UBS Jereh Oilfield Services (002353): Positive on Fast Growth in Power Generation and Natural Gas
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Following a site visit to Jereh Oilfield Services' Yantai manufacturing facility on February 25, 2026, UBS reaffirms its positive outlook on the company's medium to long-term growth potential across power generation, natural gas, and offshore engineering segments. Management expressed optimism regarding 2026 operational performance, expecting solid growth across orders, revenue, and profit. While the traditional fracturing equipment business should remain stable, the power generation and natural gas divisions are poised for rapid expansion.
Overseas contributions are expected to increase further, supported by the Dubai manufacturing facility, which is progressing smoothly toward official production by mid-2026. Jereh is also actively exploring emerging opportunities in offshore engineering, energy storage, integrated power generation services, liquid cooling, and small modular reactors.
The gas turbine power generation business is projected to become a critical growth driver, with robust equipment orders expected in 2026. Similarly, natural gas orders and revenue should sustain rapid growth following multiple large-scale overseas equipment and EPC contract wins. In offshore engineering, Jereh can supply key FPSO equipment, positioning it to benefit from a potential decade-long total addressable market of $300 billion in deepwater oil and gas.
Based on a more optimistic structural outlook, UBS raised its mid-term return on invested capital assumption from 28% to 29%. Consequently, the DCF-based target price increases from RMB 124 to RMB 130. UBS maintains a Buy rating, with the new target implying 34 times and 28 times forecast PE for 2026 and 2027.