In 2023, the company achieved operating income of 3011.012 billion yuan, a year-on-year decrease of 7.04%; net profit to mother was 161,144 billion yuan, an increase of 8.34%; of these, revenue for the fourth quarter was 728.877 billion yuan, a year-on-year decrease of 7.00% and a decrease of 9.15% year-on-year. Net profit attributable to mother was 29.493 billion yuan, up 2.36% year on year and decreased by 36.40% month on month. The ratio of the company's cash dividends (including cash dividends already distributed in the medium term) for 2023 (consolidated statement caliber according to Chinese accounting standards) was 50.0%. The company's operating performance continues to improve, the profitability of high-quality assets is prominent, and the purchase rating is maintained.
Key points to support ratings
Net profit to mother reached a record high, and the financial situation continued to be stable. In 2023, the company vigorously strengthened oil and gas exploration and development, continued to promote increased storage and production, further promoted refining and chemical transformation and upgrading, continuously optimized the product structure, steadily implemented green and low-carbon transformation, and implemented in-depth quality and efficiency improvement activities. The net profit to mother reached a record high against the backdrop of a 16.8% year-on-year decline in crude oil prices. The return on net assets (diluted) in 2023 was 11.14%, up 0.23 pct year on year. Among them, the return on net assets (diluted) for the fourth quarter was 1.86%, down 0.09 pct year on year. In 2023, the company achieved free cash flow of 176.122 billion yuan, an increase of 17.09% over the previous year; after deducting non-net profit of 1871.30 yuan, an increase of 9.91% over the previous year. Asset impairment losses in 2023 were $28.956 billion, mainly impairment losses for fixed assets and oil and gas assets. According to the “Mining Rights Sale Proceeds Collection Measures”, the company paid an additional 23.685 billion yuan in mining rights concession revenue in 2023. The company's operating performance continues to improve, and the profitability of high-quality assets is prominent.
Upstream oil and gas production continues to grow, and the processing load of the refining and chemical sector is increasing. 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 937.1 million barrels, up 3.4% year on year. Saleable natural gas production was 4,932.4 billion cubic feet, up 5.5% year over year. In the refining and chemical sector, crude oil processing volume was 1,399 million barrels, up 15.3% year on year, producing 123 million tons of refined oil products, up 16.5% year on year. Among them, kerosene production reached 14.56 million tons, an increase of 77.7% over the previous year. Oil and gas extraction and storage have been very effective. The product structure of the refining and chemical business continues to be optimized, and the company's sustainable development capacity is expected to increase.
The sales business optimized the allocation of resources, and profitability improved markedly. In 2023, the company's refined oil sales volume was 165.8 million tons, up 10.1% year on year, and natural gas sales volume was 273.548 billion cubic meters, up 5.1% year on year. Among them, domestic sales of natural gas were 219.757 billion cubic meters, an increase of 6.1% over the previous year. The sales division and natural gas sales segment achieved operating profits of 23.962 billion yuan and 43,044 billion yuan respectively, an increase of 66.7% and 232.2% over the previous year.
In the future, with the improvement of resource allocation efficiency and optimization of sales mechanisms, sales business profits may be further enhanced.
Capital expenditure remains at a high level. The company's capital expenditure in 2023 was 275.338 billion yuan, of which the oil and gas and new energy division was 248.378 billion yuan, accounting for 90.21%. The estimated capital expenditure for 2024 is $258.0 billion, of which the oil and gas and new energy segment is $213 billion, accounting for 82.56% of the plan. Capital expenditure continues to be steady, and the competitiveness of core businesses such as oil and gas development, refining and new materials is expected to continue to increase.
valuations
The company's operating performance continues to improve, and the profitability of high-quality assets is prominent. At the same time, in line with market changes, profit forecasts are estimated to be 171,351 billion yuan, 182,556 billion yuan, and 192,094 billion yuan, corresponding price-earnings ratios of 10.6 times, 9.9 times, and 9.4 times, maintaining the purchase rating.
The main risks faced by ratings
Production and operation were interrupted unexpectedly due to factors such as large price fluctuations in oil and gas products, changes in industry regulatory policies, safety hazards, and force majeure.