Ge Long Hui·2025-09-09 04:26Core Viewpoint - The company experienced a significant decline in revenue and net profit in the first half of 2025, attributed to falling oil prices and reduced sales volumes, but maintains a buy rating due to ongoing optimization in refining and accelerated new material development [1][3]. Financial Performance - In the first half of 2025, the company achieved revenue of RMB 1,409.05 billion, a year-on-year decrease of 10.60%, and a net profit attributable to shareholders of RMB 21.48 billion, down 39.83% [1]. - For Q2 2025, revenue was RMB 673.70 billion, a decline of 14.31%, with net profit at RMB 8.22 billion, down 52.73% [1]. - Operating income for the first half was RMB 33.40 billion, a decrease of 34.5%, with a weighted average return on equity of 2.61%, down 1.76 percentage points [1]. Segment Performance - The exploration and development division reported operating income of RMB 23.64 billion, down 18.9%, while the refining division saw a 50.4% drop to RMB 3.54 billion, and the marketing and distribution division's income fell 45.7% to RMB 7.96 billion [2]. - The chemical division incurred a loss of RMB 4.22 billion, an increase in loss of RMB 1.06 billion year-on-year [2]. - Cash flow from operating activities was RMB 61.02 billion, up 44.4%, with a debt-to-asset ratio of 54.10%, an increase of 0.15 percentage points [2]. Production and Cost Management - The average selling price of crude oil was RMB 3,415 per ton, down 12.9%, while the average selling price of self-produced natural gas was RMB 1,830 per thousand cubic meters, down 3.4% [2]. - Oil and gas equivalent production reached 262.81 million barrels, a 2.0% increase, with natural gas production at 736.28 billion cubic feet, up 5.1% [2]. - Cash operating costs for oil and gas were RMB 718.0 per ton, down 4.7%, while the unit cash operating cost for refining was RMB 206.5 per ton, up 5.7% [3]. Strategic Initiatives - The company plans to process 130 million tons of crude oil in the second half of 2025, adjusting product structure and increasing production of aviation kerosene and high-value products [3]. - Capital expenditure for the first half of 2025 was RMB 43.8 billion, with a planned reduction of about 5% for the full year [3]. - The company distributed interim dividends of RMB 0.088 per share, totaling RMB 10.67 billion, with a payout ratio of 49.67% [3]. - Future focus includes transformation and innovation, targeting emerging industries such as domestic large aircraft, new energy vehicles, and advanced materials [3]. Valuation - Due to unfavorable factors like fluctuating international oil prices and declining domestic fuel consumption, profit forecasts for 2025-2027 have been adjusted, with expected net profits of RMB 44.79 billion, RMB 49.31 billion, and RMB 55.54 billion respectively [3]. - Corresponding diluted EPS is projected at RMB 0.37, RMB 0.41, and RMB 0.46, with current stock price corresponding to P/E ratios of 15.4x, 14.0x, and 12.4x [3].