Key points of investment
The company's performance is improving: The company achieved operating income of 3011 billion yuan (-7% YoY) and net profit to mother of 161.1 billion yuan (+8% YoY) in 2023. Among them, 2023Q4 achieved operating income of 728.9 billion yuan (-7% YoY, -9% YoY), net profit of 29.5 billion yuan (YoY +1%, -36% YoY), and net profit of 52.6 billion yuan (YoY +27%, +11% YoY). In 2023, the company paid an additional 23.7 billion yuan in mining rights concession revenue. In 2023, due to fluctuations in oil and gas prices, changes in the domestic and foreign business environment, and increased difficulty in stabilizing production in some old oil fields, etc., a total of 29 billion yuan was prepared for impairment of long-term assets such as oil and gas assets and fixed assets, and 6.4 billion yuan was prepared for inventory depreciation. Excluding one-off effects, the company's operating conditions are excellent.
The profitability of natural gas sales increased significantly: in 2023, the company's operating profit was 253 billion yuan, an increase of 10.5 billion yuan over the same period last year. Among them, the operating profits of oil and gas and new energy, refining and chemical new materials, sales, natural gas sales, headquarters and others were 1,487/369/240/43/400 million yuan, respectively, compared with -171/-36/+96/+301/-8.5 billion yuan. The company optimizes the imported gas resource pool, rationally arranges the natural gas import rhythm, effectively controls the cost of imported gas; continuously optimizes resource allocation, and increases the development of high-end efficient markets and terminal markets.
Oil and gas production grew steadily: 1) In 2023, the company produced 1,759 million barrels of oil equivalent (+4.4% year over year). Among them, crude oil production was 937 million barrels (+3.4% YoY) and natural gas production was 139.6 billion cubic meters (+5.5% YoY). 2) In 2024, the company plans to produce 1,766 million barrels of oil equivalent (+0.4% YoY), including 909 million barrels of crude oil (-3% YoY) and 145.5 billion cubic meters of natural gas (+4.3% YoY).
The planned capital expenditure increased year-on-year: 1) In 2023, the company's actual capital expenditure was 275.3 billion yuan, exceeding the planned capital expenditure amount (previously the planned capital expenditure of 243.5 billion yuan in 2023). Among them, the capital expenses for oil and gas and new energy, refining, chemical and new materials, sales, natural gas sales, headquarters and others were 2484/164/41/1.9 billion yuan, respectively, up to +268/-254/-9/+900 million yuan. 2) In 2024, the company plans to spend 258 billion yuan on capital expenditure, which is +14.5 billion yuan (+6%) compared to the planned capital expenditure in 2023, and capital expenditure is concentrated upstream. Among them, the planned capital expenses for oil and gas and new energy, refining, chemicals, and new materials, sales, natural gas sales, headquarters, and others were 2130/290/70/60/30 billion yuan, respectively, compared to +175/-50/+0/+20 billion yuan compared to the same period last year.
The company focuses on shareholder returns: in 2023, the total dividend amount of the company was 80.5 billion yuan (mid-term and final dividends of 0.21 and 0.23 yuan/share, respectively), with a dividend ratio of 50%. According to the closing price of April 11, 2024, the dividend rate for CNPC A shares is 4.3%; the dividend rate for CNPC H shares is 6.6%, tax-deducted at 20%, and the dividend rate after tax is 5.3%.
Profit forecast and investment rating: Based on the company's oil and gas production situation and the company's benefiting from the natural gas price policy, we expect net profit to return to mother of 1,837 billion yuan, 1903, and 194.6 billion yuan respectively in 2024-2026.
According to the closing price on April 11, 2024, the corresponding H share PE is 7.37, 7.12, and 6.96 times, respectively, and the corresponding H share PB is 0.77, 0.72, and 0.68 times, respectively. The company has remarkable profitability and excellent cost control. For the first time, coverage was given a “buy” rating.
Risk warning: geopolitical risks; macroeconomic fluctuations; recovery in demand for refined oil products falls short of expectations; risk of falling crude oil prices