Summary of the Conference Call on China Energy: Oil Sector Companies Involved - **PetroChina** - **Sinopec** - **CNOOC** Key Points and Arguments Earnings Estimates Update - **PetroChina**: - 2024E EBITDA revised to RMB 469,147 million, a 2% increase from previous estimates - 2025E EBITDA revised to RMB 459,951 million, a 1% decrease - 2026E EBITDA revised to RMB 495,862 million, a 1% decrease [5][6] - **Sinopec**: - 2024E EBITDA revised to RMB 203,256 million, a 3% decrease - 2025E EBITDA revised to RMB 212,346 million, a 4% decrease - 2026E EBITDA revised to RMB 234,679 million, a 3% decrease [5][6] - **CNOOC**: - 2024E EBITDA revised to RMB 268,198 million, a 1% increase - 2025E EBITDA revised to RMB 263,099 million, a 1% decrease - 2026E EBITDA revised to RMB 285,458 million, a 1% decrease [5][6] Valuation Comparisons - **PetroChina**: - Current share price discounts a long-term Brent price of US$65/bbl - 2025E dividend yield is approximately 8% and FCF yield is around 14% [6][10] - **CNOOC**: - Current share price discounts a Brent oil price of US$57/bbl - Expected FCF yield and dividend yield both around 8% for 2025 [10][12] - **Sinopec**: - Expected to experience weak FCF due to prolonged chemical market surplus and elevated capex [12][20] Price Targets - **PetroChina**: - New 12-month price targets set at HK$8.10/Rmb12.30, down from HK$8.20/Rmb12.70 [6][18] - **CNOOC**: - New 12-month price target set at HK$23.50, up from HK$23.30 [10][12] - **Sinopec**: - New 12-month price targets set at HK$4.50/Rmb5.60, down from HK$4.80/Rmb6.10 [12][15] Sensitivity Analysis - **PetroChina**: - Earnings positively correlated with oil prices, but the net positive impact on EBITDA narrows when oil exceeds US$85/bbl due to increased royalties [8][17] - **CNOOC**: - Clean exposure to oil price changes, but net benefits decrease slightly when oil prices rise above US$85/bbl due to increased royalties [11][12] Risks - **PetroChina**: - Risks include lower oil prices than expected and a more competitive gas market leading to earnings headwinds [17][19] - **Sinopec**: - Risks include fluctuations in oil prices and refining margins, as well as cost pass-through of imported LNG [20] Other Important Insights - The valuation of Chinese oil companies remains discounted compared to global peers, indicating potential investment opportunities [5][6] - The analysis suggests a preference for upstream companies like PetroChina and CNOOC over Sinopec due to expected weak FCF in the latter [12][20]

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the oil industry, particularly the dynamics of crude oil prices and production forecasts in light of geopolitical tensions and supply-demand factors. Core Insights and Arguments 1. **Oil Price Sensitivity**: Oil prices are sensitive to supply disruption risks, particularly concerning potential downside risks to Iranian supply and declines in Red Sea oil flows. A significant interruption of trade through the Strait of Hormuz could lead to a large oil price spike [2][3][6]. 2. **Geopolitical Risk Premium**: Despite a 5% jump in Brent crude prices due to the Iran-Israel conflict, the geopolitical risk premium remains moderate according to valuation models and option prices [6][7]. 3. **Supply Dynamics**: - Trackable net supply decreased by 0.1 million barrels per day (mb/d) week-over-week, with Libya's production dropping by 0.4 mb/d due to disruptions, although it is preparing to restore full production [3][7][10]. - US Lower 48 crude production is at 11.1 mb/d, which is 0.1 mb/d lower than September expectations, influenced by lower crude prices and hurricane-related shutdowns [10][12]. - Russia's liquids production increased by 0.2 mb/d due to a surge in fuel oil exports [9][10]. 4. **Demand Forecasts**: - China's oil demand nowcast decreased by 0.1 mb/d to 16.0 mb/d, reflecting a slowdown in oil-intensive services sector growth [8][18]. - OECD Europe oil demand remained stable at 13.6 mb/d, but is 0.3 mb/d below August expectations [20]. 5. **Inventory Trends**: OECD commercial stocks decreased by 5 million barrels (mb) to 2,810 mb, indicating larger draws in developed market crude and US products [22][30]. Additional Important Insights 1. **Brent Timespreads**: The Brent 1M/36M timespread remains undervalued, with a gap of just over $5 per barrel despite recent price rallies [7][30]. 2. **Managed Money Positioning**: Oil net managed money positioning recovered by 88 mb last week, but remains at the 1st percentile, indicating limited financial demand recovery [8][10]. 3. **Volatility Metrics**: Brent implied volatility increased by 6 percentage points to 1 percentage point above modeled fair value, reflecting heightened market uncertainty [35][36]. 4. **Geopolitical Disruptions**: Oil flows through the Bab-El-Mandeb Strait have decreased by 2.8 mb/d (or 40%) since disruptions began, highlighting the impact of geopolitical tensions on supply routes [38]. This summary encapsulates the key points discussed in the conference call, providing a comprehensive overview of the current state of the oil industry, including production forecasts, demand trends, and the influence of geopolitical factors on pricing and supply dynamics.

Summary of Key Points from the Conference Call Industry Overview: China Oil & Gas Key Insights - **Gas Demand Growth**: The forecast for China's gas demand growth has been revised down to 4% per annum for FY25, from a previous estimate of 5.8% for FY24, due to weaker GDP growth and decelerated demand from industrial sectors [1][3][4] - **GDP Impact**: The macroeconomic team has cut the FY24 GDP forecast to 4.8%, which is expected to impact gas demand negatively [1][3] - **Demand Drivers**: Despite the slowdown, there are still solid demand drivers including: - Residential and heating supply, accounting for approximately 25% of total consumption - Increasing adoption of LNG trucks, which are economically beneficial compared to diesel trucks (RMB1.4/km lower) - Rising demand for gas power generation to support new energy initiatives [1][3][4] Production and Supply - **Production Capacity**: China's gas production capacity is expected to grow steadily, reaching 247 billion cubic meters (bcm) in FY24 and 262 bcm in FY25, reflecting a growth rate of 6.1-7.2% per annum [1][4] - **Storage Capacity**: By the end of FY23, China's gas storage capacity is projected to reach 6% of demand, with plans to increase this to align with global averages in the medium term [1][4] - **Import Dependency**: The import dependency for natural gas is expected to decrease to 38% by FY25-26, down from 40% in FY24 [1][4] Market Dynamics - **Long-term Contracts**: China is expected to secure long-term LNG contracts from the US and Qatar, which will reduce reliance on spot imports [1][4] - **Price Stability**: Near-term gas prices are expected to stabilize, with a projected 2% year-on-year increase in average selling price (ASP) for 2H24 [1][4] - **Profitability of Major Players**: PetroChina reported a loss of RMB4 billion in its imported gas business in 1H24, while Sinopec achieved a profit of RMB380 million [4][6] Demand Forecasts - **Revised Demand Growth**: The revised forecasts for gas demand growth are 5.8% for FY24, 3.9% for FY25, and 3.0% for FY26, reflecting a downward adjustment from previous estimates [3][4] - **Apparent Demand**: In the first eight months of 2024, China's apparent gas demand was 280 bcm, representing a 9.6% year-on-year increase, with real demand growth estimated at 6-8% [4][6] Conclusion - The outlook for the China oil and gas industry indicates a mixed scenario with slower growth rates due to economic factors, but sustained demand from residential and industrial sectors, alongside strategic long-term contracts, may provide stability in the market [1][3][4]

Financial Data and Key Metrics Changes - The company achieved a 70% reduction in financial debt through a restructuring process, resulting in a new debt profile and improved liquidity [2][6][30] - The financial debt at fair value decreased approximately 70% quarter-on-quarter, with a face value of around R$33 billion in Q2 2024 [6][7] - The net result for the quarter totaled over R$15 billion in profit, reversing previous losses, primarily due to adjustments from the supplier restructuring process [27] Business Line Data and Key Metrics Changes - New Oi's total revenue fell to R$2.1 billion, a 13% year-on-year decline, mainly due to reduced non-core revenue from copper and DTH services [18][21] - Core revenue totaled R$1.5 billion, accounting for 72% of total revenue, while fiber revenue remained stable at R$1.1 billion year-on-year, excluding one-off effects [18][19] - Oi Soluções revenues dropped by around 23% year-on-year, with ICT revenues accounting for about 29% of total revenue, showing growth in cloud and security services [23] Market Data and Key Metrics Changes - The company is focusing on B2B operations, with revenues primarily from corporate clients through integrated digital solutions, aiming for a model that is not capital intensive [4][17] - The competitive process for the sale of UPI ClientCo, the fiber unit, is ongoing, with expectations for completion by early 2025 [10][11] Company Strategy and Development Direction - The company is transitioning to a business model focused on B2B, emphasizing profitability and reducing reliance on legacy services [17][30] - The strategy includes significant asset sales, including real estate and stakes in V.tal, to reduce debt and improve financial health [12][30] - The migration to an authorization model is expected to capture efficiencies and reduce legacy-related costs, with a focus on integrated solutions for corporate clients [16][30] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges from legacy services impacting cash flow but emphasized ongoing initiatives to improve costs and cash generation [35] - The company anticipates a favorable ruling from the Attorney General regarding the consensual solution by mid-September, which is crucial for the reorganization process [38] - Future growth is expected to come from a focus on high-margin B2B services and the successful execution of the asset sales strategy [45][30] Other Important Information - The company has made significant progress in its reorganization plan, including the issuance of new debt instruments and the allocation of credits to improve liquidity [5][30] - The balance sheet decreased by approximately R$2 billion compared to December 2023, reflecting the ongoing restructuring efforts [8] Q&A Session Summary Question: Factors impacting cash flow from operations - Management indicated that cash flow is slightly better than the previous quarter but remains challenged by legacy services [35] Question: Timeline for approval by the Attorney General - The expectation is for confirmation by mid-September, with no additional items anticipated [38] Question: Schedule for monetization of real estate assets - The company has about 50 real estate assets valued over R$35 million and is organizing a specific process to accelerate sales [39] Question: Expected date for the sale of ClientCo - The second round for the disposal of UPI ClientCo is expected to conclude by early 2025, with hearings scheduled for September [40] Question: Proceeds from arbitration and asset sales - Proceeds will first settle debts with Anatel, with any excess shared equally between Oi and V.tal [41] Question: Need to dispose of V.tal shares - Yes, the disposal of V.tal shares is part of the strategic financial plan to settle debt [42] Question: Conclusion of the Court-Supervised Organization process - The court supervision is expected to last at least 24 months, contingent on fulfilling obligations [43] Question: Future operations post-asset disposal - The company aims to simplify operations and focus on value-added services with lower investment needs [44]

2023 2024 Morgan Stanley Research 31 Source: Morgan Stanley Research. FOUNDATION M Foundation Source: Company data, Morgan Stanley Research. 2611202331142435363943474849566156 7.5% 3.8% 5.5% 7.5% 4.1% 7.0% 7.7% 8.1% 8.3% 1% 3% 5% 7% 9% 11% 0 11 22 33 44 55 66 F4Q20F1Q21F2Q21F3Q21F4Q21F1Q22F2Q22F3Q22F4Q22F1Q23F2Q23F3Q23F4Q23F1Q24F2Q24F3Q24F4Q24 (Rs Bn) EBITDA EBITDA Margin (RS) Exhibit 70: Core retail EBITDA margin improved by 20bp to 8.3% M Foundation 34 Telecom: Growing Well Exhibit 76: Reliance Jio spectr ...

Cristiane Barretto - Chief Financial & Investor Relations Officer Mateus Bandeira - Chief Executive Officer Thalles Paixão - Chief Legal Officer Rogerio Takayanagi - Head of Strategy & Transformation Luis Plaster - Chief Investor Relations Officer Operator Cristiane Barretto Company Participants Leonardo Olmos - UBS During the company's presentation, all participants will be in a listen-only mode. Should you wish to ask a question, please click on the Q&A icon at the bottom of the screen and write your name ...

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3Q23 earnings presentation OTFIBR Is a game change ask our disclaimer | --- | --- | |------------------------------|-------| | | | | | | | | | | | | | This presentation only | | | | | | includes information for the | | | | | | Brazilian operations. | | | | | This presentation contains forward-looking statements as defined in applicable Brazilian regulations. Statements that are not historical facts, including statements regarding the beliefs and expectations of Oi, business strategies, future synergies, cos ...

Oi S.A. (OTC:OIBZQ) Q3 2023 Earnings Conference Call November 9, 2023 9:00 AM ET Company Participants Rodrigo Abreu - CEO Cristiane Barretto - CFO Luis Plaster - IR Director Conference Call Participants Leonardo Olmos - UBS Operator Good morning, ladies and gentlemen, and thank you for joining Oi S.A.'s Conference Call for the Third Quarter of 2023. The event will be held in English with simultaneous translation into Portuguese. Please be informed that this conference is being recorded and it will be availa ...

Oi S.A. (OTC:OIBZQ) Q2 2023 Earnings Call Transcript August 11, 2023 10:00 AM ET Company Participants Rodrigo Abreu - Chief Executive Officer Cristiane Barretto - Chief Financial Officer Luis Plaster - Investor Relations Director Conference Call Participants Operator Good morning, ladies and gentlemen, and thank you for joining Oi S.A.'s Conference Call for the Second Quarter of 2023. The event will be held in English with simultaneous translation into Portuguese. Please be informed that this video conferen ...