occurrences

CNPC released its results report for the third quarter of 2024 on October 29, 2024. In the first three quarters of 2024, the company achieved operating income of 2256.279 billion yuan, a year-on-year decrease of 1.13%, and realized net profit to mother of 132.522 billion yuan, an increase of 0.66% over the previous year. Among them, 2024Q3 achieved operating income of 702.41 billion yuan, a year-on-year decrease of 12.45%, a year-on-month decrease of 5.30%, and realized net profit of 43.911 billion yuan, a year-on-year decrease of 5.31% and an increase of 2.29% month-on-month.

Q3 Oil prices fell month-on-month, and performance remained steady

The average settlement price of 2024Q3 Brent crude oil futures was 78.71 US dollars/barrel, down 8.40% year on year and 7.43% month on month. In the first three quarters of 2024, the company's crude oil production was 0.708 billion barrels, up 0.3% year on year; natural gas production was 3.80 trillion cubic feet, up 4.0% year on year. The company continued to insist on increasing storage and production, stabilizing oil and gas growth, and still achieved a 2.29% month-on-month increase in net profit in a single quarter with oil prices falling 7.43% month-on-month in Q3.

Sales of refined oil products remained steady

Consumption demand for refined oil products diverged in the first three quarters of 2024. In January-September, the apparent consumption of diesel/gasoline/kerosene was 0.146 billion tons/0.117 billion tons/0.029 billion tons, respectively, a year-on-year decrease of 3.79%/an increase of 4.71%/12.58%. The company's crude oil processing volume in the first three quarters of 2024 reached 0.14 billion tons, a year-on-year decrease of 0.7%, and diesel/gasoline/kerosene production reached 39.936 million tons/36.439 million tons/13.534 million tons, respectively, a year-on-year decrease of 8.6%/a decrease of 3.5%/an increase of 23.0% year-on-year, respectively. At the same time, the company's total sales volume of refined oil products in the first three quarters of 2024 reached 0.12 billion tons, a year-on-year decrease of 4.6%. The number of gas stations reached 22530. Compared with a decrease of 225 at the end of 2023, the company's refined oil sales continued to be steady.

The peak natural gas season is approaching, and the company's performance is expected to increase

The company continuously optimizes the natural gas resource pool, continuously optimizes market distribution, user structure and sales flow, and strives to enhance the profitability of the sector. The company sold 209.82 billion cubic meters of natural gas in the first three quarters of 2024, an increase of 8.6% over the previous year. The company's performance is expected to improve further after entering the peak gas season.

Profit Forecasts, Valuations, and Ratings

We believe that in the context of central enterprise reform, the improvement of the company's operating indicators can partially hedge against negative fluctuations in crude oil prices, and the company's core competitiveness will continue to be reflected. We expect the company's net profit to be 178.7 billion yuan/185.8 billion yuan/198.6 billion yuan in 2024-2026, corresponding to EPS of 0.98 yuan/1.01 yuan/1.08 yuan, respectively, and the corresponding PE is 8.4X/8.1X/7.6X, maintaining the “buy” rating.

Risk warning: geopolitics disrupting the global crude oil market; risk of price liberalization of refined oil products; risk of sluggish terminal demand; risk of overseas business operations; risk of accidents; risk of exchange rate; force majeure factors.