Results highlights
PetroChina reported 9M17 net profit of RMB17.4bn or RMB0.09/shr （903% yoy），ahead of the DB estimate and accounting for 80% of our FY17 full-year forecast.
3Q17 NP came in at RMB4.7bn, or EPS of RMB0.03, up 291% yoy. PTR's 3Q wasled by the rebound in its Refining & Chems and E&P segments, with EBIT up74% yoy and reverse from negative territory, respectively. However, the marketingand gas distribution segments were below expectations with EBIT down 98% yoyand 36% yoy. Capex spent for 9M17 remained lower than expectations at onlyRMB125bn, or 65% of the full-year target.
3Q17 Results summary by segment
E&P: Segment operating profit （OP） was RMB4.1 bn （vs. –RMB1.5bn in3Q16, primarily due to the realized price surge by 15% yoy, of whichcrude/gas realization rose 13%/20% yoy respectively. Crude productionfell 2% yoy in 3Q but narrowed the decline from 11% in 1Q and 7% in2Q, suggesting that production is slowly being ramped up with the higheroil price. All-in cost increased 10% to USD 47.8/bbl, partly due to theinflation of lifting cost up 5% yoy, though realized price was up 13% yoy.
The company seemed to have accelerated natural gas production withgrowth of 5% yoy in 3Q vs 4% in 1H, to cater the robust domestic demand.
The biggest surprise was the gas price, which is up 20% yoy due to thestrong demand.
R&C: Operating profit witnessed significant growth of 74% yoy in 3Q,mainly on the price surge of chemicals products as well as continuouscost management. Ethylene EBIT improved 55% yoy and 88% qoq toRMB2,955/ton in 3Q. Compared to 1H, the company processed morecrude oil, up 16% yoy in 3Q, to ride the good upcycle. Furthermore,PetroChina optimized its refining business with a lower Diesel to Gasolineratio of 1.27 vs 1.34 in 2Q and 1.4 in 3Q16.
Marketing: Segment operating profit declined sharply to only RMB52mnin 3Q from RMB 2.8bn in 2Q17 and RMB2.2bn in 3Q16, likely resultingfrom ongoing fierce competition. Revenue actually increased 17% yoy,but the related cost apparently went up even more.
Gas and pipelines: Segment operating profit dropped 36% yoy toRMB4.1bn in 3Q. The main reason was the RMB5.2bn loss from importsales （+102% yoy） and the transmission tariff cut. The company has beenactively expanding the high-end market in East and Southwest China and direct sales to major clients, which should continue to drive volume growth in future.