Losses decreased year over year in 2023. In 2023, the company achieved operating income of 93,014 billion yuan, +12.72% year-on-year; net profit to mother - 1,406 billion yuan, a year-on-year reduction in losses. The company's crude oil processing volume grew steadily throughout the year, and losses in the chemical sector decreased year-on-year.
Crude oil processing volume is growing steadily. In 2023, the company processed a total of 14.1193 million tons of crude oil, an increase of 35.17% over the previous year; the total volume of main commodities was 124.884 million tons, an increase of 28.66% over the previous year. Among them, 8.6666 million tons of refined oil were produced, up 46.69% year on year; 707,200 tons of p-xylene, up 20.7% year on year; 64.11 million tons of ethylene, up 7.19% year on year.
The chemical business lost money year over year. Looking at profit by sector, the operating loss of chemical products in 2023 was 1,498 billion yuan, a year-on-year decrease of 2,226 billion yuan; the operating loss of refined oil products was 230 million yuan, down 231 million yuan from the previous year. Mainly due to falling crude oil prices, the unit price and unit cost of refined products fell 7% year on year, respectively, while the increase in sales of refined products led to a year-on-year increase in consumption tax.
Asset depreciation is dragging down profits. In 2023, the company accrued asset impairment of 477 million yuan, mainly including inventory depreciation losses of 447 million yuan and fixed asset impairment losses of 0.3 billion yuan.
Crude oil processing volume is planned to increase steadily in 2024. According to the company's 2023 annual report, the company plans to process a total of 14.3 million tons of crude oil in 2024, and plans to produce 8.8 million tons of refined oil products, 671,000 tons of ethylene, and 692,000 tons of p-xylene. In 2024, the company plans to spend 2,889 billion yuan on capital expenditure. The main projects under construction include thermal power unit cleaning and efficiency improvement projects, 250,000 tons/year thermoplastic elastomer projects, carbon fiber projects, etc.
Profit forecasting and investment ratings. We expect the company's 2024-2026 EPS to be 0.02, 0.06, and 0.09 yuan, respectively, and 2.32 yuan for BPS in 2024. Referring to comparable company valuation levels, we will give it 1.3-1.4 times PB in 2024, corresponding to a reasonable value range of 3.02-3.25 yuan, maintaining the “superior to the market” rating.
Risk warning: Crude oil prices fluctuate greatly, profits from refined oil products declined, price spreads on petrochemical products narrow, etc.