On Friday, A-shares finally ushered in a comprehensive rebound, the State Council to build a "national team" in the financial industry, to promote the head securities companies to become stronger and better, superimposed on the announcement of Guolian Securities' plan to acquire Minsheng Securities, drove the brokerage sector to rise collectively, but also ignited the enthusiasm of the whole market to do long. The overall turnover of the two cities returned to one trillion yuan, of which 22.4 billion yuan was frantically bought by northbound funds, which is rare.
"Pro-cyclical" investment has become a hot topic in A-shares recently, especially against the backdrop of the Fed's interest rate cut expectations, crude oil and gold prices have hit new highs in a row. Among them, crude oil is widely used, so the fluctuation of crude oil prices also affects other commodities, also known as the "king of commodities".
Since the beginning of this year, the performance of the three barrels of oil in A-shares has been eye-catching, PetroChina has hit a 9-year high, Sinopec has hit a 14-year high, and CNOOC is either on the way to a new high. The reason is also very simple, the performance is really good. PetroChina has earned 160 billion yuan in 23 years, earning 1.6 small goals every day, CNOOC earned 39.7 billion yuan in the first quarter of this year, a year-on-year increase of 23.7%; Even E Fund Zhang Kun couldn't resist the temptation and bought CNOOC as the largest heavy stock, while his former favorite Moutai could only be relegated to fifth place (E Fund Blue Chip Selection).
The core reason for this is high oil prices.
In the past few years of the epidemic, the Federal Reserve's sky-high release of water has brought a big bull market in crude oil, and then there have been crazy interest rate hikes that have caused crude oil to fall into a trough. In 2022, oil prices fell from $120 per barrel all the way to below $75 per barrel. Oil prices are too low, of course, oil-producing countries are unwilling, and they began to jointly reduce production, coupled with the Russian-Ukrainian conflict and the Israeli-Iraq conflict, oil prices have soared from more than 70 to more than 90, the largest increase since the beginning of this year more than 20%. But that's not all, now the agency predicts that oil prices could break through $100 per barrel. And the national 92 gasoline has also returned to the "8 yuan era". The continuous rise in oil prices will affect the performance of companies in the relevant industrial chain, which is also the fuse for the speculation of the A-share oil and gas sector.
1. A-share oil and gas industry chain
The petroleum industry chain is divided into: upstream oil exploration and extraction, midstream transportation and storage, downstream processing and sales of petroleum products.
The upstream exploration and production of oil requires high specialization, and at the same time, it also requires a large amount of capital investment, which is a technology- and capital-intensive field.
According to the Shenwan classification standard, the petroleum and petrochemical (first-class) sector is subdivided into three secondary industries, namely oil and gas exploitation II., oil service engineering, refining and chemical and trade, and then subdivided into six tertiary industries: oilfield services, oil and gas and refining engineering, oil refining and chemical industry, oil and petrochemical trade, and other petrochemicals.
The impact of rising oil prices should be seen separately, and for oil extraction companies and producers, it means that sales revenue and profits will increase. After the performance of upstream mining enterprises improves, in order to pursue greater profits, they will expand the capital expenditure of oil exploitation and increase the demand for oil service engineering, so the oil service engineering industry will also benefit.
However, for companies that rely on imported crude oil, it represents higher costs. Refineries and chemical plants are based on crude oil, and rising oil prices will lead to increased costs, and the ultimate impact will depend on the company's ability to transfer costs.
There are a total of 4 companies in the A-share oil and gas exploration sector, and CNOOC is the only one, with 400 billion revenue and 100 billion profits.
There are 7 companies in the oilfield service sector, with the largest scale of petrochemical oil service with a revenue of more than 70 billion yuan in 22 years, but the profit is only a few hundred million, while the revenue of CNOOC Development and CNOOC in 22 years is 35.7 billion yuan and 47.8 billion yuan respectively, and the profit is 2.1 billion yuan and 2.25 billion yuan respectively. Taken together, these three companies are in the first echelon. In addition, Zhongman Petroleum has a revenue of 3.1 billion yuan and a profit of 500 million yuan in 22 years. In addition to these 4 companies, other companies have revenues of less than 1 billion and profits of less than 100 million.
There are 6 companies in the oil and gas and refining engineering sector, with a clear competitive pattern, with CNPC Engineering as the absolute leader, with a revenue of more than 80 billion yuan and a net profit of 700 million yuan in 22 years, ranking second in the offshore oil engineering industry, with a revenue of nearly 30 billion yuan and a profit of 850 million yuan in 22 years. The remaining companies have a profit of no more than 100 million in 22 years, and their revenue ranges from 500 million to 3 billion.
Most of the speculation in the market is small-cap stocks with small revenue, weak profitability and small total market capitalization. The revenue of potential Hengxin and Tongyuan Petroleum in 2022 will only be 770 million and 480 million respectively, and the profits will be even less, 3 million and 39 million respectively. The 22-year revenue of Quasi-Oil Co., Ltd. is less than 200 million, and the loss is more than 40 million.
A company that hasn't made money for so many years, you can't expect him to make money now. Don't touch this kind of company that makes a few points when you make money and tens of thousands when you lose money.
2. Fundamental analysis of core companies
Let's take a look at the fundamentals of several companies in the oil and gas sector from a risk, operational, and valuation perspective.
- CNOOC
The company is the largest offshore crude oil and natural gas producer in China.
From the perspective of risk, the total three-year cash flow from operating activities is 151%, and the company's goodwill is 2.4%, which is basically negligible, and there is no pledge by major shareholders and no reduction of holdings by major executives. The company's risk indicators are generally good, and there is no major risk
At the operational level, the three-year average growth rate of operating income was 41%, and the three-year average growth rate of non-net profit was 119%. Under the high oil price, the company's growth will continue.
Finally, looking at the valuation, the rolling P/E ratio is 11.23 times, the price-to-book ratio is 2 times, and the current P/E ratio and price-to-book ratio are in the historical average: the high zone.
2. CNPC Engineering
The company is a subsidiary of PetroChina, with average historical performance, and its profits have been decreasing year by year from 2015 to 22.
From the perspective of risk, the total cash flow from operating activities for three years is 1.21%, which is very poor, and the company has no goodwill, no pledge by major shareholders, and no major executives and major shareholders to reduce their holdings.
At the operational level, the three-year average growth rate of operating income is 2.27%, and the three-year average growth rate of non-net profit is 0.99%, and the company's growth is very poor.
Finally, looking at the valuation, the rolling P/E ratio is 24.4x, which is in the historical average low zone, and the price-to-book ratio is 0.69x, which is in the historical average: mid-to-low zone.
3. CNOOC Engineering
The company is the only general contracting company in mainland China under CNOOC Group to undertake offshore oil and natural gas development and construction projects. Historical performance shows typical large fluctuations, 4.267 billion in 2014, less than 20 million in 2019, and rebounded to 1.6 billion in recent years.
From the perspective of risk, the total cash flow from operating activities for three years is 44.17%, which is average, and the company has no goodwill, no pledge by major shareholders, and no reduction of holdings by major executives and major shareholders. The company's risk indicators are generally good, and there is no major risk.
At the operational level, the three-year average growth rate of operating income was 20.7%, and the three-year average growth rate of non-net profit was 109%, indicating a significant improvement in profit.
Finally, looking at the valuation, the rolling P/E ratio is 12.7 times, the P/B ratio is 1.11 times, the current P/E ratio is in the historical average low area, and the P/B ratio is in the historical: medium low area.
4. Petrochemical oil suits
The company is a subsidiary of Sinopec, and its historical performance is also not satisfactory.
From the perspective of risk, the total cash flow from operating activities for three years is 20.96%, which is average, and the company has no goodwill, no pledge by major shareholders, and no reduction in holdings by major executives and major shareholders. The company's risk indicators are generally good, and there is no major risk
At the operational level, the three-year average growth rate of operating income is 4.68%, and the three-year average growth rate of non-net profit is 104%, and the profit growth rate is accelerating.
Finally, looking at the valuation, the rolling P/E ratio is 56.47 times, the P/B ratio is 4.25 times, the current P/E ratio is in the historical average low area, and the P/B ratio is in the historical low area.
5. CNOOC development
The company is a subsidiary of CNOOC Group, and its historical performance looks slightly better, with an increase of 90% in 22 years, and a double-digit growth in the third quarter of 23 years.
From the perspective of risk, the total three-year cash flow from operating activities is 27.65%, which is average, and the company has no goodwill, no pledge by major shareholders, and no reduction of holdings by major executives and major shareholders. The company's risk indicators are generally good, and there is no major risk.
At the operational level, the three-year average growth rate of operating income is 13.95%, and the three-year average growth rate of non-net profit is 58.67%, which is good compared with the previous two companies.
Finally, looking at the valuation, the rolling P/E ratio is 12.4x, the P/B ratio is 1.42x, and the current P/E ratio is in the historical average: low zone, but the net ratio is in the historical average: mid-to-high zone.
6. CNOOC
It is also a subsidiary of China National Offshore Oil Group. After 2015, the performance fluctuated greatly, tens of millions when it was bad, and 2~3 billion when it was good.
From the perspective of risk, the total cash flow from operating activities for three years is 72.21%, and the data is excellent, and the company has no goodwill and no pledge by major shareholders. No senior executives have reduced their shareholdings by major shareholders. The company's risk indicators are generally good, and there is no major risk
From the perspective of operation, the three-year average growth rate of operating income is 10.7%, and the three-year average growth rate of non-net profit is 72.77%, and the profit improvement in the latest year is very obvious.
Finally, looking at the valuation, the rolling P/E ratio is 27.23 times, the price-to-book ratio is 1.7 times, and the current P/E ratio and price-to-book ratio are in the historical average: the middle and low area.
7. Zhongman Petroleum
The company is the most powerful private drilling engineering contractor and petroleum equipment manufacturer in China, and its historical performance shows obvious fluctuations.
From a risk perspective, the total cash flow from operating activities is 70% for three years, and the data is excellent, and the company has no goodwill. However, 71.8% of the pledges were pledged by no major shareholders, and the major shareholders of senior executives reduced their holdings by -4.63, which is a relatively obvious potential risk.
At the operational level, the three-year average growth rate of operating income was 31.9%, and the three-year average growth rate of non-net profit was 155%, indicating excellent growth.
Finally, looking at the valuation, the rolling P/E ratio is 9.39x, the P/B ratio is 2.62x, and the current P/E ratio is at the historical average:
The price-to-book ratio is at the historical average: the middle and low zone.
Finally, a brief summary. Although the expectation of an interest rate cut by the United States has been postponed recently, it is only a matter of delay, and the show has just begun. Petroleum and petrochemical is a typical pro-cyclical direction, and the current performance has been reflected in the performance of upstream companies, and the performance of oil services in the midstream will be later than that of oil companies. The domestic oil service companies are basically subsidiaries of three barrels of oil, and the upstream parent company has meat, and they will not only drink soup. As a cyclical stock, the valuation should also be dynamic, like CNOOC, the annualized P/E ratio is about 5PE, while Hong Kong stocks are cheaper.