Haitong Securities·2024-03-21 16:00Investment Rating - The investment rating for the company is "Outperform the Market" and is maintained [1]. Core Views - The company has achieved a compound annual growth rate (CAGR) of over 5% in oil and gas production, with a total production of 678 million barrels of oil equivalent in 2023, representing an 8.7% year-on-year increase [4][8]. - The average cost per barrel of oil has decreased to below $30, specifically to $28.83 per barrel of oil equivalent in 2023, down by $1.56 year-on-year, primarily due to reductions in taxes, depreciation, and operating costs [5][9]. - The company plans to maintain high levels of capital expenditure, with 2023 capital spending reaching 129.6 billion yuan, a 26% increase year-on-year, and plans for 2024 capital expenditure between 125 billion and 135 billion yuan [29]. - Earnings per share (EPS) forecasts for 2024-2026 are projected at 2.77, 2.91, and 2.98 yuan respectively, with a book value per share (BPS) of 15.56 yuan in 2024 [5][41]. Summary by Sections Production and Growth - The company has maintained a growth trajectory in oil and gas production despite fluctuations in oil prices, achieving a CAGR of 5.1% since 2013 [4][8]. - The production targets for 2023-2025 are set at 700-720 million barrels, 780-800 million barrels, and 810-830 million barrels of oil equivalent respectively, indicating a commitment to continued growth [29]. Cost Management - The company has successfully reduced its cost per barrel, which is a significant factor in maintaining profitability amid fluctuating oil prices [5][9]. Financial Performance - In 2023, the company reported a revenue of 416.6 billion yuan, a slight decrease of 1% year-on-year, while net profit was 123.8 billion yuan, down 13% year-on-year, yet maintaining a net profit level above 120 billion yuan for two consecutive years [21][25]. - The dividend payout ratio remains above 40%, with a proposed total dividend of 1.25 Hong Kong dollars per share for 2023 [23][25]. Market Conditions - Despite a decline in international oil prices, the average Brent crude price remained above $80 per barrel in 2023, with the company achieving oil and gas prices of $77.96 per barrel and $7.98 per thousand cubic feet respectively [22][26].