Incident: The company issued an indicative announcement on production and operation results in 2003. The company's oil and gas equivalent production increased by 3.09% year on year to 504.09 million barrels (oil equivalent), crude oil processing volume increased 6.29% year on year to 257.52 million tons, and total domestic sales volume of refined oil products increased 15.75% year on year to 188.17 million tons.
In addition, the company's fixed increase plan was approved by the Securities Regulatory Commission. Sinopec Group, the controlling shareholder of the company, plans to fully subscribe for the company's 2,390 billion shares in cash at a one-time issuance price of 502 yuan/share, and the total capital raised by the company will not exceed 12 billion yuan.
Comment: Production increased moderately, and sales increased dramatically. The company's crude oil and natural gas production in 2023 increased 0.09%, 7.13% to 281.12 million barrels and 1337.82 billion cubic feet, respectively. Its domestic crude oil production increased 0.33% year on year to 251.63 million barrels, and overseas crude oil production decreased 1.93% year on year to 29.49 million barrels year on year. In the refining sector, the growth rate of crude oil processing volume changed from negative to positive and exceeded the 2021 level, 6.7 times the company's crude oil production. Among them, gasoline, diesel, kerosene, and chemical light oil production increased by 5.86%, 2.30%, 60.74%, and 1.5%, respectively. In the chemical sector, production of ethylene, synthetic resin, synthetic fiber and synthetic rubber increased by 6.53%, 10.95%, 0.09%, and 10.90% year-on-year respectively, and all surpassed 2021. In the sales sector, the growth rates of retail sales volume, direct sales and distribution volume all changed from negative to positive, with year-on-year increases of 12.36% and 22.28% to 120.12 and 68.05 million tons, respectively. As the macroeconomy rises and production capacity continues to be built, the production and sales volume of the company's main products is expected to continue to increase.
The fixed increase passed smoothly, and production capacity is expected to increase. On March 24, 2023, the board of directors of the company passed the fixed addition bill. On December 15, 2023 and January 26, 2024, the Shanghai Stock Exchange and the Securities Regulatory Commission respectively reviewed and approved it. The company raised no more than 12 billion yuan in capital to build 5 projects, including the Tianjin LNG project, the Maoming branch refining transformation and upgrading project, and the ethylene upgrading project, involving national incentives and key development industries such as natural gas, hydrogen energy, and high value-added materials. Although the amount raised was high and the stock was broken, it is expected that the project is mainly due to the major national strategic direction, only financing to major shareholders, and the amount of dividends far greater than the amount raised. As the company's new production capacity is gradually released, the company's performance and competitiveness are expected to continue to improve.
Focus on shareholder returns, and the investment value is remarkable. The company pays more attention to shareholder returns. In terms of repurchases, in August 2022 and 2023, the company spent 18.88, 816 million yuan to buy back 4423 and 143.5 million shares (accounting for 0.37% and 0.12%), respectively; in terms of dividends, the company has stabilized cash dividends twice a year, with an annual dividend rate of no less than 65% since 2016. The company's dividend rate and dividend ratio are among listed companies in China, and the long-term investment value is remarkable.
Profit forecast: In 2023-2025, the company's revenue is expected to be 3.35/3.40/3.45 trillion yuan, net profit to mother of 678/708/73.7 billion yuan, EPS 0.57/0.59/0.62 yuan, corresponding PE 10.60/10.14/9.74 times, respectively. First coverage, giving a “buy” rating.
Risk warning: Changes in the macroeconomic situation, changes in the industry cycle, and large fluctuations in crude oil prices.