CNOOC(600938)：WITH OBVIOUS COST ADVANTAGES LEADING SOE IN OFFSHORE OIL AND GAS INDUSTRY AWAITS VALUATION REPAIRMENT

　　Investment Thesis
　　Obvious cost advantage constitutes the main investment logic of CNOOC: low cost is the core competitiveness of oil companies and the key to improving profits and resisting oil price fluctuations, enabling the company to maintain the ability to earn profits under low and medium oil prices. In 2022, CNOOC's full barrel cost was approximately USD30/barrel, implying a significant cost advantage.
　　CNOOC maintains high capital expenditure and output growth: the company's capital expenditure for 2022 was RMB102.5bn, and the plan for 2023 is RMB100-110bn. In 2022, CNOOC's net oil and gas output was 60.225 million barrels of oil equivalent, and the company's oil and gas output targets for 2023-2025 are 6.5-6.6, 6.9-7.0, and 7.3-7.4 million barrels of oil equivalent respectively, and the proportion of overseas production gradually increases.
　　Rich offshore resources help CNOOC to maintain sustainable growth: in 2022, CNOOC's additional production accounted for more than half of the country's total oil production increase. The reserve replacement rate exceeds 100%, and its reserve life is maintained at ~10 years. The reserve life of PetroChina continued to decline, and the reserve life of Sinopec was maintained at ~6 years. CNOOC's sustainable development situation is leading the three major oil companies.
　　Earnings Forecast & Rating: We forecast CNOOC's 2023-2025 net profit to be RMB140.665/130.968/131.603bn, indicating P/E of 6.03x/6.47x/6.44x. Considering CNOOC's benefit from the high level of crude oil price and production increase, its valuation is at the bottom when compared with the large cycle of oil price from 2010 to 2021, and obviously lower than peers. In addition, with the re-emphasis of the SASAC on SOEs, we maintain our "Buy" rating on CNOOC （600938.SH） / CNOOC （0883.HK）。
　　Risks: 1） Economic recession; 2） Oil price fluctuation; 3） Faster substitution of traditional oil with renewables; 4） Economic sanctions.
【免责声明】本文仅代表第三方观点，不代表和讯网立场。投资者据此操作，风险请自担。

   【免责声明】本文仅代表第三方观点，不代表和讯网立场。投资者据此操作，风险请自担。