\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 857 Petrochina Company Limited(601857) )
Event:
On March 31, 2021, the company released its annual report for 2021. In the past 21 years, the company achieved an operating revenue of 2.61 trillion yuan, a year-on-year increase of + 35%; The net profit attributable to the parent company was 92.2 billion yuan, a year-on-year increase of + 385%. Among them, Q4 achieved a revenue of 734 billion yuan in a single quarter, a year-on-year increase of + 45% and a month on month increase of + 7%; The net profit attributable to the parent company was 17 billion yuan, up + 91% year-on-year and – 23% month on month.
Comments:
I. The high prosperity of the industry has boosted the performance to a seven-year high
1. Upstream: the rising oil and gas prices have improved the company’s upstream performance, and the natural gas production has reached a record high
In 2021, the company’s upstream segment achieved an operating profit of 68.5 billion yuan, a year-on-year high of + 196%, a seven-year high, mainly due to the improvement of global economic recovery, the overall demand of the energy market and the tight supply of oil and gas, resulting in a sharp rise in international oil and gas prices: in 2021, the average price of Brent crude oil futures was 70.94 US dollars / barrel, a year-on-year high of + 64.2%; The crude oil price of the company was USD 65.58/barrel, a year-on-year increase of + 62.6%; The price of natural gas was $7.59/thousand cubic feet, a year-on-year increase of + 58.1%. The company insists on stabilizing oil and increasing gas, and further promotes the stable production of old oilfields and the benefit construction of new areas. China’s oil and gas production has achieved double growth, and the natural gas production has reached a record high. In 2021, the company produced 753.4 million barrels of crude oil in China, a year-on-year increase of + 1.3%; China’s saleable natural gas output was 4.22 trillion cubic feet, a year-on-year increase of + 5.7%, a record high, and the proportion of natural gas output in oil and gas equivalent continued to increase.
2. Refining and chemical industry: reduce oil and increase chemical industry, optimize the product structure, and the output and profit of chemical products hit the best level in history
In 2021, the refining and chemical sector of the company realized an operating profit of 49.74 billion yuan, a year-on-year increase of + 51.5 billion yuan. Among them, the operating profit of oil refining business was 37.7 billion yuan, a year-on-year increase of + 50.5 billion yuan; The operating profit of chemical business was 12 billion yuan, a year-on-year increase of + 9.5%, mainly due to the rising price of refined oil. The company strengthened cost control and realized the continuous decline of unit processing cost under the condition of rising oil price. In 2021, the company processed a total of 1225 million barrels of crude oil, with a year-on-year increase of + 4%, and produced 4939, 4825 and 11.08 million tons of steam, diesel and kerosene, with a year-on-year increase of + 6.72%, – 4.88% and + 10.32% respectively; The company actively promoted oil reduction and increase, with the yield of refined oil decreased by 1.60pct to 65.6% year-on-year, and the yield of chemical products increased by 2pct to 28.3% year-on-year. The company continued to optimize the structure of oil refining products, and the diesel steam ratio decreased by 0.12 to 0.98 year-on-year. The company adheres to the transformation and upgrading of refining and chemical business, maintains the high load operation of key chemical plants such as ethylene, advances the integrated refining and chemical project of Guangdong petrochemical, Tarim and Changqing ethane to ethylene and other key projects in an orderly manner, vigorously strengthens scientific and technological innovation, and actively promotes the research and development of new chemical products and materials. In 2021, the company produced 671, 1090, 1141, 1040 and 2420000 tons of ethylene, resin, fiber, rubber and urea respectively, with a year-on-year increase of + 5.8%, + 6.0%, – 10.3%, + 4.3% and + 12.0% respectively. The company’s commodity volume of chemical products, profit from oil refining business and profit from chemical business all reached the best level in history.
3. Sales: the recovery of demand promotes the recovery of sales profit, and the sales volume of refined oil increases steadily
In 2021, the company achieved an operating profit of 13.2 billion yuan in the sales sector, an increase of 16.1 billion yuan year-on-year, mainly due to the steady improvement of China’s macro economy, the gradual recovery of refined oil demand, the stable supply of refined oil in China and the easing of market oversupply. According to the market changes, the company strengthened the connection between production and marketing, coordinated and optimized the flow of resources, strengthened the inventory management of refined oil, and realized the steady growth of refined oil sales: in 2021, the company sold 6598, 81.73 and 15.6 million tons of steam, diesel and kerosene respectively, with a year-on-year increase of – 0.16%, + 1.15% and + 8.70% respectively. In addition, we actively innovated the business model, accelerated the promotion and application of direct selling and wholesale app, flexibly adjusted the gasoline and diesel sales strategy, and the first batch of commercial intelligent refueling Siasun Robot&Automation Co.Ltd(300024) went on duty to continuously improve the quality and efficiency of retail business. Strengthen the development of gas stations in advantageous markets and efficient areas, and increase the number of operating gas stations by 181 to 22800.
4. Natural gas and pipeline: China’s natural gas demand has increased rapidly, and the company’s natural gas sales have increased
In 2021, the company realized an operating profit of 43.9 billion yuan in the natural gas and pipeline sector, a year-on-year decrease of 39.3%, mainly due to the decline in the profit of the natural gas sector due to the reduction in the income from pipeline asset restructuring in 2021 compared with that in 2020. In 2021, the company’s imported natural gas business lost 7.212 billion yuan, a year-on-year decrease of 6.947 billion yuan. The company seizes the favorable opportunity of China’s stable economic growth and market demand recovery, actively develops direct sales and end customers, continuously improves service quality and strives to increase sales; Vigorously strengthen the cost control of natural gas procurement and continuously improve the sales efficiency. In 2021, the company sold 274 billion cubic meters of natural gas, a year-on-year increase of 10.1%.
II. Capital expenditure has increased steadily, and the upstream exploration has been continuously strengthened in 22 years
From 2016 to 2019, the company’s capital expenditure increased steadily, from 172.4 billion yuan in 2016 to 296.8 billion yuan in 2019, of which the capital expenditure of exploration and production increased by 17.3% year-on-year to 230.1 billion yuan in 2019. From 2014 to 2019, the capital expenditure of PetroChina’s upstream exploration and production sector accounted for about three quarters of the total capital expenditure, accounting for the largest proportion. From 2017 to 2019, the proportion of capital expenditure in the upstream exploration and production sector increased steadily. In 2020, the international oil price fell to a low point, and the capital expenditure of overseas oil and gas giants decreased by nearly 30%. The company overcame the difficulties of the industry downturn and controlled the decline of capital expenditure to 17%.
In 2021, the company adheres to rigorous investment, precise investment and benefit investment, continuously improves the level of investment management, continuously optimizes the investment structure and strives to improve the investment efficiency. The annual capital expenditure was 251.2 billion yuan, a year-on-year increase of + 1.9%. The capital expenditure of upstream, refining, sales, natural gas and pipeline was 178.3 billion yuan, 54.5 billion yuan, 11.0 billion yuan and 6.7 billion yuan respectively, a year-on-year increase of – 4%, + 150%, – 33% and – 68% respectively. In 2022, the company’s planned capital expenditure was 242 billion yuan, with a year-on-year increase of – 4%. The planned capital expenditure of upstream, refining, sales, natural gas and pipeline was 181.2 billion yuan, 44.5 billion yuan, 7.5 billion yuan and 8 billion yuan respectively, with a year-on-year increase of + 2%, – 18%, – 32% and + 19% respectively. The company’s total capital expenditure increased steadily in 2021, and the upstream capital expenditure continued to grow in 2022, which will lay a solid foundation for the growth of the company’s product output and the improvement of profitability.
III. remarkable achievements have been made in increasing reserves and production, and crude oil reserves have increased significantly
The company continued to respond to the national call for “increasing reserves and increasing production”. China’s exploration and development business promoted centralized exploration, fine exploration and efficient evaluation in key basins and key areas, made a number of strategic breakthroughs and important exploration achievements in Sichuan, Inner Mongolia Eerduosi Resources Co.Ltd(600295) , Junggar, Tarim and other basins, and discovered and implemented large-scale reserves such as Chang 7 shale oil in Inner Mongolia Eerduosi Resources Co.Ltd(600295) Qingcheng area and natural gas in Central Sichuan and Taiwan.
Since 2016, the company’s new recoverable reserves have increased continuously. In 2021, the company made every effort to promote efficient exploration and increase oil and gas reserves and production, and made a number of major breakthroughs and important discoveries in key basins such as Inner Mongolia Eerduosi Resources Co.Ltd(600295) , Tarim, Junggar and Sichuan. The replacement rate of oil and gas reserves in China is 147%, and the replacement rate of Central Plains oil reserves is 221%, a record high.
In 2021, the new crude oil reserves reached 1.745 billion barrels, and the proven crude oil reserves reached 6.06 billion barrels, a significant increase of 16.5% year-on-year; The total new oil and gas reserves were 2.229 billion barrels equivalent, and the total oil and gas reserves reached 18.55 billion barrels equivalent, a year-on-year increase of 3.4%. The company’s crude oil reserves have increased significantly, and the reserve replacement rate remains healthy, which has become the foundation for further improvement of production in the future.
IV. with the advent of the era of high oil prices, the upstream of the company is expected to benefit significantly
In 2022, the global crude oil demand will resume superposition, the production increase will be slow, the supply and demand pattern will be tight, and the oil price will remain high under the influence of Geopolitics; Insufficient capital expenditure limits the long-term increase of global crude oil production, and increases the risk premium of crude oil by superimposing geopolitical instability factors. We believe that the era of high oil prices is officially coming, and the high outlook of crude oil will continue.
PetroChina has large-scale upstream assets and business, which will fully benefit from the high boom of crude oil. According to the calculation of “three barrels of oil” performance elasticity in the era of high oil prices – Calculation of “three barrels of oil” profit elasticity in a series of reports on energy structure transformation released by us on March 27, PetroChina’s upstream business began to make profits gradually after the oil distribution price exceeded US $50 / barrel. Under the oil distribution price of US $100 / barrel, the company’s upstream net profit could reach 165.8 billion yuan; In terms of marginal profit, when the oil price is in the range of $70-80 / barrel, the marginal net profit elasticity of the company is about 3.2 billion yuan, while when the oil price is higher than $100 / barrel, the marginal net profit elasticity of the company will stabilize at 2.4 billion yuan.
V. implement the “double carbon” goal and accelerate the green and low-carbon transformation
Under the strategic goal of carbon peak and carbon neutralization, the company actively implements the “double carbon” goal and accelerates the green and low-carbon transformation. The company plans to vigorously deploy the hydrogen energy industry chain, clean transformation of fossil energy and CCS / CCUs by 2025 to explore the clean development and utilization of fossil energy at a lower cost.
In terms of hydrogen energy, in 2021, the total capacity of Petrochina Company Limited(601857) hydrogen has exceeded 2.6 million tons / year. At present, the company has built 8 hydrogenation stations, 6 replacement stations and 3 comprehensive energy service stations in Beijing, Hebei and Chongqing, and deployed 19 hydrogen purification projects in 7 regions such as Bohai rim and Shaanxi Gansu Ningxia, so as to give full play to the existing hydrogen production capacity and the combination of by-product hydrogen resources and carbon dioxide capture and utilization, so as to realize the supply of “blue hydrogen”. The company gives full play to its basic advantages in the field of chemistry, chemical industry and new materials, constructs diversified hydrogen supply such as “blue hydrogen” and “green hydrogen”, carries out the mutual transformation of hydrogen electricity and electricity hydrogen, and establishes a supply chain for hydrogen storage, transportation and terminal filling. Adhere to the three-step strategic layout of “low-cost and efficient development of hydrogen storage and transportation”, and actively promote the development of hydrogen storage and transportation system in accordance with the “three-step and three-step” strategic layout.
In terms of photovoltaic, the 200000 kW photovoltaic power generation project in Yumen was completed and put into operation in 2021, realizing a breakthrough of zero external clean power supply. The company built China’s first BIPV photovoltaic power generation oil-gas joint construction station in Ningxia. Compared with the traditional bapv photovoltaic power generation mode, it has high efficiency, long service life and low cost. There are 12 pumping stations in Tarim Oilfield to build Cecep Solar Energy Co.Ltd(000591) photovoltaic power generation irrigation demonstration station to replace diesel power generation irrigation. At present, the company is building the Cecep Solar Energy Co.Ltd(000591) utilization project of Tazhong desert highway. After completion, it will realize the full coverage of photoelectric pumping irrigation of 436km desert highway. By the end of the 21st century, the company had added 200000 kilowatts of photovoltaic installed capacity, and 117 gas stations had carried out charging business and 91 gas stations had carried out photovoltaic power generation business. In terms of CCUs, a number of wind power generation projects and CCUs projects in Jilin and Daqing are advancing steadily. The company has significant resources and technical advantages in the development of CCUs industry, and has the largest number and scale of ccus-eor industrial projects in China. Among them, carbon dioxide flooding in Jilin oilfield is the first full process demonstration project in China, and the cumulative storage of carbon dioxide has exceeded 2 million tons; Xinjiang CCUs center led by the company is one of the first five CCUs industry promotion centers deployed by the oil and gas industry climate initiative organization in the world,
The scheme design of phase I with CCUs capacity of 1 million tons / year has passed the expert demonstration, and the capacity of phase II will reach 3 million tons / year.
Earnings forecast, valuation and rating
Since the beginning of 2022, under the background of tight crude oil supply and demand pattern, the conflict between Russia and Ukraine has continued to escalate, resulting in the continuous rise of crude oil price. As of March 30, 2022, Brent crude oil futures price has risen to US $113.45/barrel. We believe that the company’s crude oil output continues to grow due to the superposition of high oil prices, and the company’s upstream business is expected to fully benefit from high oil prices. For the sake of geopolitical conflict, the net profit of the parent company is expected to be 105.4 billion yuan in 2024 and 999.2 billion yuan in 2024, but the profit of the parent company is expected to remain conservative in 2024, taking into account the geopolitical conflict of the parent company, which is expected to be 105.4 billion yuan in 2024 and 999.4 billion yuan in 2024. The company is the leader of China’s oil and gas production. It will steadily increase upstream capital expenditure, vigorously promote the increase of reserves and production, and layout the new energy industry chain. It is expected to fully benefit from the high boom of the crude oil industry and maintain the “buy” rating of the company’s a + 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.
