Incidents:
CNOOC released its 2023 annual report, achieving full year operating income of 44.109 billion yuan (+23.7% year over year) and net profit to mother of 3,013 billion yuan (+27.8% year over year). Among them, Q4 achieved revenue of 14.601 billion yuan (+27.9% YoY, +37.3%) and net profit to mother of 740 million yuan (+155.7% YoY, -20.8%) in a single quarter.
Main business benefits from high upstream investment and good growth
International oil prices fluctuated at a high level in 2023, total global upstream exploration and development expenditure was +10.6% year-on-year, and the utilization rate of global drilling platforms continued to rise. The company's operating profit increases in the four major sectors of drilling/technology/ship/geophysics were +13.76/+5.68/+0.92/+0.92 billion yuan respectively, with corresponding increases of +216.4%/+16.3%/+164.6%/+138.6%, respectively, accounting for 65%/27%/5%/4%, respectively. Among them, the drilling sector ranked first in terms of operating growth. The utilization rate of drilling platforms increased 1.7 pct to 85.2% year-on-year.
Continue to implement technology-driven strategies, steadily promote localization and replacement, the company adheres to a technology-driven strategy, and continues to make breakthroughs in core oilfield service technologies. The compound growth rate of the company's investment in research from 2021 to 2023 reached 5.2%, and the return on scientific research output increased year by year. Oilfield technology accounts for a steady increase in domestic offshore autonomous operations: ESCOOL and Xuanji technologies are expected to account for 95% and 60% of autonomous operations by 2025, respectively. In 2023, the technology sector achieved revenue of 25.757 billion yuan (+31.4% year over year), accounting for 58.39% of the main business revenue.
Consolidate lean cost management and continuously optimize profit margins for the past three years. The company achieved an operating cash ratio of close to 30% in 2023, +10.3 pct; a cost and expense ratio of 10.5% (+1.5pct year over year), a significant improvement over 2022; and an operating profit margin of 9.7%, which continued to rise for the past three years. The efficiency of the company's working capital management was further improved: in 2023, the company's accounts receivable turnover ratio was 2.6 times, and the inventory turnover ratio was 14.7 times, an average increase compared to 2022. The company will continue to consolidate its cost advantage in 2024, and the profit margin and debt structure are expected to continue to be optimized.
Profit Forecasts, Valuations, and Ratings
Considering the year-on-year increase in global capital expenditure for upstream offshore exploration and development, CNOOC's capital expenditure is expected to increase further in 2024. We expect the company's revenue for 2024-2026 to be 519.10/604.25/67.612 billion yuan, +17.69%/16.40%/11.89% year-on-year, net profit to mother 39.44/47.35/ 5.477 billion yuan, and EPS of 0.83/0.99/1.15 yuan/share, respectively. It is recommended that we continue to pay attention.
Risk warning: Global macroeconomic downturn risk; risk of large fluctuations in international crude oil and natural gas prices; risk of new crude oil and natural gas projects falling short of expectations; risk of adverse weather conditions.