How far along are Jereh’s Middle East projects?

  • Jereh announced on 4 November that its wholly owned subsidiary, Jereh Oil & Gas Engineering, had recently secured projects totaling more than 3 billion dollars in the Middle East market. These include three project award letters from Abu Dhabi National Oil Company (ADNOC), totaling 2.697 billion dollars, and a formal contract signed for an Oman National Oil Company project.
  • The largest project, Ruwais Diyab, is worth 1.7042 billion dollars. The company is responsible for surface facilities such as gas-processing stations and gathering and transmission pipelines. The construction period is 29 months, followed by an operating period of 60 months. The other projects involve the construction of wellhead facilities, oil-well upgrades and pipelines.
  • Dongwu Securities believes that, following an easing of tensions in the Middle East, facility repairs, production recovery and supporting construction may release additional demand. Jereh has existing national oil company customers and regional project experience, positioning it to take on related investment projects.

What else underpins Jereh’s growth outlook?

  • In its power business, the construction of AI data centers in North America is driving electricity demand, and gas turbines can provide a stable power-supply option that can be deployed relatively quickly. The company is expanding its sources of gas turbine engines and working with FTAI to develop its aero-derivative gas turbine business; the relevant units have passed testing and validation.
  • Dongwu Securities forecasts Jereh’s net profit attributable to shareholders of the parent for 2026 through 2028 at 3.68 billion, 8.61 billion and 13.42 billion yuan, respectively, representing a marked increase from 2.68 billion yuan in 2025. If oil and gas or AI capital expenditure falls short of expectations, this growth outlook would be affected.

Why has Hony Biotech’s order growth not yet translated into profitability?

  • Hony Biotech provides research and manufacturing services to cell and gene therapy companies. New CDMO orders in the first three quarters exceeded 230 million yuan, already surpassing the full-year level of last year. CDMO revenue over the same period was 104 million yuan, up 7.85% year on year; the increase in orders still needs to be converted into revenue through subsequent deliveries.
  • The demand environment has improved somewhat: financing in China’s cell and gene therapy sector totaled 1.662 billion dollars in the first half of the year, up 67.9% year on year. Zheshang Securities believes that as projects advance and quality requirements rise, service providers with process-development capabilities, compliant production capacity and quality systems may secure more orders.
  • The original cost of fixed assets at the company’s Lingang base stood at 1.214 billion yuan at the end of 2025. Utilization rates for its vector and filling lines rose from 46.58% to 83.84%, while the rate for its cell line increased from 21.67% to 58.50%. Higher deliveries may help spread existing fixed costs.
  • However, revenue growth and losses continue to coexist. Zheshang Securities forecasts the company’s revenue for 2026 through 2028 at 302 million, 351 million and 406 million yuan, respectively, and net losses attributable to shareholders of the parent of approximately 223 million, 215 million and 197 million yuan, respectively. Downstream demand and order conversion are important factors affecting this outlook.