Event
The company issued its 2008 annual report today. As calculated by Chinese Accounting Standards, the company realized pretax profit of Rmb161.1bn (-21.1% yoy), net profit attributable to shareholders of parent of Rmb113798mn (-22.0% yoy), and EPS of Rmb0.62. Based on International Financing Reporting Standards, in 2008, it realized pretax profit of Rmb161829mn (-21.0% yoy), net profit attributable to shareholders of parent of Rmb114431mn (-22.0% yoy), and basic EPS & diluted earning attributable to shareholders of parent of Rmb0.63.
Our Analysis and Estimation
As dragged by international oil price fluctuation, its performance in Q4 2008 sees a quarter-on-quarter decrease of 37.3%.
Inflation is a key for the company’s exploration performance which obviously slides in 2009.
Its oil refining & sales performance will see upturn in 2009.
Contributions of Petrochemical and pipeline industry are limited.
Its 2009 EPS is forecasted at Rmb0.56.
Investment Suggestion
As propelled by advanced exploration technology, the company is now at a summit of oil & gas field discovery and oil & gas product storage keeps surging, reserve replacement ratio is above 1 and has been growing successively; moreover, international oil price is upgraded to some degree due to US dollar depreciation. However, it has not yet reached the best earning section of USD80. Although its oil refining & sales will see upturn in 2009, it still can not make up the exploration performance slide. With low oil price expectation, we forecast its EPS in 2009-2010E to be Rmb0.56, Rmb0.54 and Rmb0.60 respectively, and “Neutral” rating is hereby maintained.