The loss was reversed after 2Q23. In 2023, the company achieved operating income of 325.112 billion yuan, +12.46% year-on-year; realized net profit to mother of 1,158 billion yuan, -65.33% year-on-year. Looking at a single quarter, the company's net profit for 1Q23-4Q23 was -1,468 million yuan, 341 million yuan, 1,244 billion yuan, and 1,051 billion yuan, respectively. The company plans to distribute a cash dividend of 1.0 yuan (tax included) for every 10 shares to all shareholders. In the first quarter of 2024, the company achieved operating income of 81.088 billion yuan, +16.30% year-on-year; realized net profit of 552 million yuan, which significantly reversed losses over the previous year and increased profit of 2,020 billion yuan.
Zhejiang Petrochemical contributed to the main profit in 2023. In 2023, Zhejiang Petrochemical processed about 44 million tons of crude oil, achieving a net profit of 1,367 billion yuan. Based on 51% equity calculation, it contributed about 70 billion yuan to the company's net profit to mother.
Chemical fiber profits rebounded in 2023, and the PTA sector (including bottles) was under pressure as a whole. In 2023, the net profit of Zhongjin Petrochemical (aromatic hydrocarbons) was 39 million yuan, a year-on-year improvement; Shengyuan Chemical Fiber's net profit was 104 million yuan, a year-on-year improvement; the total loss of the four PTA factories (including bottles) was 300 million yuan, turning a year-on-year loss.
1Q24 gross profit year-on-year, month-on-month recovery. In the first quarter of 2024, the company achieved gross profit (before taxes and surcharges) of 4.290 billion yuan, an increase of 5.365 billion yuan over the previous year and an increase of 1,382 billion yuan over the previous year. We believe that as downstream demand gradually recovers, the company's gross profit has improved.
Relying on 40 million tons/year integrated refining and chemical projects, the layout of new materials is accelerated. The company has built five major industrial chains: polyester, engineering plastics, new energy, high-end polyolefin, and special rubber. It is one of the important producers of polyester, new energy materials, engineering plastics and high-value-added polyolefins in Asia. Aiming at the field of new energy and high-end materials, the company has deployed a number of new energy new material products such as EVA, POE, DMC, PC and ABS, and the product chain continues to be enriched. With the steady progress of new projects, the company's production capacity for new energy materials, renewable plastics, special synthetic materials and high-end synthetic materials will be expanded in an orderly manner, and the transformation of new materials will gradually accelerate.
Introducing Saudi Aramco as a strategic investor. In 2023, the company introduced Saudi Aramco as a strategic investor, and Saudi Aramco holds approximately 10% of the company's shares. The two sides have carried out deep long-term cooperation in various areas such as crude oil procurement, raw material supply, chemical sales, refined chemical product sales, crude oil storage and technology sharing.
In January 2024, the company and Saudi Aramco signed a “Memorandum of Understanding”. The two sides plan to carry out equity cooperation and subsequent capacity expansion and transformation of Saudi Aramco Jubail and CICC.
Profit forecasting and investment ratings. We expect the company's EPS to be 0.43 yuan, 0.63 yuan, and 0.82 yuan respectively in 2024-2026, and 4.59 yuan for BPS in 2024. Referring to the valuation level of comparable companies, they were given 30-35 times PE in 2024, corresponding to a reasonable value range of 12.90-15.05 yuan (corresponding to 2024 PB 2.8-3.3 times, PEG is 0.22-0.25), maintaining a “superior to market” rating.
Risk warning: Crude oil prices fluctuate at a high level; product prices fluctuate greatly; the progress of projects under construction falls short of expectations.