Maintain an increase in holdings rating, maintain profit forecast and target price: We maintain the company's 2024-2025 EPS of 0.64/0.69 yuan, add 2026 EPS of 0.73 yuan, maintain the 2024 PE valuation by 12.7 times, increase the target price to 8.13 yuan (originally 8 yuan), and give it an “gain” rating.
The performance was in line with expectations. 2024Q1 Chemical's business performance improved month-on-month: in 2023, it achieved revenue of 3212.2 billion yuan, -3.2% year over year, and net profit to mother of 60.5 billion yuan, -9.9% year on year. 2024Q1 achieved revenue of 790 billion yuan, -0.2% year over year, and net profit to mother of 18.2 billion yuan, -7.8% year over year. The results were in line with expectations. The EBIT of all segments of 2024Q1 increased month-on-month. Exploration and development/refining/marketing and distribution/chemical were 148/69/87/-1.6 billion yuan, respectively, and 64/12/28/- 4 billion yuan month-on-month +84/+57+59/+2.5 billion yuan month-on-month compared to Q4. The 2023 mining concession proceeds affected the exploration sector's EBIT of 7.4 billion yuan.
New breakthroughs in upstream cost reduction and efficiency, with high capital expenditure supporting subsequent growth: the unit cost of each sector was reduced in 2023: the change rates of upstream cash operating cost/cash operating cost of refining/cash cost of selling tons of oil/full cost per chemical unit were -6.7%/-9.1%/-7.3%/-6.2%, respectively.
The company's annual crude oil processing volume was 258 million tons, a record high. The company's 2024 capital expenditure plan is 173 billion yuan. It will continue to invest in oil and gas storage and transportation, refining restructuring, sales of refined oil products, and high-end materials to support subsequent growth.
High-percentage dividends focus on shareholder returns: In 2023, a cash dividend of RMB 0.345 per share is expected, with a comprehensive dividend rate of about 75%, taking into account the final cash dividend with a comprehensive dividend yield of nearly 9%.
Risk warning: Risk of large fluctuations in crude oil prices, risk of declining refining and chemical industry sentiment.