Description of the event
The company disclosed its report for the first quarter of 2024. In the first quarter of 2024, the company achieved operating income of 812.84 billion yuan, an increase of 10.88% over the previous year, and realized net profit of 45.681 billion yuan, an increase of 4.70% over the previous year.
Incident comments
Oil and gas production increased and cost control was remarkable, and the increase in oil and gas business performance was superior to oil price fluctuations during the same period. The average spot price of Brent rose 2.5% year-on-year in Q1 in 2024. The company achieved oil and gas equivalent production of 463.7 million barrels, an increase of 2.6% over the previous year.
Among them, China's domestic oil and gas equivalent production was 413.0 million barrels, up 2.6% year on year; overseas oil and gas equivalent production was 50.7 million barrels, up 2.6% year on year. Oil and gas operating costs per unit were $10.38 per barrel, down 1.8% year over year. Against the backdrop of increased production and lower costs, the oil and gas business achieved operating profit of 42,965 billion yuan, an increase of 4.8% year over year, higher than the increase in oil prices during the same period.
The gross profit of refined oil products narrowed, and the chemical business turned a loss into a profit. In 2024, 353.8 million barrels of crude oil were processed in Q1, up 8.2% year on year; 34.82 million tons of refined oil were produced, up 9.8% year on year; 2.27 million tons of ethylene were produced, up 13.5% year on year; and the commercial volume of chemical products was 9.98 million tons, up 16.7% year on year. The refining, chemical and new materials business achieved operating profit of 8.115 billion yuan, a year-on-year decrease of 4.2%. Among them, the refining business achieved operating profit of 6.97 billion yuan, a year-on-year decrease of 2,426 billion yuan due to the narrowing of the gross profit of refined products; due to increased sales of chemical products and Guangdong Petrochemical's loss and profit increase, the operating profit of the chemical business was 1,145 billion yuan, which turned a loss into a profit, with a year-on-year increase of 2,071 billion yuan.
Sales volume increased and imported gas costs decreased, and the profitability of the natural gas sales business increased dramatically. The natural gas sales business continues to optimize the imported gas resource pool structure, effectively control procurement costs, vigorously develop high-end and efficient markets, strive to increase the sales ratio of direct supply direct sales customers and terminal markets, and continuously improve sales volume and efficiency. In Q1 2024, sales of natural gas were 83.369 billion cubic meters, up 14.2% year on year, and sales of 67.102 billion cubic meters of natural gas in China were up 7.5% year on year. Mainly due to increased natural gas sales and lower procurement costs of imported gas, the natural gas sales business achieved operating profit of RMB 12.316 billion, an increase of RMB 2.180 billion over the previous year.
Focus on shareholder returns, and there is still room for repair in valuations. In 2023, the company plans to distribute a final tax-inclusive cash dividend of 0.23 yuan/share, plus a mid-term dividend plan of 0.44 yuan/share for the whole year. The corresponding cash dividend ratio is 50%, with a total dividend of about 80.529 billion yuan, a record high. Since this year, in the energy sector of central state-owned enterprises represented by three barrels of oil, stock prices and corporate valuations have increased markedly in the context of ensuring energy security and the transformation of new energy sources. However, in comparison with domestic non-state-owned enterprises in the same industry and overseas enterprises in the same industry, the current valuation is still relatively low. As the profitability gap between central state-owned enterprises represented by three barrels of oil gradually narrows, the valuations of leading central state-owned enterprises such as CNPC still have significant prospects of improving, and valuations may continue to be repaired.
The company's 2024-2026EPS is expected to be 0.99 yuan, 1.04 yuan, and 1.12 yuan, respectively. The PE corresponding to the closing price on April 30, 2024 was 10.39X, 9.91X, and 9.16X, respectively, maintaining a “buy” rating.
Risk warning
1. The sharp drop in international oil prices;
2. Geopolitical risks.