\u3000\u3000 China Petroleum & Chemical Corporation(600028) (600028)
Event: the company released the performance forecast for 2021. It is estimated that the net profit attributable to the parent company will reach 66.9-72.9 billion yuan in 21 years, with a year-on-year increase of 103% – 122%; In 21q4, the net profit attributable to the parent company was 7-13 billion yuan in a single quarter, with a year-on-year change of – 25% – + 38% and a month-on-month decrease of 37% – 66%.
Comments:
The rise of oil price improved the upstream performance and the company’s oil and gas production continued to increase: in 2021, the international crude oil price continued to fluctuate and rise, China’s macro-economy recovered steadily, the demand for oil and gas products continued to increase, and the company’s profitability increased significantly. The average price of 21-year oil distribution futures was US $70.98/barrel, up 65% year-on-year. Driven by the “seven year action plan” of China’s oil and gas industry, the company continued to promote high-quality exploration and benefit development, made a number of new oil and gas discoveries in Tarim Basin, Sichuan Basin and Inner Mongolia Eerduosi Resources Co.Ltd(600295) basin, and made major breakthroughs in continental shale oil exploration in Bohai Bay, Sichuan and Subei basins. In 21 years, 35.15 million tons of crude oil were produced, with a year-on-year increase of + 0.16%; 33.9 billion cubic meters of natural gas was produced, a year-on-year increase of + 12%. The company’s oil and gas business has made steady progress, with a year-on-year increase in performance in 21 years, reaching a new high in recent ten years.
The epidemic situation improved, the demand continued to pick up, and the boom of downstream chemicals picked up: in 21 years, the epidemic situation was gradually controlled, the demand for petroleum and petrochemical products continued to recover, the boom of downstream chemical products picked up, and the price of the company’s main chemicals rose sharply. In 21 years, the average prices of naphtha, PX, ethylene, polyester POY, polyethylene and synthetic rubber in China were 6761 yuan / ton, 6599 yuan / ton, 7078 yuan / ton, 7432 yuan / ton, 8549 yuan / ton and 12270 yuan / ton respectively, with a year-on-year increase of + 33%, + 47%, + 40%, + 30%, + 19% and + 15% respectively. The price of downstream chemicals rose sharply. At the same time, the company continued to strengthen cost control and effectively control operating costs. The gross profit margin of the chemical sector rose, which helped the company’s performance increase significantly in 21 years.
Adhere to the direction of “oil conversion” and increase the size of fine chemical industry: the company adheres to the direction of “oil conversion” and “oil to special”. In 21 years, the company processed 255 million tons of crude oil, with a year-on-year increase of + 8%, and produced 65.21 million tons, 59.85 million tons and 21.15 million tons of steam, diesel and kerosene respectively, with a year-on-year increase of + 12.61%, – 5.32% and + 3.78% respectively. The company accelerated the construction of a world-class refining and chemical base, and the first phase of Zhenhai base and Gulei Petrochemical were completed as scheduled. At the same time, the company actively increased the production of high value-added products and special products, built 6 sets of hydrogen purification units, and successfully developed high-end needle coke products. The domestic market share of low sulfur ship fuel ranked first. In terms of chemical industry, the company strengthened structural adjustment and vigorously developed new products. In 21 years, the company produced 13.38 million tons, 19 million tons, 1.36 million tons and 1.25 million tons of ethylene, synthetic resin, synthetic rubber and synthetic fiber, with a year-on-year increase of + 11%, + 9%, + 3% and + 17% respectively. The company’s ethylene equity production capacity rose to the third place in the world, and the proportion of three major synthetic materials and fine chemical high value-added products continued to increase. On November 30, 2001, the company issued the announcement of related party transactions. Yizheng Chemical fiber, a wholly-owned subsidiary of the company, plans to purchase PBT, PBAT, PET polyester film and other businesses of Yizheng branch held by Sinopec Group asset company for 1.14 billion yuan, and continue to overweight the fine chemical sector.
Layout new energy and actively promote energy transformation: under the goal of “double carbon”, the company has made greater efforts to layout new energy business. On December 1, 2001, China Petroleum & Chemical Corporation(600028) and Petrochina Company Limited(601857) signed a strategic cooperation framework agreement. The two sides jointly undertake the important task of national oil and gas security, and take the signing of the agreement as an opportunity to comprehensively deepen cooperation in oil and gas business, new energy, informatization and digitization. The signing of this agreement shows that China Petroleum & Chemical Corporation(600028) and Petrochina Company Limited(601857) are determined to actively embrace carbon neutrality and accelerate the transformation to new energy fields such as hydrogen energy and photovoltaic by relying on capital and technological advantages, among which hydrogen energy field is the key field for the transformation of oil and gas enterprises. The company accelerated its transformation to a comprehensive energy service provider of “oil, gas, hydrogen and electricity services”, and started the construction of China’s first 10000 ton photovoltaic green hydrogen demonstration project in Kuqa, Xinjiang. This project is the world’s largest photovoltaic green hydrogen production project, which can produce 20000 tons of green hydrogen per year after the project is put into operation; A number of refining and chemical hydrogen supply centers have been built with high quality, and 74 hydrogenation stations, more than 1000 charging and exchange stations and more than 1000 distributed photovoltaic power generation stations have been built. The company’s green and low-carbon transformation route is clear, and its development in the field of new energy can be expected in the future.
Profit forecast, valuation and rating: we maintain the profit forecast of the company. It is estimated that the net profit attributable to the parent company from 2021 to 2023 will be 71.6/734/75.4 billion yuan respectively, equivalent to EPS of 0.59/0.61/0.62 yuan / share respectively, and maintain the “buy” rating of A-Shares and H shares.
Risk tip: there is a significant downward risk in crude oil price and a downward risk in the prosperity of oil refining and chemical industry.
