Sinopec (600028) 2019 Third Quarterly Report Review: The Company’s Q3 Performance Drops High Scores Still Attractive
Competition in the domestic refining and chemical industry has intensified, and the company’s refining and chemical sector in the first three quarters dropped significantly, dragging down the company’s performance.
However, at the current highest level, assuming a company’s dividend ratio of 60% in 2019, the corresponding exchange rate is 5.
5% is still attractive.
Target price is 6 based on 2019’s double PB estimate.
1 yuan, maintain “Buy” rating.
The company’s third quarter results were in line with expectations.
The company achieved operating income in the first three quarters2.
23 trillion U.S. dollars at the beginning of the year + 8%, net profit attributable to mothers was 43.3 billion US dollars, of which -2%; of which Q3 achieved operating income of 734.3 billion U.S. dollars, equivalent to -5%, -6% qoq, net profit attributable to mothers was 11.9 billion, Higher than -35%, compared to -28%.
This year’s domestic refining and chemical industry competition has intensified, and the company’s Q3 refining and chemical sector’s performance has dropped significantly. The conversion of Q3 has about 1 billion non-hedging derivative financial instruments floating losses, dragging down the company’s Q3 performance.
The domestic crude oil output has been flat, and the profitability of exploration and development business has continued to be positive.
The company’s domestic crude oil production in the first three quarters was 186.
7 million barrels, previously +0.
1%; of which Q3 crude oil production is 71.
1 million barrels, at least -2.
3%, Q3 domestic crude oil production 62.
6 million barrels, at least -0.
At 2%, natural gas production is 264 billion cubic feet, + 11% per year, + 4% month-on-month, and natural gas maintains rapid growth.
The company’s crude oil price in the first three quarters was 58.
8 USD / barrel, 10% for 10 years; operating profit of the exploration and development segment was 8.7 billion USD, +10.7 billion USD a year.
Among them, Q3 crude oil realized price of 51.
$ 7 / barrel, previously -32%, -23% MoM; barrel oil cost 21.
3 USD / barrel, -52% a year, -35% month-on-month; the operating profit of the exploration and development segment was 2.5 billion US dollars, +4.1 billion a year, -2.2 billion US dollars, which was positive for three consecutive quarters.
Competition in the domestic refining and chemical industry has intensified, and earnings declines in the refining and chemical sectors have weighed on performance.
The company’s crude oil processing capacity in the first three quarters1.
9 billion tons, previously + 2%; refined oil production1.
2 billion tons, previously + 3%; the main chemical output is 3132 maximum, + 6% per year.
The intensified competition in the domestic refining and chemical industry this year has dragged down the company’s performance. The company’s refining segment’s operating profit in the first three quarters was $ 22.5 billion, -58% each time, and the chemical sector was $ 16.6 billion, up to -29%; of which the Q3 refining segment was $ 3.4 billionIn excess of -77%, -55% MoM, the chemical sector was $ 4.7 billion, -38% per second, and -8% MoM.
The company’s Q3 refining net profit per ton was 55 yuan, -77% per year, -55% qoq; the net profit per chemical ton was 443 yuan, -40% per year, flat qoq.
The decline in the company’s Q3 results was mainly due to the decline in the business climate of the refining and chemical sectors.
The company has higher barriers to the sale of refined oil products, and the profit of the Q3 sales segment has increased.
In the first three quarters, the company’s domestic refined oil sales volume was 139, +3 per year.
1%, retail sales accounted for 65%.
9%, down by 1 every year.
34 pcs; 成都桑拿网 of which Q3 refined oil sales were 47.
5 Initially, + 2% per year, + 3% MoM, and retail 66%.
8%, a decline of 0 per year.9pct, an increase of 2 from the previous month.
In the first three quarters of the company, the operating profit of the marketing and distribution segment was 23.2 billion U.S. dollars, 2% a year, of which Q3 operating profit was 8.5 billion yuan, + 29% per year, + 27% month-on-month, and the single-ton sales profit was 180 yuan, + 27% in the past,+ 24%, a significant improvement.
We believe that the company’s refined oil sales sector has high competition barriers. Under the current situation of internal settlement from refining to sales, it is expected that the company’s profit in the sales sector will gradually increase with the sales of refined oil.
Changes in net cash flow increase the company’s dividend pressure, and high dividends are still worth looking forward to.
In the first three quarters, the company’s operating net cash flow was US $ 81.4 billion, a year of -41%. Driven by the national oil and gas reserves and production increase, the company’s investment net cash flow was-US $ 70.8 billion, a net increase of US $ 67.5 billion, and the company’s operating cash inflow decreased.The increase in investment cash and increased dividend pressure.
However, in the final three quarterly reports, the company’s book currency funds were as high as 1,600 trillion, and short-term pressure was not great. Assuming a 60% dividend ratio in 2019, the current corresponding exchange rate is 5.
5% is still worth looking forward to.
Risk factors: the risk of a significant drop in international oil prices; the risk that the price difference between light and heavy oil continues to push up the company’s crude oil procurement costs; the company’s capital expenditure exceeds expectations, affecting the risk of cash flow and the ability to pay dividends.
Investment suggestion: Due to the intensified competition in the domestic refining and chemical industry, we slightly reduce the company’s profit forecast for 2019-2021 to US $ 557/606/655 billion (the original forecast was 612/653/706 trillion), and the corresponding EPS forecasts are 0.
54 yuan (previous forecast was 0.
58 yuan), the current sustainable corresponding PE is 11/10/9 times.
Considering the company’s current sustainable high yield is still worth looking forward to, according to January 2019.
0x PB estimate, given a target price of 6.
1 yuan, assuming a 60% dividend ratio, corresponding to 4.
5% rating, maintain “Buy” rating.