Core views
The company's 24Q1 revenue was 812.2 billion yuan, +10.9% year-on-year, and net profit to mother was 45.7 billion yuan, +4.7% year-on-year, achieving a “good start”.
Oil and gas and new energy performance continued to grow: 24Q1 operating profit of 43 billion yuan, +4.8% year over year and +62.8% month on month. Oil and gas production was 434 million barrels, +2.6% year on year, crude oil production was 240 million barrels, +1.4% year on year, and natural gas production was 1,345 billion cubic feet, +3.9% year on year. Production in the refining, chemical and new materials sectors increased, the sales sector remained steady, and natural gas sales performance increased significantly over the same period last year.
The company's dividend rate for 23 years is 50%. In the future, as capital expenditure declines, there is still room for improvement in dividend capacity. According to the 24-year profit forecast and 50% dividend rate, the company's latest dividend rate for A shares is 4.7%, and the latest dividend rate for Hong Kong stocks is 6.6%.
occurrences
The company released its 2024 quarterly report, and the results achieved a good start
In the first quarter of 2024, the company achieved operating income of 812.2 billion yuan, +10.9% year-on-month, +11.4% month-on-month; realized net profit of 45.7 billion yuan, +4.7% year-on-year, +54.9% month-on-month, net profit after deducting 45.8 billion yuan, +3.8% year-on-year and -12.9% month-on-month.
Brief review
The oil and gas and new energy sector continued to grow steadily. Production in the refining and chemical sector increased steadily, and natural gas sales increased year-on-year. The first-quarter results achieved a gross profit margin of 20.4%, -0.8 pct year on year; net profit margin of 6.31%, -0.31 pct year on year.
Operating cash flow was -12.1%, balance ratio 38.9%, year-on-year -2.7 pct; return on net assets was 3.1%, which was basically the same as year on year.
Oil and gas and new energy sector: 24Q1 achieved operating profit of 43 billion yuan, +4.8% year-on-year and +62.8% month-on-month. The average spot price of oil in 24Q1 was 83.2 US dollars/barrel, +2.5% year over year; the company achieved an oil price of 75.4 US dollars/barrel, -0.8% year over year, and the average sales price of natural gas was 9.38 US dollars/1000 cubic feet, which was basically the same as the previous year. 24Q1 achieved total oil and gas production of 464 million barrels, +2.6% year-on-year, +4.4% month-on-month, with 413 million barrels in China and 50.7 million barrels overseas, an increase of 2.6% year-on-year. Crude oil was 240 million barrels, +1.4% year over month, and marketable natural gas production was 1,345 billion cubic feet, +3.9% year over month, and +5.4% month on month. Due to the increase in domestic natural gas production and sales, the company's oil and gas operating costs per unit were 10.38 US dollars/barrel, -1.8% compared with the same period last year. The company actively promotes exploration and development, increases storage and production, optimizes the product structure and strengthens capital control, accelerates the layout of the new energy sector, and continuously improves competitiveness.
Refining, chemical and new materials sector: 24Q1's refining, chemical and new materials business achieved operating profit of 8.11 billion yuan, -4.2% year-on-year, and -10.9% month-on-month, of which the refining business operating profit was 6.97 billion yuan, -28.6% year-on-year. The pressure on performance was mainly due to the narrowing of the gross margin of refined products. The operating profit of the chemical business was 1.15 billion yuan, turning a loss into a profit, with a year-on-year increase of 2.07 billion yuan. The company processed 354 million barrels of crude oil in the first quarter, +8.2% year on year, 30.48 million tons of refined oil products, +9.8% year on year, and 2.27 million tons of ethylene, +13.5% year on year. The company continues to optimize production organization, business layout and product structure, continuously increase the proportion of specialty refining products and high-end chemical products, accelerate structural adjustment and transformation and upgrading, and promote the construction of key projects such as the transformation and upgrading of Jilin Petrochemical, Guangxi Petrochemical, and the 1.2 million tons/year phase II ethylene project in Tarim.
Sales sector: The 24Q1 sales segment achieved operating profit of 6.76 billion yuan, -17.1% year-on-year, which was basically flat from month to month. The decline in international trade business profits caused a certain drag. 24Q1 sold 39.26 million tons of refined oil products, +4.5% year over year, and 28.55 million tons in China, +4.6% year over year. The company seizes the favorable opportunity of domestic macroeconomic recovery and the recovery in demand for refined oil products; strives to expand sales of refined oil products; actively promotes the layout of hydrogen fueling stations and photovoltaic stations in the vehicle charging field, and acquires Putian New Energy Co., Ltd.; vigorously develops the non-oil business. The gross profit of the non-oil business has increased dramatically, and the international trade business continues to improve the layout of the international trade business to maximize the value of the industrial chain.
Natural gas sales sector: 24Q1 achieved operating profit of 12.3 billion yuan, +21.5% year-on-year and -47.8% month-on-month. Mainly due to the company's continuous optimization of natural gas resource pools, effective cost control, and vigorous development of high-end markets, domestic gas sales and terminal retail business profits increased year-on-year; in 24Q1, natural gas sales were 83.4 billion cubic meters, +14.2% year-on-year, and its domestic sales volume in China was 67.1 billion cubic meters, +7.5% year-on-year.
The construction of a valuation system with Chinese characteristics combined with market value management assessments of central enterprises helps the valuations of high-dividend and undervalued central enterprises such as companies continue to increase the “China Special Assessment”. In the context of the “China Special Assessment”, the State Assets Administration Commission strengthened the management index leadership of central enterprises, added ROE and operating cash ratio indicators, further strengthened the assessment of the profitability and creative ability of state-owned enterprises, and promoted the high-quality development of state-owned enterprises. State-owned enterprise reforms place higher demands on the company's cash flow, and stable performance and sufficient cash flow are the foundation for enterprises to continue to have high dividends. The company has been implementing a high dividend policy for a long time. The company's articles of association stipulate that the cash dividend ratio is not less than 30% of the net profit attributable to the mother, and the dividend rate has reached 50% since listing. The company's capital expenditure in 2023 was 275.3 billion yuan, which is basically the same as the previous year. The company's planned capital expenditure target for 2024 is 258 billion yuan. The company's dividend rate for 23 years is 50%. In the future, as capital expenditure declines, there is still room for improvement in dividend capacity. According to the 24-year profit forecast and 50% dividend rate, the company's latest dividend rate for A shares is 4.7%, and the latest dividend rate for Hong Kong stocks is 6.6%.
Profit forecast and valuation: The company's net profit for 2024-2026 is estimated to be 1,766, 182.2, and 189.9 billion yuan, respectively, and EPS of 0.96, 1.00, and 1.04 yuan, respectively. In view of the company's prominent position as a leader in the industry and the driving effect of central enterprise market value management assessments on the company, the “buy” rating was maintained.
Risk warning: (1) Crude oil price fluctuations: Crude oil prices are highly related to the international political and economic situation. If crude oil prices fluctuate, it will affect the company's profitability; (2) changes in the industry competition pattern: there are many domestic refining and chemical supporting projects, which may cause partial overcapacity in certain product sectors, thereby increasing industry competition, squeezing profit space within the industry, and affecting companies in the industry; (3) Global economic downturn: petroleum, petrochemical and downstream new material products are distributed and widely distributed, and are highly related to the macroeconomic situation. The downside will likely have an impact There is a risk of damage to the industry's product demand and the company's performance.