CISI FIN: Maintain "buy" rating on CNOOC (00883), with excellent performance in the first half of 2024.

CISI FIN released a research report stating that CNOOC (00883) has excellent fundamentals, and is also implementing a stock buyback in Hong Kong. In July, it repurchased 16.366 million shares of Hong Kong stocks and canceled them. According to the latest industry situation, assuming the average price of Brent crude oil spot market in 2024-2026 is $80 per barrel, it is estimated that the company's net profit attributable to shareholders in 2024-2026 will be 141.8 billion, 152.1 billion, and 163.3 billion RMB, respectively, with year-on-year growth rates of 14.5%, 7.2%, and 7.4%. The company's "buy" rating is maintained. The bank calculated the company's net profit attributable to shareholders in 2025 under three oil price scenarios and calculated the dividend yield change based on the current market price (as of September 10, 2024). In 2025, if the oil price reaches $60, $70, or $85 per barrel, the company's net profit attributable to shareholders may reach 100 billion, 128.3 billion, and 163 billion RMB respectively; calculated at a 40% dividend rate, the dividend yield may reach 5.3%, 6.8%, and 8.6% respectively. CISI FIN's main points are as follows: In the first half of 2024, the company's net profit reached a historical high for the same period. During the period, the company achieved operating income of 226.8 billion RMB, a year-on-year increase of 18.1%, and achieved a net profit attributable to shareholders of 79.7 billion RMB, a year-on-year increase of 25% (of which, in the first and second quarters of 2024, the net profit attributable to shareholders was 39.7 billion RMB and 40 billion RMB respectively); capital expenditure reached 63.1 billion RMB, a year-on-year increase of 11.7%, achieving 47-51% of the annual budget. Free cash flow is ample, reaching 63.99 billion RMB, and the capital-to-debt ratio has dropped to 11.4%. The company actively shares its development achievements, with a mid-year dividend of 0.74 Hong Kong dollars per share (inclusive of tax) in 2024, reaching a historical high for the same period; the dividend payout ratio in the first half of 2024 was 40.3%, with a year-on-year increase of 25.4% per share. In the first half of 2024, the company's net production reached a historical high for the same period. During the period, the company's net production reached 362.6 million barrels of oil equivalent, a year-on-year increase of 9.3%; among them, China's net production reached 247.6 million barrels of oil equivalent, a year-on-year increase of 7.1%, mainly benefiting from the production contributions of the Kenli 6-1 and Bohai 19-6 oil and gas fields; overseas net production reached 114.9 million barrels of oil equivalent, a year-on-year increase of 14.2%, mainly benefiting from the production growth brought by the Payara project in Guyana. In the first and second quarters of 2024, the company's net production reached 180.1 million and 181.5 million barrels of oil equivalent respectively. The company's production guidance for full year 2023 was 700-720 million barrels of oil equivalent, and the bank predicts that the company may achieve the upper limit of the annual production guidance. Average realized oil prices have increased slightly, while gas prices have decreased. In the first half of 2024, the company's average realized oil price was $80.32 per barrel, a year-on-year increase of 9.2%, while the average Brent crude oil price for the same period increased by 4.4% to $83.42 per barrel. In the first quarter of 2024, the company's average realized oil price was $78.75 per barrel, a 6.2% increase year-on-year. In the first half of 2024, the company's average realized gas price was $7.79 per thousand cubic feet, a year-on-year decrease of 4.1%. In the first quarter of 2024, the company's average realized gas price was $7.69 per thousand cubic feet, a 7.7% decrease year-on-year.