Net profit to mother increased 4.7% year over year, and the results were in line with expectations. In the first quarter of 2024, the company achieved revenue of 812.18 billion yuan (+10.9% YoY, +11.4%), net profit of 45.68 billion yuan (YoY +4.7%, +54.9% YoY), net profit of 45.79 billion yuan (+3.8% YoY, -12.9% YoY), net cash flow from operating activities of 111.08 billion yuan (-12.1% YoY, -3.9% YoY), mainly due to increased domestic sales of refined oil products, natural gas, chemicals, etc.
Oil and gas and new energy sector: Oil and gas production is growing steadily, and the results of cost reduction and efficiency are gradually showing. In the first quarter of 2024, the company achieved oil and gas production of 463.5 million barrels of oil equivalent (+2.6% year over year), of which crude oil production was 239.6 million barrels (+1.4% year over year), natural gas production was 1.34 trillion cubic feet (+3.9% year over year), the average realized crude oil price was 75.4 US dollars/barrel (-0.8% year over year), and the unit oil and gas operating cost was 10.38 US dollars/barrel (-1.8% YoY). The oil and gas and new energy sector achieved operating profit of 42.97 billion yuan (+4.8% year-on-year), mainly due to increased domestic natural gas production and sales, and continuous strengthening of cost control.
Refining and New Materials Sector: Product structure transformation and adjustment, chemical business turned losses into profits. In the first quarter of 2024, the company processed 353.8 million barrels of crude oil (+8.2% year over year), produced 30.82 million tons of refined oil products (+9.8% year over year), and commercialized 9.98 million tons of chemical products (+16.7% year over year). The company adheres to market demand as the guide and vigorously develops high-efficiency products with refining characteristics and new chemical products and materials. The operating profit of the sector was 8.12 billion yuan (-4.2% YoY), of which the refining business operating profit was 6.97 billion yuan (-25.8% YoY), and the chemical business reversed losses to achieve operating profit of 1.15 billion yuan, an increase of 2.07 billion yuan over the previous year.
Sales sector: Demand in the refined oil market is growing steadily, and international trade business profits have declined. In the first quarter of 2024, the company achieved sales of 39.258 million tons of refined oil products (+4.5% year over year), and its sales volume in China was 28.545 million tons (+4.6% year over year). The company continued to increase its marketing efforts, and the sales sector achieved operating profit of 6.76 billion yuan (-17.1% year-on-year). The decline in performance was mainly due to a decrease in international trade business profits.
Natural gas sales sector: Demand for natural gas continues to grow, and sector performance is growing steadily. In the first quarter of 2024, the company sold 83.37 billion cubic meters of natural gas (+14.2% year over year), and sold 67.10 billion cubic meters of natural gas in China (+7.5% year over year). The average domestic gas sales price was 9.38 US dollars/1000 cubic feet, which was basically the same as the same period last year. The company continued to optimize the imported gas resource pool structure to effectively control procurement costs, and the natural gas sales sector achieved operating profit of 12.32 billion yuan (+21.5% over the same period last year).
Risk warning: Risk of large fluctuations in oil prices; demand recovery falling short of expectations; domestic gas price rise falling short of expectations.
Investment advice: Maintain profit forecasts. The company's net profit for 2024-2026 is estimated to be 1735/1863/2029 billion yuan, diluted EPS of 0.95/1.02/1.11 yuan, 10.8/10.0/9.2x for current A shares and 7.1/6.6/6.1x for H shares, maintaining a “buy” rating.