Introduction to this report:
The company's 2023 performance is in line with expectations, and a high percentage of dividends emphasizes shareholder returns to promote value revaluation. Relying on world-class refining and chemical platforms to build new green, low-carbon materials opens up future space.
Key points of investment:
Maintain the increase rating and lower the profit forecast and target price: Due to rising crude oil costs and squeezing chemical price differences, we lowered the company's 2024-2025 EPS to 1.21/1.46 yuan (originally 1.40/1.98 yuan) and added 2026 EPS to 1.91 yuan. Referring to the 2024 16XPE valuation, the comparable company lowered the target price to 19.36 yuan (originally 20 yuan), maintaining the “gain” rating.
The Q4 performance was in line with expectations: the company achieved revenue of 234.8 billion yuan in 2023, +5.61% year-on-year, and net profit to mother of 6.905 billion yuan, +197.83% year-on-year. 2023Q4 achieved revenue of 61.7 billion yuan, +18.70% year-on-year, and net profit to mother of 1,204 billion yuan, +131.90% year-on-year. The company's fourth quarter results were in line with expectations. Price differences for some of the company's products declined month-on-month in the fourth quarter: refining gross profit (Longzhong Information) /LLDPE - Ethylene - Naphtha/PTA-PX/Ethylene - Naphtha/POYPTA-MEG price differences were 191/18921585/304/1522/1,136 yuan/ton, respectively, -76.48%/-21.24%/-15.77%/+97.28%/+28.34%/-5.76%.
We plan to promote large dividends throughout the year and focus on shareholder returns: The company attaches importance to reasonable returns for investors. The total proposed cash dividend for 2023 is 3,871 billion yuan, accounting for about 56% of net profit to mother. After this dividend, the company accumulated dividends of 22.371 billion yuan after restructuring and listing in 2016, accounting for 41.08% of the cumulative net profit to mother, which greatly exceeds the supporting capital raised by the company from the capital market.
Relying on the “Big Chemical” platform to build new momentum for emerging industries: Relying on the 20 million ton world-class platform, the company's production capacity for new materials such as 1.6 million tons/year for green and low-carbon emerging industries will be released one after another. As a representative of “new quality productivity” in the chemical industry, the company brings new momentum to structural optimization and industrial upgrading.
Risk warning: There is a risk that crude oil prices will fluctuate greatly, and the project progress will fall short of expectations.