According to the Futu Securities app, Zhongtai Securities has released a research report stating that in the first half of 2024, the international oil price overall remains in a relatively strong and stable high position, providing support for the chemical industry, with a slowdown in capital expenditure. Under the background of national energy security and controllability, the three major oil companies have continued to promote increased reserves and production in a high oil price environment in the first half of the year, with outstanding performance and long-term focus on shareholder returns. The growth rate of the polyester filament industry has significantly slowed down. Considering the shutdown/reduction and elimination of some units, the actual growth rate of new production has declined, and the overall industry capacity may have already peaked. In addition, the fixed price policy for polyester filaments guarantees profit. Since May 23, the leading polyester filament companies have significantly increased the processing fees and initiated a new round of production restrictions to maintain prices, resulting in a significant increase in polyester filament price differentials.

The performance is closely related to the high oil price and has performed well overall in the first half of 2024. In the first half of 2024, the international oil price remained relatively strong and stable, with average prices of WTI crude oil and Brent crude oil at 78.74 and 83.42 USD/barrel, respectively, +5.3% and +4.4% year-on-year. In terms of sector index performance, the 2024H1 Petroleum and Chemical Industry Index increased by 7.1%. Looking at the sub-industries, using the third-level classification standard of the Shenzhen Stock Exchange, in the first half of 2024, the refining and chemical industry, oilfield services, oil & gas and refining trade, other petrochemicals, and oil product trade industries increased or decreased by approximately +11.4%, +10.4%, -8.1%, -8.5%, and -16.4%, respectively. In the second quarter of 2024, other petrochemicals, refining and chemical, oilfield services, oil & gas and refining trade, and oil product trade Shenzhen Stock Exchange composite indexes changed by approximately +1.2%, -2.7%, -5.5%, -10.7%, and -12.1%, respectively.

High oil prices support the industry's prosperity, while capital expenditures have slowed down. In the first half of 2024, the operating income, net profit attributable to the mother, and non-net profit attributable to the mother of the petroleum and chemical industry were 4.1 trillion yuan, 218.9 billion yuan, and 2195.5 billion yuan, respectively, +2.5%, +11.1%, and +13.0% year-on-year. The industry's gross margin, net margin, and ROE in the first half of the year were approximately 19.0%, 5.8%, and 6.0%, respectively, +0.8pct, +0.6pct, and +0.1pct year-on-year. In the second quarter of 2024, the operating income, net profit attributable to the mother, and non-net profit attributable to the mother were 2 trillion yuan, 107.7 billion yuan, and 1095.8 billion yuan, respectively, -0.6%, +11.8%, and +15.2% year-on-year; the gross margin, net margin, and ROE for the quarter were approximately 19.1%, 5.7%, and 2.9%, respectively, +0.8pct, +0.6pct, and +0.1pct year-on-year.

In terms of ongoing projects and fixed assets, as of the end of the first half of 2024, the industry's ongoing projects and fixed assets totaled 565.38 billion yuan and 19 trillion yuan, respectively, -2.1% and +6.5% year-on-year. Looking at the trend, the year-on-year growth of ongoing projects has been negative for seven consecutive quarters since the fourth quarter of 2022, while the year-on-year growth rate of fixed assets has been declining for five consecutive quarters on a quarter-on-quarter basis. In terms of capital expenditures, the industry's cumulative capital expenditures in the first half of 2024 were 289.27 billion yuan, -10.3% year-on-year. The industry's capital expenditures in the second quarter of 2024 were 137.93 billion yuan, -23.7% year-on-year. This is the first time that the industry's total capital expenditures have shown negative growth year-on-year since the fourth quarter of 2022.

Geopolitics and supply and demand tensions have led to a relatively strong and stable oil price in the first half of the year. Looking back at the oil price trend in the first half of 2024, with the weakening of market expectations for a global economic recession at the beginning of the year and the high solidarity of the actual production reduction by OPEC+, oil prices entered an upward channel from the beginning of the year. With the continued geopolitical tensions in places like Israel, Palestine, and Russia and Ukraine, as well as the catalyzing effect of the Fed's interest rate cut expectations, by early April, the WTI and Brent oil prices hit the year's high of 86.91 and 91.17 USD/barrel. Afterward, with the easing of geopolitical tensions and the successive entry of refineries in the northern hemisphere into the maintenance period, the demand weakened and oil prices began to gradually decline from the peak.

According to the content of the OPEC+ meeting in June, the new round of production cuts is carried out in two aspects: 1) The additional production cut of 1.65 million barrels/day announced in April 2023 has been extended to December 2025; 2) The additional production cut of 2.2 million barrels/day announced in November 2023 has been extended to the end of September 2024, after which it will gradually increase production according to the plan. On September 5th, OPEC announced that the increase in production would be extended for an additional 2 months. Overall, OPEC's support for global oil supply has weakened to some extent. On the demand side, affected by the increase in the penetration rate of new energy vehicles and LNG heavy trucks, the demand for gasoline and diesel is expected to decrease, with the incremental demand for crude oil mainly coming from the chemical and aviation coal industries. According to the IEA's forecast, global crude oil demand is expected to reach 103 million barrels/day in 2024, an increase of 0.97 million barrels/day year-on-year.

The three major oil companies focus on increasing reserves, production and lean management, and have long-term attention to shareholder returns. Against the background of national energy security and independent controllability, the three major oil companies continued to advance the increase in reserves and production in the first half of 2024 in a high oil price environment. PetroChina, Sinopec, and CNOOC achieved year-on-year production increases of +1.3%, +3.1%, and +9.3% respectively. With Brent crude oil prices up by +4.4% year-on-year, the crude oil prices of various companies in the first half of the year increased by +4.5%, +5.6%, and +9.2% respectively, showing outstanding performance in upstream operations. In terms of capital expenditure, in the first half of 2024, PetroChina, Sinopec, and CNOOC's capital expenditures were 78.94 billion yuan, 55.9 billion yuan, and 63.1 billion yuan, with year-on-year changes of -7.3%, -25.2%, and +11.7%.

In addition, as the vanguard of the reform of central enterprises, the three major oil companies have long-term attention to shareholder returns. In the first half of 2024, PetroChina, Sinopec, and CNOOC respectively distributed mid-term dividends of 0.22 yuan/share, 0.146 yuan/share, and 0.74 Hong Kong dollars/share (including tax), with dividend ratios of approximately 45.4%, 49.8%, and 40.3% respectively. Using the dividend ratio of the three major oil companies at the end of 2023 as a baseline, the expected dividend yields of the three companies on September 10, 2024 were approximately 5.9%, 6.1%, and 5.2% based on their market values. In terms of performance, in the first half of 2024, PetroChina, Sinopec, and CNOOC had revenues of 1553.9 billion yuan, 1576.1 billion yuan, and 226.8 billion yuan, with year-on-year changes of +5.0%, -1.1%, and +18.1%; net incomes attributable to the parent companies were 88.6 billion yuan, 35.7 billion yuan, and 79.7 billion yuan, with year-on-year changes of +3.9%, +1.7%, and +25.0%; non-recurring net profits attributable to the parent companies were 91.6 billion yuan, 35.6 billion yuan, and 79.2 billion yuan, with year-on-year changes of +4.8%, +5.7%, and +27.1%.

Polyester filament: Fixed pricing policy guarantees profitability, and leading companies' performance is outstanding. 1) Industry expansion tends to be rational: In 2023, net added production capacity of domestic filament was 3.97 million tons, with a total annual filament production capacity of 54.25 million tons, up by +7.9% year-on-year, and a production capacity CAGR of approximately 5.8% from 2019 to 2023. The industry growth rate significantly slowed in 2024, with an expected increase of only about 0.95 million tons in the industry, according to statistics from Zhongtai Securities. Considering the shutdown/reduction and elimination of some facilities, the actual growth of new production capacity may be even lower, and the overall capacity of the industry may have peaked. 2) Fixed pricing policy safeguards profitability: Since May 23, after the leading filament companies anchored the processing fees and significantly raised prices, the price differentials for filaments have increased significantly. By the end of the second quarter of 2024, prices for POY, FDY, and DTY were up by +470, +170, and +220 yuan/ton respectively since May 23. In terms of performance, in the first half of 2024, Tongkun Group and Xinfengming achieved revenues of 48.21 billion and 31.27 billion yuan respectively, up by +30.7% and +11.0%, and net profits attributable to the parent companies were 1.07 billion and 0.60 billion yuan, up by +911.4% and +26.2%.

Risk warning: Macroeconomic fluctuations, geopolitical factors, significant fluctuations in oil prices, discrepancies between data and actual conditions, lower-than-expected demand, and outdated third-party data information updates.