Key points of investment
Introduction: The company's competitive cost advantage continues to be stable, increasing storage and production, improving quality and efficiency, and production capacity and net profit have greatly exceeded expectations.
Event: In the first quarter of 2024, the company achieved operating income of 111,468 billion yuan, an increase of 14.1% year on year; achieved net profit of 39.719 billion yuan, up 23.7% year on year and 51.6% month on month; achieved basic earnings per share of 0.84 yuan, an increase of 23.7% year on year.
The average price of oil in Q1 in '24 was $81.7/barrel, and crude oil prices exceeded expectations. In the first quarter of '24, the global economy showed resilience. China's economic recovery momentum gradually increased, international oil prices fluctuated upward, and the average price of oil futures was 81.7 US dollars/barrel, which was basically the same as last year. The company indicates that production will reach 81-83 million barrels in 2026, an increase of 19%-22% over 2023. While oil prices remain high, continued production growth will guarantee the company's long-term growth.
Net production of 180.1 million barrels of oil equivalent was achieved in Q1 '24, up 9.9% year on year. The increase in production exceeded expectations.
Among them, China's net production volume was 123.2 million barrels of oil equivalent, up 6.9% year on year, mainly due to production contributions from the commissioning of new projects; overseas net production was 56.9 million barrels of oil equivalent, up 16.9% year on year, mainly due to increased production in Guyana and Canada. In the first quarter of 2024, the company obtained a total of 2 new discoveries and successfully evaluated 4 oil and gas containing structures.
The main cost of 24Q1 barrels of oil was 27.59 US dollars/barrel of oil equivalent, -2.2% compared with the same period last year. The competitive cost advantage is prominent. The company's barrel oil cost has shown a gradual downward trend since 2013. In 2023, the company's barrel oil cost fell to 28.83 US dollars/barrel, a year-on-year decrease of 5.13%. We expect global inflation to come to an end, and the company's barrel oil costs are expected to continue to decline in the future.
Investment advice: Optimistic that the company will increase capital expenditure on upstream oil and gas, and that oil and gas production will maintain high growth. Against the backdrop of oil prices maintaining medium to high levels, the company has the dual attributes of growth and stability and high profits. The company is expected to achieve net profit of 1368/1458/151.7 billion yuan in 2024-2026, +10.48%/+6.54%/+4.04% year-on-year. The PB corresponding to the current market capitalization is 1.96/1.76/1.59 times, maintaining a “buy” rating.
Risk warning: market competition risk, risk of delays in oil field exploration and commissioning, risk of domestic and foreign business development and operation, risk of asset impairment, risk of exchange rate risk, risk of falling oil prices, calculation bias.