上海石化(600688):原油价格振荡回落 需求回暖支撑炼厂利润

Shanghai Petrochemical (600688): Crude oil prices fluctuate and demand recovers to support refinery profits

西南證券 ·  03/30  · Researches

Incident: Shanghai Petrochemical released its 2022 annual report. Crude oil prices rose sharply in 2022, market demand was weak, and the company's performance declined significantly due to the impact of the epidemic and the company's equipment accident. The company achieved revenue of 82.52 billion yuan for the whole year, a decrease of 7.6% over the previous year, and the net profit of the mother was -2.87 billion yuan, a decrease of 243.6% over the previous year.

Crude oil prices are running high, and processing costs have risen sharply. Under the influence of the epidemic and the company's equipment accident, the company processed a total of 104.45 million tons of crude oil in 2022, a year-on-year decrease of 24.1%; while international crude oil prices rose sharply under the influence of multiple factors. In 2022, the company's crude oil processing cost was 4682.5 yuan/ton, up 1450.2 yuan/ton from the same period last year, an increase of 44.9%. The total cost of crude oil processing for the whole year increased 3.96 billion yuan (+9.2%) over the same period last year.

Market demand is weak, prices of petroleum and petrochemical products have risen less than crude oil prices, and gross profit has declined. In 2022, the sales volume of the company's synthetic fiber products was 22,000 tons, a sharp decrease of 78% over the previous year, and net sales were 410 million yuan, a decrease of 70%; the average sales price of resins and plastics rose 3.6%, while sales fell 29.1%, and net sales fell 26.5% to 7.32 billion yuan; the price of intermediate petrochemical products rose 14% year on year, sales fell 11.4%, net sales were 10.54 billion yuan, a slight decrease of 2.3% over the previous year; net sales of petroleum products fell 1.1% to 41.44 billion yuan, of which the sales price increased 31.9% year on year. Sales volume fell 30.1% year over year.

Crude oil prices have fluctuated and declined, and demand recovery is expected to support refinery profits. Since 2023, the downside risk of the global economy has increased, which has had a negative impact on crude oil consumption demand, and international crude oil prices have weakened. At the same time, the price of crude oil exported by Russia fell due to sanctions, the proportion of Russian crude oil imported by China increased, the cost of raw materials fell, and profits were transferred to refineries. The export quota for the first batch of refined oil products was issued in 2023 to 18.99 million tons, up 46.1% year on year. China's refined oil export trend is improving. The release of the epidemic in China will support the price of refined oil products from the demand side, and refinery profits can be expected. In December 2022, China's epidemic prevention and control policy was continuously adjusted, epidemic control was liberalized, and China's economy will gradually recover. In the future, residents' travel will resume. Diesel is used as an important industrial fuel, and gasoline and kerosene are used as fuel for means of transportation, and the recovery in consumer demand is expected to support the price of refined oil products.

Profit forecasts and investment recommendations. The company's revenue for 2023-2025 is estimated to be 861.7 billion, 878.5 billion and 909.3 billion yuan respectively, and net profit of the mother is 800, 15.2 and 1.99 billion yuan respectively. Combining the valuations of comparable companies with the current business layout and pace of operation of Shanghai Petrochemical, the company was given 1.6 times PB in 2023, with a corresponding target price of 4.06 yuan, covering the “buy” rating for the first time.

Risk warning: sharp rise in crude oil prices, macroeconomic fluctuations, petrochemical product sales falling short of expectations, risk of safety accidents, etc.

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