\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 028 China Petroleum & Chemical Corporation(600028) )
Event: on March 27, 2022, the company released its 2021 annual report. In 2021, it achieved a revenue of 274088 billion yuan, a year-on-year increase of 30.2%; The net profit attributable to the parent company was 71.21 billion yuan, a year-on-year increase of 114.0%; The net profit of non parent company deduction was 72.22 billion yuan, turning losses into profits year-on-year.
Affected by impairment, 2021q4 fell month on month. According to the announcement, the net profit attributable to the parent company of 2021q4 was RMB 11.32 billion, a year-on-year increase of 15.8% and a month on month decrease of 45.4%. In 2021, the company’s provision for impairment totaled 15.69 billion yuan, mainly including 9.42 billion yuan for impairment of fixed assets, 3.15 billion yuan for inventory depreciation and 2.46 billion yuan for bad debts. The impairment affected the release of the company’s performance.
All businesses grew steadily and are expected to continue to benefit from the continued high oil prices. In terms of exploration and development, the company’s crude oil output in 2021 was 279.8 million barrels, unchanged year-on-year; Natural gas production was 11994 billion cubic feet, a year-on-year increase of 11.9%. In terms of oil refining, 260 million tons of crude oil were processed throughout the year, with a year-on-year increase of 7.8%. In terms of marketing and distribution, the annual sales volume of refined oil was 220 million tons, a year-on-year increase of 2.0%. In terms of chemical industry, the annual ethylene output was 13.38 million tons, a year-on-year increase of 10.9%. In terms of output in 2022, the company expects to produce 281.2 million barrels of oil in the whole year; Production of natural gas 12567 cubic feet; The annual processing of crude oil was 260 million tons; The annual production of ethylene was 15.25 million tons. We believe that the price center of crude oil and natural gas may continue to rise in 2022, and the company’s performance is expected to continue to benefit.
The company plans to pay a dividend of 0.31 yuan / share, with a dividend rate of 11.0%, highlighting the investment value. According to the announcement, the company plans to distribute a cash dividend of 0.31 yuan per share to all shareholders. With the cash dividend of 0.16 yuan per share distributed in the middle of 2021, the annual share profit reaches 0.47 yuan per share (including tax). The proportion of the company’s cash dividend in 2021 is 79.9%. Based on the closing price on March 28, 2022, the dividend rate of A-Shares reached 11.0%, and the high dividend highlighted the investment value of the company.
The steady growth of capital expenditure supported the improvement of the company’s oil and gas production. The company’s capital expenditure in 2021 was 167.9 billion yuan, and the planned capital expenditure in 2022 was 19.0 billion yuan, with a year-on-year increase of 15.2%. It will mainly invest in oil and gas exploration and development, natural gas production, supply, storage and marketing, oil refining structure adjustment, refining and chemical base construction and chemical high-end materials.
With the active layout of new energy and the vigorous development of fine chemicals, the company’s valuation is expected to improve. On the one hand, the company actively promotes the construction of “oil, gas, hydrogen and electricity service” comprehensive refueling stations, and plans to build a total of 1000 hydrogenation stations and more than 5000 charging and replacement power stations by 2025 to transform to new energy. On the other hand, the company strengthened the research and development of high-end products and new materials, increased the output of high value-added products such as metallocene polyolefin and carbon fiber, increased the proportion of synthetic resin, synthetic rubber, synthetic fiber and fine chemicals, and improved the competitiveness of the company.
Investment suggestion: Based on the company’s performance in 2021 and the trend of 22q1 international oil price, we raised the net profit attributable to the parent company from 2022 to 2024 to 83 / 865 / 868 billion yuan, and the PE corresponding to the closing price on March 28, 2022 was 6 / 6 / 6 times. Considering the improvement of profitability of stock business caused by high oil price and the company’s layout in the field of new energy, we maintained the “recommended” rating.
Risk warning: the risk of crude oil price falling or fluctuating; Risk of falling prices of major petrochemical products; The risk that the construction rhythm of hydrogenation station and exchange station is not as fast as planned.
