Brief performance review
The company released the company's performance report for the first quarter of 2024 on April 29, 2024. 2024Q1 achieved operating income of 812.184 billion yuan, an increase of 10.90% over the previous year; realized net profit to mother of 45.683 billion yuan, an increase of 4.70% over the previous year, and the 2024Q1 performance exceeded expectations.
Management analysis
Capital expenditure may be skewed towards the exploration and development sector, and the company's performance is expected to rise steadily: the company continues to maintain a high level of capital expenditure in response to the government's call to increase reserves and production, and with the completion of Guangdong Petrochemical's commissioning in 2023, the company's capital expenditure may be re-skewed towards the upstream exploration and development sector. The company's capital expenditure guide for exploration and development in 2024 is 213 billion yuan, which will continue to remain at a high level. The company's upstream oil and gas production increased significantly. 2024Q1's crude oil production was 240 million barrels, up 1.40% year on year; natural gas production was 1.34 trillion cubic feet, up 3.91% year on year. Continued geological tension in early 2024 drove up oil prices. The average settlement price of Brent crude oil futures from the beginning of the year was $83.52 per barrel. Compared with the average value for the full year of 2023 ($82.18 per barrel), oil prices are expected to continue to fluctuate at medium to high levels, and the performance of the company's exploration and development sector is expected to rise steadily.
The refined oil sales market continues to be booming: the apparent consumption of refined oil products reached a new high in the same period in recent years. The apparent consumption of 2024Q1 refined oil products was 98.23 million tons, an increase of 11.06% over the previous year.
2024Q1's crude oil processing capacity reached 354 million tons, an increase of 8.23% year on year, and produced 31.48 million tons of refined oil products, an increase of 13.43% year on year. At the same time, China's refined oil sales market continued to be strong, and the company's refined oil sales volume increased. Q1 gasoline/diesel/kerosene sales volume was 16.967 million tons/16.998 million tons/5.293 million tons, an increase of 8.17%, a year-on-year decrease of 5.51%/an increase of 35.72%. As of 2024Q1, the company had 22,689 gas stations. With the further restoration of travel intensity, demand for oil products is expected to increase further, and the company's sales volume of refined oil products is expected to continue to maintain a high level.
The profitability of the natural gas sector has recovered significantly: Since 2023Q4, the company's natural gas sales sector performance has recovered significantly. The domestic gas sales volume of 2024Q1 reached 67.102 billion cubic meters, up 7.55% year on year, and the operating profit of the natural gas sales segment reached 12.316 billion yuan, an increase of 21.51 percent year on year. The main reason is that the cost of imported pipeline gas and imported LNG has decreased significantly and the increase in the company's own gas production is mostly unregulated gas, along with the marketization of natural gas prices.
Profit Forecasts, Valuations, and Ratings
We believe that in the context of central enterprise reform, the increase in operating indicators is expected to hedge against fluctuations in crude oil prices, and the company's core competitiveness may continue. We expect the company's net profit to be 181.1 billion yuan/191.8 billion yuan/2010 billion yuan in 24-26 years, corresponding EPS of 0.99 yuan/1.05 yuan/1.10 yuan, and the corresponding PE is 10.33X/9.31X, maintaining a “buy” rating.
Risk warning
(1) Oil and gas field commissioning progress falls short of expectations; (2) risk of oil product price liberalization; (3) risk of slump in terminal demand; (4) impact of tripartite data errors; (5) overseas business risk (6) exchange rate risk.