Sinopec (600028) Interim Review: Vigorously enhance oil and gas exploration and development efforts The upstream sector turned losses into profits
Event description The company released its semi-annual report for 2019, and the company achieved operating income of 14,989 in the first half of the year.
96 ppm, an increase of 15 in ten years.
29%, realizing net profit attributable to shareholders of the parent company 313.
38 ‰, a decrease of 24 per year.
67%, net profit 304 after deduction to mother.
51 ‰, a decrease of 23 per year.
Mainly due to the impact of the company’s refinery, chemical and other major products gross margin narrowing.
Among them, Q2 single quarter realized operating income of 7814.
17 ppm, an increase of 15 in ten years.
08%, an increase of 8 from the previous month.
9%, net profit attributable to mother is 165.
75 ppm, a reduction of 27 per year.
4%, an increase of 12 from the previous month.
Comment on the event The upstream sector turned losses into profits, increasing crude oil procurement costs and fierce market competition dragged down the performance of the refining, marketing and distribution, and chemical sectors.
From the perspective of the molecular sector, the operating profit of the company’s exploration and development segment in the first half of 2019 was 6.2 billion yuan, turning losses into profits.
Mainly due to the development of fine flour, efforts to increase natural gas production, strengthen cost control, and effectively improved profitability.
The operating profit of the refining segment was 19.1 billion US dollars, a year-on-year decrease of 51.
Refining gross profit was 383 yuan / ton, which dropped by 29.
Mainly due to the increase in the paste of imported crude oil, the increase in overseas shipping premiums, and the decline in the value of the RMB exchange rate. At the same time, crude oil procurement costs rose. At the same time, the price differentials of other petroleum refining products such as naphtha and liquefied gas increased significantly.
The marketing and distribution segment achieved operating profit of 14.7 billion, a year-on-year decrease of 14.
Mainly due to the fierce competition in the domestic refined oil market and the narrowing of the retail price spread.
From the production and sales data, H1 processes crude oil 1.
2.4 billion tons, an annual increase of 2.
7%, producing 7,894 tons of refined oil, an increase of 3 per year.
4%, of which gasoline production increased by 4.
3%, kerosene production increased by 7.
The total sales volume of refined oil products increased by 12,691, an annual increase of 9.
6%, of which the total domestic refined oil sales of 9177 initially, an increase of 3 per year.
The operating profit of the chemical sector was 11.9 billion yuan, a decrease of 24 per year.
5%, mainly due to fierce competition in the chemical product market, abundant supply and lower product gross profit.
The fierce market competition has reduced the gross profit margin of the products and reduced the management expenses.In the first half of 2019, the gross profit 成都桑拿网 margin of the company’s exploration and mining business increased from the previous year2.
5 single to 15.
4%; the fluctuations caused by the gross margin extension of the refining business, marketing and distribution business, and chemical business are 4
5% and 8.
7%, a decrease of 3 from the previous year.
6 and 1.
5 levels, mainly due to fierce market competition to reduce product gross profit.
Affected by the factors mentioned above, the company’s comprehensive gross profit margin was 7.
7%, a decrease of 2 from the previous year.
From the perspective of expenses, the company’s selling expenses and financial expenses were 297.
400 billion and 51.
6.3 billion, an increase of 7 over the previous year.
52% and 1863.
12%, the substantial increase in financial expenses was mainly due to the increase in index expenditures, and administrative expenses were 270.
39 trillion, a reduction of 20 per year.
Net cash flow from operating activities was 32.9 billion yuan, a decrease of 54 per year.
04%, mainly due to a profit before tax of more than US $ 18.7 billion, and an increase in changes in net receivables and other current assets of US $ 21.2 billion.
Capital expenditure has increased, and the speed of oil and gas exploration and development has been greatly increased.
In the first half of 2019, the company’s capital expenditure was 428.
78 ppm, an increase of 81 in ten years.
02%, of which the capital expenditure in the exploration and development segment was 200.
6.4 billion US dollars, mainly for Shengli, Northwest and other crude oil production capacity construction, Liling, Weirong and other shale gas production capacity construction, to promote the construction of natural gas pipelines and gas storages and overseas oil and gas projects; capital expenditure in the refining segment.
US $ 7.9 billion, mainly for the construction of Sinopec refining and chemical projects, Tianjin, Zhenhai, Luoyang, Maoming and other refining structure adjustment projects; 80 capital expenditures in the marketing and distribution sector.
7.1 billion US dollars, mainly for the construction of refined oil depots, pipelines and gas (gas) stations and other projects; chemical sector capital expenditures56.
7.4 billion US dollars, mainly for the construction of refining and chemical projects in Zhongke, Zhenhai, Wuhan, etc .; headquarters and other capital expenditures.
90 trillion, mainly used in the construction of scientific research equipment and informatization projects.
Overall, the company fully implemented an action plan to vigorously enhance the exploration and development of oil and gas, fully promoted the stabilization of oil and gas, and reduced costs, and coordinated the construction of a natural gas production, supply, and sales system to achieve benefits.
Capital expenditures are used in the main business sector, which is beneficial to the company’s further development.
Investment suggestions According to the “2018 Domestic and Foreign Oil and Gas Industry Development Report” released by the China Petroleum Corporation’s Institute of Economics and Technology, China’s apparent consumption of petroleum in 2018 exceeded 600 million tons for the first time, reaching 6
2.5 billion tons, an increase of 0 every year.
4.1 billion tons, a growth rate of 7%.
In 2018, the annual oil import volume was 4.
4 billion tons, an increase of 11% in ten years, and the degree of dependence on foreign oil rose to 69.
According to the Ministry of Natural Resources, among the areas with prospects for oil and gas, only about half of the area has been submitted for exploration and production permits, which means that there is still a good prospect for the development of domestic upstream oil and gas fields.
At the same time, the turmoil in the United States and Iran will have serious consequences for the stability of the Middle East. Once the geopolitical conflict in the Middle East further intensifies, it will pose a serious threat to China ‘s energy security and cut off supplies of Middle East crude oil.Costs, so expanding capital expenditures and vigorously increasing the speed of domestic oil and gas field development is particularly important for national energy security.As a large-scale energy and chemical company integrating upstream, middle, and downstream, Sinopec dominates the oil and gas industry. The company maintains a large revenue and profit scale and has a strong overall scale. We are optimistic about the company’s future oil and gas industryContinuously benefit from deepening reform and development.
The company’s EPS for 2019-2021 is expected to be 0.
67\0.71\0.62, PE for 2019-2021 is 7, respectively.
4\7.1\8，维持“增持”评级。 There are risks: sharp fluctuations in oil prices; risks of intensified market competition in the petrochemical industry; risks of changes in the macroeconomic outlook