Jereh gas turbine orders exceed expectations; Citi maintains Buy

Overview

This report is Citi's summary of key points from Yantai Jereh Oilfield Services Group's management business update conference call. The core conclusion is that gas turbine generator orders and pricing are both better than expected at the beginning of the year, while U.S. AIDC-related demand, bundled energy storage sales, and tight supply are jointly driving accelerated growth in the company's power business. Citi maintains its Buy rating and Rmb146 target price.

Core views

Citi believes Jereh's gas turbine generator orders have clearly exceeded the US$600-800m guidance given at the beginning of the year, leading to an upward revision to the full-year 2026 order forecast; ASP has risen to US$1.3-1.4m/MW, reflecting tight supply and product pricing power. U.S. AIDC demand is the main driver, and the company is advancing bundled sales of "gas turbines + energy storage." Management remains confident in the accelerated goal of making the power business the largest profit segment by 2027.

Analysis framework

The report is mainly based on information from the management conference call and focuses on orders, ASP, capacity, customer demand, market concerns, valuation, and risks. The valuation uses a target price of Rmb146, corresponding to 30x 2027E EPS, with the company's breakthrough in the U.S. market and tight gas turbine supply-demand dynamics serving as the basis for the valuation premium.

Methodology notes

• Fundamental trackingManagement call highlights

  Validation of orders, pricing, capacity, and customer demand

  By assessing the order progress disclosed by management, changes in ASP, U.S. capacity expansion progress, and customer negotiations, the report evaluates the business momentum and earnings elasticity of the gas turbine generator business.

• Valuation methodsPE target price method

  30x 2027E EPS

  Citi's Rmb146 target price is based on 30x 2027E EPS, with the multiple set 3 standard deviations above the 2021-2022 average level, on the view that the U.S. AIDC power business breakthrough, sustained strong demand, and supply shortages could drive valuation re-rating.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Yantai Jereh Oilfield Services Group（002353.SZ）

  Covered company

  Strengths

  Gas turbine generator orders exceeded guidance, ASP is rising, U.S. AIDC power demand is strong, and the company can enhance order quality through its "gas turbines + energy storage" solution.

  Weaknesses

  Part of the growth depends on overseas gas turbine demand, execution of U.S. capacity expansion, and delivery of new business orders; traditional oilfield-related demand is still affected by China's E&P spending and the pace of shale oil and gas development.

  Comparison

  Citi sets the target valuation 3 standard deviations above the 2021-2022 average level, believing that the U.S. market breakthrough and supply-demand shortages can support a valuation premium.

  Risks

  China E&P spending below expectations, slower-than-expected domestic shale oil and gas development, slower-than-expected e-frack adoption, and weaker-than-expected overseas gas turbine demand.

Key data

• Report date2026-06-10The report disclosure time was 10 Jun 2026 04:14:26 ET.
• Investment ratingBuyCiti maintained its Buy rating after the management conference call.
• Target priceRmb146The target price is based on 30x 2027E EPS.
• Beginning-of-year order guidanceUS$600-800mYear-to-date signed gas turbine generator orders have exceeded this market guidance given at the beginning of the year.
• Current ASPUS$1.3-1.4m/MWManagement said it rose by about another 10% on top of previous price increases.
• Additional orders2Two additional orders were signed after the last AIDC announcement, one of which is related to an important enterprise in Taiwan.
• Potential order window2H26-1H27Citi expects new businesses such as data center integration, energy storage, and microgrids may see orders materialize during this period.
• Strategic goalPower business to become the largest profit segment by 2027Management remains confident in this accelerated goal.

Impact & implications

If orders, ASP, and U.S. AIDC demand continue to deliver, Jereh may further shift from a traditional oilfield services and equipment company toward a beneficiary of power and data center energy infrastructure, with room for both earnings mix improvement and valuation uplift. Near-term share price catalysts mainly include disclosure of new orders, ASP staying at high levels, progress in U.S. capacity expansion, and the materialization of new business orders.

Risks

• China E&P spending below expectations.
• China shale oil and gas development is slower than expected.
• e-frack adoption is slower than expected.
• If overseas gas turbine generator demand declines, it could weaken the logic for higher orders and ASP.

What to watch

• Whether data center integration, energy storage, and microgrid orders materialize in 2H26-1H27.
• Progress of U.S. factory expansion construction and capacity ramp-up.
• Whether gas turbine generator ASP can remain at US$1.3-1.4m/MW or continue to rise.
• Customer acceptance of the bundled "gas turbines + energy storage" sales strategy.
• Whether the power business can become the company's largest profit segment by 2027.
• The pace of China E&P spending, shale oil and gas development, and e-frack adoption.