Description of the event
The company disclosed its 2023 annual report. During the reporting period, the company's total revenue was 3011.012 billion yuan, down 7.04% year on year, and net profit to mother was 161,144 billion yuan, up 8.34% year on year. According to data for the single quarter, total revenue for the fourth quarter was 728.877 billion yuan, down 7.0% year on year, while net profit returned to mother for the fourth quarter was 29.493 billion yuan, up 2.36% year on year.
Incident comments
Revenue from the sale of additional mining rights was 23.69 billion yuan, and the performance is still at a record high. In March 2023, the Ministry of Finance, the Ministry of Natural Resources, and the State Administration of Taxation issued the “Measures for the Collection of Mining Rights Sale Proceeds” to levy mining rights concession proceeds from petroleum, natural gas and other minerals in the form of mining rights concession yields, which will take effect from May 1, 2023. Although oil prices fell to only 17.108 billion yuan in 2023, a year-on-year decrease of 60.9%, the company added 23.69 billion yuan in mining concession proceeds, and taxes other than income tax amounted to 296.26 billion yuan, an increase of 6.5% over the previous year.
Against this backdrop, the company's performance continued to rise 8.34% year over year, reaching another record high.
Promoting increased storage and production, and implementing cost reduction and efficiency, the resilience of the oil and gas and new energy business is highlighted. The company continues to vigorously strengthen oil and gas exploration and development, increase storage and production, and promote the integrated development of oil and gas and new energy sources. Continue to strengthen cost control and maintain equal emphasis on production and efficiency. In 2023, the company produced 1,759 billion barrels of oil and gas equivalent, up 4.4% year on year, of which crude oil production was 937 million barrels, up 3.4% year on year; it produced 4.93 trillion cubic feet of natural gas for sale, up 5.5% year on year. The operating cost per unit of oil and gas in 2023 was $11.95 per barrel, down 3.8% year over year. The average realized price of crude oil in 2023 was 76.60 US dollars/barrel, down 16.8% year on year. Due to increased production combined with cost reduction and efficiency, the company's oil and gas and new energy business achieved operating profit of 148.695 billion yuan, a year-on-year decrease of only 10.3%, far lower than the drop in oil prices.
Resource allocation has been optimized, and the profitability of the natural gas sales business has been greatly improved. In 2023, the company's natural gas sales business continued to optimize the imported gas resource pool, rationally arrange the natural gas import rhythm, effectively control the cost of imported gas; continuously optimize resource allocation, increase the development of high-end efficient markets and terminal markets; and adopt active marketing strategies to improve marketing quality and efficiency. The company sold 273.55 billion cubic meters of natural gas throughout the year, up 5.1% year on year, and achieved operating profit of 43,044 billion yuan, a sharp increase of 232.31% year over year, the most impressive increase in all sectors.
Focus on shareholder returns, and there is still room for repair in valuations. The company plans to distribute a final tax-inclusive cash dividend of 0.23 yuan/share, plus a mid-term dividend plan of 0.44 yuan/share for the whole year. The corresponding cash dividend ratio is 50%, with a total dividend of about 80.529 billion yuan, a record high. Since this year, in the energy sector of central state-owned enterprises represented by three barrels of oil, stock prices and corporate valuations have increased markedly in the context of ensuring energy security and the transformation of new energy sources. However, in comparison with domestic non-state-owned enterprises in the same industry and overseas enterprises in the same industry, the current valuation is still relatively low. As the profitability gap between central state-owned enterprises represented by three barrels of oil gradually narrows, the valuations of leading central state-owned enterprises such as CNPC still have significant prospects of improving, and valuations may continue to be repaired.
The company's 2024-2026EPS is expected to be 0.94 yuan, 1.01 yuan, and 1.08 yuan, respectively. The PE corresponding to the closing price on March 28, 2024 was 9.84X, 9.14X, and 8.56X, respectively, maintaining a “buy” rating.
Risk warning
1. The sharp drop in international oil prices;
2. Geopolitical risks.