HTSC·2025-06-06 03:00Investment Rating - The report maintains a "Buy" rating for the company in both A and H shares [8]. Core Insights - The company reported a net oil and gas production of 188.8 million barrels of oil equivalent in Q1, representing a year-on-year increase of 4.8%. The breakdown includes 145.5 million barrels of oil and 253.0 billion cubic feet of natural gas [2]. - The average Brent futures price in Q1 decreased by 8.3% year-on-year to $75.0 per barrel, while the company's realized oil price fell by 7.7% to $72.7 per barrel, indicating a narrowing discount [2]. - The company has effectively controlled its five key cost metrics, with Q1 costs decreasing by $0.56 per barrel to $27.03 per barrel. Future reductions in costs are anticipated due to economies of scale [2]. - The company has set its full-year capital expenditure guidance for 2025 at RMB 125-135 billion and has raised the lower limit of its dividend payout ratio for 2025-2027 to 45%, up from 40% for 2022-2024, resulting in a dividend yield of 5.2% for A shares and 8.0% for H shares based on the closing price on June 5 [2][5]. Summary by Sections Production and Financial Performance - The company aims to increase its natural gas production, leveraging domestic gas consumption growth and focusing on three major gas fields. The production structure is expected to stabilize at 78:22 in favor of oil [3]. - The company’s net profit forecasts for 2025-2027 are RMB 142.5 billion, RMB 144.1 billion, and RMB 148.4 billion, respectively, with EPS projected at RMB 3.00, RMB 3.03, and RMB 3.12 [5][22]. Market and Pricing Outlook - The report notes that the OPEC group has continuously raised its production targets, leading to fluctuations in oil prices. The Brent crude oil price forecast for 2025-2026 is maintained at $67 and $66 per barrel, respectively [4]. - The company is expected to benefit from the commencement of production in its overseas projects, such as the Buzios 7 project in Brazil and the Stabroek block in Guyana, which are projected to contribute significantly to low-cost production increases [3]. Valuation Metrics - The report maintains a target price of RMB 37.50 for A shares and HKD 27.42 for H shares, based on a cautious valuation approach of 12.5x PE for A shares and 8.5x PE for H shares [5].