai plant

- Previously served as Deputy General Manager of Property Department of Shenzhen

Gold Industries and Technical Supervisor and Deputy Manager of the Technical

Department at Shekou China Merchants Port Services Company

Mr. Bo Yang

杨波先生

Assistant to President - Manager of Jutal Offshore Shipbuilding Services (Dalian Company)

- Previously served as the Head of Research Office at Dalian Shipyard

Mr. Zhe Xu

徐喆

Assistant to President - Responsible for commercial and marketing

- Joined Jutal in 1998


Tue, 04 Jun 2013

Jutal (3303 HK)

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Shareholding structure

The major shareholder of Jutal is Chairman Mr. Wang Lishan, with 56.9% shares.

Mr. Cao Yunsheng, CEO, held 1.7%, and Mr. Chen Cuocai, President, held 1.4%

shares in Jutal.

The remaining 39.9% are held by the public.

Exhibit 24: Shareholding Structure of Jutal


Chairman Mr. Wang

56.9%

CEO Mr. Cao1.7%

President Mr. Chen

1.4%

Public39.9%

Tue, 04 Jun 2013

Jutal (3303 HK)

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Appendix 2: Chevron Wheatstone LNG Project

Background

The Chevron Wheatstone Project is located in West Australia. The project is

operated by a Chevron-led joint venture, where Chevron has over 80% stakes.

The project was approved in September 2011; consisting investment of US$29bn.

The construction of the project began in December 2011, and is scheduled to

complete by 2016.

Exhibit 25: Signing ceremony of Wheatstone Project in Sep 2011

Source: Chevron

Components

The Wheatstone LNG Project consists of two parts.

The upstream explores and develops offshore gas reservoirs in Wheatstone, Iaqo,

Brunello and Julimar fields; located 225km off the Pilbaba Coast in Western

Australia. The Julimar and Brunello fields will tie back the gas to the central

processing platform.

The average depth of water is between 100m to 260m.

Tue, 04 Jun 2013

Jutal (3303 HK)

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Exhibit 26: Location of Chevron Wheatstone Reservoirs

Source: Chevron

The downstream project provides purification and liquefies natural gas into LNG

through its 4.45mn tonne annual capacity LNG trains.

Upon completion of the project scheduled in 2016, LNG will be shipped to

Japanese power companies including TEPCO, Kyushu, Chubu Electric Power

and Tohoku Electric Power.

Exhibit 27: Downstream of Chevron Wheatstone LNG Project

Source: Chevron

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Scope of work

According to FMC Technologies, contract amounted US$325mn were awarded

by FMC Technologies from Chevron regarding Wheatstone Project on 30

November 2011.

The supply contract consisted of 11 subsea production trees, 11 wellheads, 3

manifolds, subsea and topside controls and well assesses systems.

The manifold system order were further sub-contracted by FMC Technologies’

Asia-Pacific Operation to Jutal at US$20mn. The manifolds are scheduled to be

delivered in 2013.

Tue, 04 Jun 2013

Jutal (3303 HK)

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Appendix 3: Subsea equipment market

Where are subsea equipment used?

Subsea equipment system are employed in deep sea environment (wells below

water depth of 300m/1,000 feet), where fixed platform are generally unfeasible to

establish.

Exhibit 28: Offshore drilling platforms, host facilities

Source: HowStuffWorks

Subsea equipment family members

The offshore infrastructure generally consists of the host facility, subsea

production system, umbilical, and flowlines.


Host Facility Controls and monitors the oil production. It also collects liquid transported

from subsea systems to onshore processing facilities.

Subsea

production

system

Performs the major function to control and monitor production at multiple well

reservoirs

Umbilical Provides power and fluids to the subsea production systems

Flowlines Transport liquids from subsea system to host facilities

Source: OP Research

Subsea production system consists of the subsea tree (often called “Christmas

tree”), the manifold, jumper, pipeline end termination (PLET), and flying lead.

Tue, 04 Jun 2013

Jutal (3303 HK)

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Exhibit 30: Subsea equipment family

Source: Offshore Energy Today


Subsea tree Permanent structures deployed on the seabed on top of wellheads. Series of

values. Controls and monitor production

Manifold Central collection point of liquids produced by multiple wells. Transmit collected

liquid to host location through flowlines

Jumper A short, and pipeline device which connects manifold to flowlines

Pipeline and

termination (PLET)

Connection point between manifold and pipeline

Flying lead Short-range connector of power of fluids to subsea trees

Source: OP Research

Tue, 04 Jun 2013

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Financial Summary Profit and loss Cash flow

Year to Dec (RMB mn) FY11A FY12A FY13E FY14E FY15E Year to Dec (RMB mn) FY11A FY12A FY13E FY14E FY15E

Revenue 493 609 843 1,038 1,291 Profit before taxation 17 47 106 144 172

Cost of sales (393) (476) (637) (780) (974) Depreciation and amortization 12 17 18 21 25

Gross profit 100 132 206 258 317 Change in working capital (43) 48 (36) (63) (37)

Other income 2 1 1 1 1 Taxes paid (6) (6) (16) (22) (26)

Selling expenses 0 0 0 0 0 Other adjustments 1 (23) (42) (50) (55)

Administrative expenses (83) (108) (135) (156) (194) Operating cash flows (19) 82 31 30 78

Other expenses (0) (0) 0 0 0 Capex (44) (79) (80) (80) (50)

Operating profit 19 26 72 103 124 Free cash flow (64) 3 (49) (50) 28

Net finance cost (4) (10) (7) (9) (8) Other investing cash flows 2 2 0 0 111

Share of profit of JCE/ asso 2 31 42 50 55 Investing cash flows (42) (76) (80) (80) 61

Others non-operating items 0 0 0 0 0 Dividends paid (13) 0 (10) (9) (12)

Profit before taxation 17 47 106 144 172 Net debt repayment 59 29 (6) 60 (100)

Taxation (8) (6) (16) (22) (26) Equity issue 0 3 67 0 0

Profit after taxation 9 41 90 123 146 Other financing cash flows (1) 0 0 0 0

Non-controlling interests 0 0 0 0 0 Financing cash flows 46 32 51 51 (112)

Net profit 9 41 90 123 146 Net cash flow (16) 37 1 2 27

Others 0 0 0 0 0 Beginning cash 90 71 108 109 111

Dividends (13) 0 (10) (9) (12) # Forex and other adjustments (5) 7 0 0 0

Transfer to reserves (3) 41 80 114 134 Ending cash 69 115 109 111 138

Balance sheet Statistics and ratios

Year to Dec (RMB mn) FY11A FY12A FY13E FY14E FY15E Year to Dec (RMB mn) FY11A FY12A FY13E FY14E FY15E

PPE, land & intangible assets 312 375 437 496 521 Growth rate (%)

Inv. in JCE, asso and others 265 297 339 389 334 Revenue 15 23 38 23 24

Other non-current assets 185 188 188 188 188 EBITDA (48) 38 111 38 20

Total non-current assets 762 860 964 1,073 1,043 EBIT (57) 34 180 43 21

Inventories 8 14 17 21 27 Net profit (86) 345 118 36 19

Trade receivables 70 113 173 256 318 EPS (86) 345 118 36 19

Other receivables 25 43 57 70 88 Margins (%)

Other current assets 126 131 168 204 252 Gross margin 20 22 24 25 25

Cash 69 108 109 111 138 EBITDA margin 6 7 11 12 12

Total current assets 298 410 525 662 823 EBIT 4 4 8 10 10

Total assets 1,060 1,270 1,489 1,735 1,866 Net margin 2 7 11 12 11

Trade payables (66) (142) (192) (235) (294) Other ratios

Other payables (40) (66) (84) (104) (129) P/E 120.5 28.8 14.7 10.8 9.1

Short-term borrowings (97) (126) (120) (180) (80) P/B 1.4 1.4 1.3 1.2 1.0

Other current liabilities (9) (37) (47) (57) (70) P/CF N/M 31.8 N/M N/M 49.0

Total current liabilities (212) (371) (443) (576) (572) Dividend yield (%) 0.0 0.8 0.7 0.9 0.0

Long-term borrowings 0 0 0 0 0 Current ratio 1.4 1.1 1.2 1.1 1.4

Other long-term liabilities (23) (24) (24) (24) (24) Quick ratio 1.4 1.1 1.1 1.1 1.4

Total long-term liabilities (23) (24) (24) (24) (24) Effective tax rate (%) 45.4 11.8 15.0 15.0 15.0

Total liabilities (234) (395) (468) (600) (596) Gearing (%) 11.8 14.4 11.7 15.9 6.3

Net assets 825 874 1,021 1,135 1,269 Net gearing (%) 3.4 2.1 1.1 6.1 Net cash

Share capital (6) (6) (6) (6) (6) ROE (%) 1.1 4.7 8.8 10.8 11.5

Reserves (819) (868) (1,015) (1,129) (1,263) Working capital

Owners' equity (825) (874) (1,021) (1,135) (1,269) Inventory (days) 7 11 10 10 10

Non-controlling interests 0 0 0 0 0 Debtors (days) 52 68 75 90 90

Total equity (825) (874) (1,021) (1,135) (1,269) Creditors (days) 61 109 110 110 110

Net cash (debt) (28) (18) (11) (69) Net cash Cash conversion days (2) (30) (25) (10) (10)


Tue, 04 Jun 2013

Jutal (3303 HK)

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Exhibit 32: Peer Group Comparison

Company Ticker Price

Mkt cap

(US$m)

3-mth

avg t/o

(US$m)

PER

Hist (x)

PER

FY1 (x)

PER

FY2 (x)

EPS

FY1

YoY%

EPS FY2

YoY%

3-Yr EPS

Cagr (%)

Div yld

Hist (%)

Div yld

FY1 (%)

P/B

Hist (x)

P/B

FY1 (x)

EV/

Ebitda

Hist

EV/

Ebitda

Cur Yr

Net

gearing

Hist (%)

Gross

margin

Hist (%)

Net

margin

Hist (%)

ROE

Hist

(%)

ROE

FY1

(%)

Sh px

1-mth %

Sh px

3-mth %

Jutal 3303 HK 2.25 203 3.7 28.8 14.7 10.8 118.1 35.7 52.2 0.8 0.7 1.36 1.30 30.4 N/A 2.1 21.7 6.8 4.7 8.8 17.2 15.4

HSI 22,282.19 10.3 10.6 9.7 (3.0) 8.8 5.0 3.2 3.7 1.40 1.31 13.7 12.4 (1.8) (2.6)

HSCEI 10,548.13 8.6 7.7 7.0 11.9 9.3 10.5 3.5 4.1 1.26 1.16 14.6 15.0 (2.7) (7.0)

CSI300 2,602.62 12.9 11.0 9.3 17.7 17.4 2.0 2.5 1.75 1.60 13.6 14.6 4.4 (2.5)

Adjusted sector avg* 23.7 17.6 13.9 35.5 27.3 23.4 1.8 1.0 2.81 2.64 13.1 10.3 12.2 32.8 8.9 12.8 16.5 2.9 6.2

TSC 206 HK 3.07 271 0.7 36.3 N/A N/A N/A N/A N/A N/A N/A 1.76 N/A 13.3 N/A 0.6 34.1 4.1 11.9 N/A 13.7 67.8

Honghua 196 HK 3.71 1,546 20.0 17.7 10.7 9.5 64.7 12.5 27.8 1.6 2.5 2.12 1.80 13.3 7.5 25.9 34.5 10.4 12.4 18.1 (4.4) (7.0)

Offshore Oil Engineering 600583 CH 8.11 5,144 33.1 36.9 25.8 20.6 42.7 25.2 24.5 0.4 0.2 3.00 2.82 17.4 12.6 21.2 14.8 7.0 10.5 11.6 24.6 28.5

Jereh 002353 CH 68.08 6,629 30.3 48.6 42.6 30.8 14.3 38.3 31.5 0.3 0.4 9.49 9.87 56.7 33.2 0.0 42.3 27.2 24.7 24.6 5.4 34.5

NOV NOV US 70.30 30,038 270.7 12.0 12.5 10.6 (4.2) 17.7 7.3 0.7 0.8 1.46 1.34 7.7 7.4 0.0 26.6 12.4 12.3 11.2 5.1 5.0

FMC Technologies FTI US 55.66 13,218 89.1 31.1 25.7 18.8 20.9 36.9 28.4 N/A 0.0 7.07 5.81 19.5 15.3 70.1 21.4 7.0 25.3 24.8 0.5 8.1

Dril-Quip DRQ US 90.45 3,671 27.1 30.6 24.0 18.7 27.1 28.3 20.9 N/A N/A 3.34 3.02 17.8 14.2 0.0 38.4 16.3 12.6 13.2 3.3 11.8

Aker Solutions AKSO NO 86.25 4,039 21.6 10.4 11.5 8.0 (9.9) 42.9 15.2 4.6 4.3 1.88 1.78 7.2 7.3 54.1 N/A 5.1 16.8 16.3 2.8 (22.9)

Cameron CAM US 60.87 15,099 135.0 20.0 16.6 12.3 20.2 34.8 23.5 N/A 0.0 2.67 2.33 11.9 9.6 6.7 26.1 8.8 14.5 15.3 (3.7) (3.2)

General Electric GE US 23.32 241,132 896.6 18.1 14.0 12.8 28.7 9.6 15.3 3.1 3.3 1.95 2.21 9.5 8.1 1.5 38.6 9.4 11.6 13.6 3.3 0.6

* Outliners and "N/A" entries are in red and excl. from the calculation of averages


Tue, 04 Jun 2013

Jutal (3303 HK)

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Our recent reports

Date Company / Sector Stock Code Title Rating Analyst

31/05/2013 Youyuan 2268 Product mix enriched BUY Vivien Chan

27/05/2013 China All Access 633 Disposing 5% stake of Jufei (300303 CH) and BJ All

Access Zhiping

BUY Yuji Fung

27/05/2013 Hilong 1623 New Contract Surprise from Shell in Nigeria BUY Alan Lau

21/05/2013 Mengniu Dairy 2319 Positive outlook is already BUY Tracy Sun

21/05/2013 Tingyi Holding 322 The counterattack from RTD Tea HOLD Tracy Sun

20/05/2013 China Wind Power - Resumption of wind farm approval at local government

level

- Alan Lau

20/05/2013 Oriental Watch 398 China SSSG remains weak HOLD Terence Lok

13/05/2013 Dongfeng Motor 489 Recovery continued in 4M13 BUY Vivien Chan

10/05/2013 Bloomage Biotech 963 Hinge on Hyaluronic Acid (HA) Products BUY Min Li

09/05/2013 TCL COMM 2618 Weak shipments in April HOLD Yuji Fung

09/05/2013 TCL Multimedia 1070 LeTV, the “Xiaomi” in the TV market BUY Yuji Fung

09/05/2013 China Wireless 2369 Upgrade on shipment assumption revision BUY Yuji Fung

08/05/2013 China Modern Dairy 1117 Mengniu becomes CMD's single largest shareholder BUY Tracy Sun

08/05/2013 SPT Energy 1251 Significant growth from Tarim Basin realized in 1Q13 BUY Alan Lau

08/05/2013 Jiangnan Group 1366 The Cable Guy BUY Min Li

08/05/2013 Xingda 1899 NDR Keys Takeaway BUY Vivien Chan

29/04/2013 Boer Power 1685 Rebooting BUY Min Li

26/04/2013 Youyuan Int'l 2268 1Q13 operation update BUY Vivien Chan

26/04/2013 China Modern Dairy 1117 Site visit key takeaways BUY Tracy Sun

26/04/2013 Great Wall Motor 2333 1Q13 results stronger than expectation - HOLD HOLD Vivien Chan

25/04/2013 CIMC ENRIC 3899 Strong growth fairly priced in; Downgrade to Hold on

limited upside

HOLD Alan Lau

25/04/2013 Antonoil 3337 Resilient growth from new businesses BUY Alan Lau

25/04/2013 TCL COMM 2618 1Q13 Loss making is expected HOLD Yuji Fung

25/04/2013 TCL Multimedia 1070 1Q13 results in-line BUY Yuji Fung

16/04/2013 Luk Fook 590 Margin concern, large ticket items sales next catalyst HOLD Terence Lok

11/04/2013 Hilong 1623 Conviction Buy on appealing valuation BUY Alan Lau

11/04/2013 Ju Teng Intl 3336 Sign of mgmt confident in business growth BUY Yuji Fung

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http://www.oriental-patron.com.hk/opsl/dl_count.php?id=1248&type=company&pdf_path=/upload/File/China%20All%20Access%20(633%20HK)%20Disposing%205%20stake%20of%20Jufei%20(300303%20CH)%20and%20BJ%20All%20Access%20Zhiping%20-%20BUY.pdf







http://www.oriental-patron.com.hk/opsl/dl_count.php?id=1247&type=company&pdf_path=/upload/File/Hilong%20(1623%20HK)%20New%20Contract%20Surprise%20from%20Shell%20in%20Nigeria%20-%20BUY.pdf






http://www.oriental-patron.com.hk/opsl/dl_count.php?id=1246&type=company&pdf_path=/upload/File/Mengniu%20Dairy%20(2319%20HK)%20Positive%20outlook%20is%20already%20-%20BUY.pdf






http://www.oriental-patron.com.hk/opsl/dl_count.php?id=1245&type=company&pdf_path=/upload/File/Tingyi%20Holding%20(322%20HK)%20The%20counterattack%20from%20RTD%20Tea%20-%20HOLD.pdf






http://www.oriental-patron.com.hk/opsl/dl_count.php?id=52&type=sector&pdf_path=/upload/File/China%20Wind%20Power%20-%20Resumption%20of%20wind%20farm%20approval%20at%20local%20government%20level.pdf







http://www.oriental-patron.com.hk/opsl/dl_count.php?id=1244&type=company&pdf_path=/upload/File/Oriental%20Watch%20(398%20HK)%20China%20SSSG%20remains%20weak%20-%20HOLD.pdf






http://www.oriental-patron.com.hk/opsl/dl_count.php?id=1243&type=company&pdf_path=/upload/File/Dongfeng%20Motor%20(489%20HK)%20Recovery%20continued%20in%204M13%20-%20BUY.pdf






http://www.oriental-patron.com.hk/opsl/dl_count.php?id=1242&type=company&pdf_path=/upload/File/Bloomage%20Biotech%20(963%20HK)%20Hinge%20on%20Hyaluronic%20Acid%20(HA)%20Products%20-%20BUY.pdf






http://www.oriental-patron.com.hk/opsl/dl_count.php?id=1241&type=company&pdf_path=/upload/File/TCL%20COMM%20(2618%20HK)%20Weak%20shipments%20in%20April%20-%20HOLD.pdf






http://www.oriental-patron.com.hk/opsl/dl_count.php?id=1240&type=company&pdf_path=/upload/File/TCL%20Multimedia%20(1070%20HK)%20LeTV%20the%20Xiaomi%20in%20the%20TV%20market%20-%20BUY.pdf






http://www.oriental-patron.com.hk/opsl/dl_count.php?id=1239&type=company&pdf_path=/upload/File/China%20Wireless%20(2369%20HK)%20Upgrade%20on%20shipment%20assumption%20revision%20-%20BUY.pdf






http://www.oriental-patron.com.hk/opsl/dl_count.php?id=1238&type=company&pdf_path=/upload/File/China%20Modern%20Dairy%20(1117%20HK)%20Mengniu%20becomes%20CMDs%20single%20largest%20shareholder%20-%20BUY.pdf






http://www.oriental-patron.com.hk/opsl/dl_count.php?id=1237&type=company&pdf_path=/upload/File/SPT%20Energy%20(1251%20HK)%20Significant%20growth%20from%20Tarim%20Basin%20realized%20in%201Q13%20-%20BUY.pdf






http://www.oriental-patron.com.hk/opsl/dl_count.php?id=1236&type=company&pdf_path=/upload/File/Jiangnan%20Group%20(1366%20HK)%20The%20Cable%20Guy%20-%20BUY.pdf






http://www.oriental-patron.com.hk/opsl/dl_count.php?id=1235&type=company&pdf_path=/upload/File/Xingda%20(1899%20HK)%20NDR%20Keys%20Takeaway%20-%20BUY.pdf






http://www.oriental-patron.com.hk/opsl/dl_count.php?id=1234&type=company&pdf_path=/upload/File/BOER%20Power%20(1685%20HK)%20Rebooting%20-%20BUY_%20.pdf






http://www.oriental-patron.com.hk/opsl/dl_count.php?id=1233&type=company&pdf_path=/upload/File/Youyuan%20(2268%20HK)%20-%201Q13%20operation%20update.pdf






http://www.oriental-patron.com.hk/opsl/dl_count.php?id=1232&type=company&pdf_path=/upload/File/China%20Modern%20Dairy%20(1117%20HK)-Site%20visit%20key%20takeaways.pdf






http://www.oriental-patron.com.hk/opsl/dl_count.php?id=1231&type=company&pdf_path=/upload/File/Great%20Wall%20Motor%20(2333%20HK)%20-%201Q13%20results%20stronger%20than%20expectation%20-%20HOLD.pdf






http://www.oriental-patron.com.hk/opsl/dl_count.php?id=1230&type=company&pdf_path=/upload/File/CIMC%20Enric%20(3899%20HK)%20Strong%20growth%20fairly%20priced%20in%20-%20Downgrade%20to%20Hold%20on%20limited%20upside%20-%20HOLD.pdf







http://www.oriental-patron.com.hk/opsl/dl_count.php?id=1229&type=company&pdf_path=/upload/File/Antonoil%20(3337%20HK)%20Resilient%20growth%20from%20new%20businesses%20-%20BUY.pdf






http://www.oriental-patron.com.hk/opsl/dl_count.php?id=1228&type=company&pdf_path=/upload/File/TCL%20COMM%20(2618%20HK)%201Q13%20Loss%20making%20is%20expected%20-%20HOLD.pdf






http://www.oriental-patron.com.hk/opsl/dl_count.php?id=1227&type=company&pdf_path=/upload/File/TCL%20Multimedia%20(1070%20HK)%201Q13%20results%20in-line%20-%20BUY.pdf






http://www.oriental-patron.com.hk/opsl/dl_count.php?id=1224&type=company&pdf_path=/upload/File/Luk%20Fook%20Holdings%20(590%20HK)%20Margin%20concern,%20large%20ticket%20items%20sales%20next%20catalyst%20-%20HOLD.pdf






http://www.oriental-patron.com.hk/opsl/dl_count.php?id=1223&type=company&pdf_path=/upload/File/Hilong%20(1623%20HK)%20Conviction%20Buy%20on%20appealing%20valuation%20-%20BUY.pdf






http://www.oriental-patron.com.hk/opsl/dl_count.php?id=1222&type=company&pdf_path=/upload/File/Ju%20Teng%20Intl%20(3336%20HK)%20Sign%20of%20mgmt%20confident%20in%20business%20growth%20-%20BUY.pdf






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