Incidents:
The company released its 2023 annual report, achieving annual revenue of 3011 billion yuan, yoy -7.04%; net profit to mother of 161.1 billion yuan, yoy +8.34%. Q4 achieved revenue of 728.8 billion yuan in a single quarter, yoy -7.00%; realized net profit to mother of 29.5 billion yuan, yoy +1.33%. Against the backdrop of falling oil prices, the company's performance achieved contrarian growth that exceeded expectations, reflecting the company's operational resilience.
The company also announced the 2023 profit distribution plan. At the end of 2023, it plans to pay a dividend of 0.23 yuan/share (tax included), adding a mid-year dividend of 0.21 yuan/share, and the company's annual dividend of 0.44 yuan/share. Based on the closing price on April 1, the dividend rate for A shares is 4.52%, and the dividend rate for Hong Kong stocks is 6.30%.
Conclusions and recommendations
Against the backdrop of falling crude oil prices, the company's profit achieved contrarian growth, which highlighted the stability of operations. In 2024, crude oil prices are expected to fluctuate at a high level, and the company's performance growth is guaranteed. In terms of dividends, the company attaches importance to shareholder returns, maintains a high dividend ratio, highlights the value of high dividend allocations, covers it for the first time, and gives “buying” suggestions.
Crude oil prices fell, and oil and gas sector profits declined: the company's oil and gas and new energy sector achieved profit of 148.7 billion yuan, yoy -10.3%, and the gross margin of the sector fell 1.17 pct to 16.66% year on year. Mainly affected by the decline in crude oil prices, the company's average crude oil price for the whole year was 76.60 US dollars/barrel, yoy -16.8%. Although the company's oil and gas operating costs also declined year over year, the decline was less than the sales price, which affected the sector's gross profit margin. Production and sales maintained a steady growth trend. The company achieved crude oil production of 937 million barrels, yoy +3.4%; saleable natural gas production of 4932.4 billion cubic feet, yoy +5.5%; oil and gas equivalent production of 1.76 billion barrels, yoy +4.4%. Crude oil prices are expected to rise year on year in 2024, and the company's oil and gas sector profits are expected to recover.
Profits in the refining business narrowed, and the chemical business reversed losses: the company's refining and new materials sector achieved a profit of 369.
100 million yuan, yoy -9.0%. Among them, the refining business achieved profit of 36.3 billion yuan, or YOY -11.9%, mainly due to the comprehensive impact of narrowing of the refining business margin and increased production; the chemical business achieved a profit of 700 million yuan, an increase of 1.3 billion yuan over the previous year, turning a loss into a profit, mainly due to increased sales of chemical products and a drop in the price of crude oil, a chemical raw material. In 2024, the performance of the refining and new materials sector is expected to improve as downstream demand recovers.
Sales of refined oil products increased and sales sector profit recovered: In 2023, the company's sales segment achieved profit of 24 billion yuan, yoy +67%, and the gross margin of the section increased by 0.43 pct to 0.95% year on year, mainly benefiting from lower costs and the recovery in refined oil sales. In 2023, the company sold 166 million tons of refined oil products, yoy +10.1%. Domestic gasoline and diesel standard product prices were reduced by a total of RMB 50 per ton in 2023. As crude oil prices fluctuated at medium to high levels in 24, we expect the price of refined oil products to increase, and there is room for profit growth in the company's sales sector.
The volume and price of natural gas increased, and sales profit increased dramatically: in 2023, the company's natural gas sales segment achieved a profit of 43 billion yuan, yoy +232%, and the gross margin of the section increased 5.17pct year-on-year to 7.67%. The company sells 273.5 billion cubic meters of natural gas, yoy +5%. Overseas natural gas prices have declined from a high level since 2023, and there are still expectations of decline in 2024. Domestic gas prices are expected to remain flat, company costs are expected to drop further, and profits in the natural gas sales sector are expected to continue to grow.
The dividend ratio has increased, and the high dividend attributes are highlighted: the mid-year dividend of 2023 is 0.21 yuan/share, and the year-end dividend is 0.23 yuan/share. Based on the closing price on April 1, the dividend rate for A shares is 4.52%, and the dividend rate for Hong Kong stocks is 6.30%. The company maintains a high dividend ratio policy. The annual dividend ratio reached 50%, and the 2021/2022 dividend ratio was 45%/52%, respectively. The company's high dividend attributes remain unchanged, and the allocation value is still obvious.
Profit expectations: We expect the company to achieve net profit of 170/178/18.2 billion yuan in 2024/2025/2026, YOY of +6%/+4%/+3%, respectively; EPS of 0.93/0.97/1.00 yuan respectively. Currently, the P/E corresponding to A shares is 10.5/10/9.8 times, and the P/E corresponding to H shares is 6.5/6.2/5.9 times, respectively. The company's fundamentals are stable, and the appeal of high dividends is prominent. It is covered for the first time, and “buy” suggestions are given.