Introduction to this report:
The company's annual performance was in line with expectations. The company continued to improve its operations, crude oil processing volume increased slightly, refining and chemical margins improved, and natural gas optimized the imported gas resource pool and continued to optimize resource allocation. The company's dividend ratio increased.
Key points of investment:
Maintaining the shareholding rating and raising the target price and profit forecast: As the company continues to reduce costs and increase efficiency, crude oil prices are stronger than market expectations, we raised the company's 2024/2025 EPS to 0.94/1 yuan (originally 0.93/0.93 yuan), increased the 2026 EPS by 1.02 yuan, referring to the comparable company's EV/EBITDA valuation to 5.63, and we raised the company's target price to 10.66 yuan (originally 9.30 yuan) to maintain the “increase in holdings” rating.
The performance was in line with expectations, and upstream oil and gas prices caused performance fluctuations: the company achieved profit of 161.1 billion yuan for the whole year, and the performance was in line with market expectations. The company achieved operating profit of 49.2 billion yuan in Q4, an increase of 18% over the previous year. Net profit attributable to mother was 29.4 billion yuan, up 1% year over year. The average price of oil in 2024 fell from $87 per barrel in Q3 to $85 per barrel, in addition, the price of natural gas fell month-on-month. By sector, the company's oil and gas and new energy/refining chemical/sales/natural gas sales segments were 160/91/67/ 235 billion yuan respectively; 268/142/71/-2.7 billion yuan respectively for the same period in 2022.
Fluctuations in one-time fees affected fourth quarter results: corporate taxes and additional projects increased from 63 billion yuan to 92.9 billion yuan in the same period in the 2022/Q4 period due to the company's payment of proceeds from mining rights concessions. In terms of asset impairment, the company's asset impairment was reduced from RMB 36.6 billion in Q4 to RMB 275 billion.
The company's dividend ratio increased in 2023: According to the company's annual report, the company expects capital expenditure of 258 billion yuan in 2024, down from 275.3 billion yuan in 2022 and 274.3 billion yuan in 2023. The company's “Articles of Association” stipulate that the cash dividend ratio shall not be less than 30% of the net profit achieved to the mother in the current year, and the company's dividend ratio in 2023 is 50% of the net profit, which is better than market expectations.
The company's dividend ratio for 2022 and 2021 was 52% and 45%, respectively.
Risk warning: There is a risk that crude oil prices will fluctuate greatly, and the recovery of chemicals is lower than expected.