The U.S. inflation rate rose to 9.1% in June 2022, the highest level since November 1981, with energy prices contributing the most. Driven by gasoline rising 59.9%, fuel oil rising 98.5%, electricity prices rising 13.7%, and natural gas rising 38.4%, energy prices in the United States rose 41.6%, the largest increase since April 1980.
What’s interesting is that the price of refined oil has increased much faster than the price of crude oil. Data from
Tradingeconomics shows that the price of U.S. WTI crude oil has increased by 48.70% in one year, while the price increase of European Brent crude oil has been similar, at 49.29%. However, the price of gasoline increased by 52.81%, and the price of heating oil increased by as much as 86.38%. Obviously, the price of refined oil products has increased much more than that of crude oil.
Such a significant price difference is an opportunity (for exploration and refining companies) and a risk (for airlines) for industries that rely on oil prices.
Winner:
"Two barrels of oil" have issued positive profits
If we say who can benefit most from the rise in oil prices, oil companies will naturally bear the brunt. This is also the case with "stock god" Buffett adding positions in Occidental Petroleum (OXY.US) reason.
Chinese oil companies are no exception. PetroChina (00857.HK, 601857.SH) and China National Offshore Oil Corporation (00883.HK, 600938.SH) have successively issued positive profit forecasts.
PetroChina expects that as it strengthens oil and gas exploration and optimizes product structure to promote oil and gas sales, its net profit attributable to the parent company will increase by 26.5 billion yuan (in RMB, the same below) to 32 billion yuan in the first half of 2022, an increase of 50% to 32 billion yuan. 60%; excluding non-attributable net profit may increase by 42 billion yuan to 48 billion yuan compared with the same period last year.
The author calculated based on this that its net profit attributable to the parent company in the first half of the year may be between 79.536 billion yuan and 85.036 billion yuan; in the second quarter of 2022, the net profit attributable to the parent company may be between 40.477 billion yuan and 45.977 billion yuan, year-on-year Growth of 60%-82%. In the first half of the year, the net profit after non-attribution to the parent company may be between 87.231 billion yuan and 93.232 billion yuan; in the second quarter, the net profit after non-attribution to the parent company may be between 47.593 billion yuan and 53.594 billion yuan.
Similarly, CNOOC , which was listed on A in April this year, also issued a profit forecast. It is expected that driven by the sharp increase in international oil prices, its profit level in the first half of the year will increase significantly. Its net profit attributable to the parent company in the first half of 2022 may be 70.5 billion yuan to 72.5 billion yuan, an increase of 37.2 billion yuan to 39.2 billion yuan compared with the same period last year, a year-on-year increase of approximately 112% to 118%; excluding non-net profit attributable to the parent company Or 69.8 billion yuan to 71.5 billion yuan, a year-on-year increase of 37.3 billion yuan to 39 billion yuan (or 115% to 120%).
The author estimates based on this that CNOOC’s net profit attributable to its parent company in the second quarter of 2022 may be between 36.2 billion yuan and 38.2 billion yuan, a year-on-year increase of 95%-106%; net profit after non-attributable to the parent company may be between 35.8 billion yuan -37.5 billion yuan, a year-on-year increase of 98%-108%, see the table below.
The author believes that PetroChina and CNOOC will have good performance in the first half of 2022, not only because of rising oil prices, but also because of their more superior business models.
PetroChina is mainly engaged in exploration and sales of refined oil products. The crude oil products explored and mined are mainly supplied to its own refining business. Therefore, it can fully grasp the opportunities brought by the increase in the price of refined oil products being greater than the increase in crude oil prices.
CNOOC is mainly engaged in offshore offshore oil development. Its gross profit margin is much higher than that of PetroChina and Sinopec . This is because offshore oil exploration and development has a higher technical content and requires a large initial investment, but in the mining process The medium-term fixed expenditure is smaller than that of onshore oil exploration and development, so its profit margin is better than that of onshore oil development.
CNOOC's downstream business is relatively small, and it can take advantage of its own mining business profitability to fully grasp the rise in crude oil prices.
Losers:
The losses of the three major airlines have expanded
Capital has always been a zero-sum game . There are winners and losers. When oil prices rise, oil companies will benefit, while industries that rely on oil for their own business operations, such as the aviation industry, will suffer.
While the "Two Barrels of Oil" profit surged in the first half of the year, the three major airlines China Southern Airlines (01055.HK, 600029.SH), China Eastern Airlines (00670.HK, 600115.SH) and Air China (00753 .HK, 601111.SH) sadly announced a pre-performance loss.
China Southern Airlines expects its net loss attributable to its parent company to be between 10.2 billion yuan and 12.1 billion yuan in the first half of 2022, compared with a net loss of 4.688 billion yuan in the same period last year; excluding non-attributable net losses to its parent company, it is 10.3 billion yuan to 12.5 billion yuan. Compared with the same period last year, the net loss was 4.8 billion yuan.
Air China expects its net loss attributable to its parent company to be between 18.5 billion yuan and 21 billion yuan in the first half of 2022, which is much higher than the 6.786 billion yuan in the same period last year; net loss after deducting non-attributed losses to its parent company will also reach 18.6 billion to 21.3 billion yuan. Much higher than the 6.920 billion yuan in the same period last year.
China Eastern Airlines estimates that its net loss attributable to its parent company in the first half of 2022 will be between 17 billion yuan and 19.5 billion yuan, much higher than the net loss of 5.208 billion yuan in the same period last year; net loss after non-attributable to its parent company will be between 17.3 billion yuan and 19.5 billion yuan. 19.8 billion yuan, higher than the net loss of 5.619 billion yuan in the same period last year, as shown in the table below.
The half-year net losses of the three major airlines increased significantly. The reason is not difficult to understand: the local epidemic caused a decrease in transportation volume during the period, and high oil prices made it worse.
As shown in the figure below, the revenue ton-kilometers of the three major airlines in the first half of 2022 is far lower than the level in the first half of 2021, and even lower than the level in the first half of 2020 when the epidemic first emerged. This is mainly due to the decline in travel demand caused by the local epidemic.
The largest items of airline expenses include depreciation (depreciation of purchased aircraft and expenses and amortization of leased aircraft), fuel and employee expenses. Depreciation and amortization expenses are basically fixed. If revenue declines, the proportion of this expense in revenue will increase, dragging down the airline's profitability.
In addition, the sharp rise in fuel costs along with oil prices has also eroded airline revenue, especially in the first half of 2022, when the price of fuel oil will rise far more than crude oil.
As can be seen from the above figure, the blue line representing the aircraft fuel price curve has increased significantly in the second quarter of 2022, far above the red line referring to the price of Brent crude oil. How to seize the opportunity in the future market of
? How will
perform in the future?
From the supply side, OPEC may intend to maintain the original production reduction plan, that is to say, it is likely not to increase production to make up for the impact of restricted supply in a large country, which may trigger supply shortages in some regions (especially Europe).
However, from the demand side, high inflation in the United States (especially high energy prices) and the difficulty in finding energy in Europe may lead to a contraction in demand - the price is too high and unaffordable, which may cause some consumers to choose other alternatives. Or reduce consumption desire.
On the other hand, high inflation in Europe and the United States has also been transmitted from the increase in labor and upstream industry costs to the production end, which may cause manufacturers to reduce the scale of production or suspend production to reduce losses, which will reduce demand.
S;P Global's report shows that China, one of the world's largest energy consumers, crude oil imports fell to a 47-month low in June to 8.75 million barrels per day (data from the General Administration of Customs on July 13), It fell 11% year-on-year and 19% from the previous month, and was also far lower than most analysts' expectations, mainly because state-owned refineries reduced spot purchases.
In the first half of 2022, China's crude oil imports fell by 3.1% year-on-year to 253 million tons, or 10.23 million barrels per day.
The agency speculated that the decline in domestic crude oil imports may be due to the crude oil inventory in May reaching 945 million barrels, an 11-month high, equivalent to 63% of domestic crude oil storage capacity, leading to a decline in demand for imports.
In summary, domestic epidemic prevention and control measures, higher-than-expected inflation in the United States, and the Federal Reserve and other central banks expanding interest rate curbing economic growth have led to shrinking demand. In addition, the author believes that the exchange rate of the U.S. dollar against the euro and the pound A sharp rise will likely weaken the ability of European countries to pay for energy purchases, posing challenges to oil prices in the short and medium term.
In the long term, current energy issues may highlight the importance of alternative energy sources.China is at the forefront of the world in the development of new energy resources. In the future, as countries around the world vigorously develop new energy sources, their dependence on petrochemical energy will decrease, and fluctuations in oil prices may no longer have a significant impact on global industry and consumption.
Therefore, oil prices will continue to fluctuate in the short term, and the performance of domestic airlines will continue to be affected by the recurrence of the epidemic and the fluctuations in oil prices. However, the author believes that as the economy returns to normal, aviation demand is expected to bottom out, and oil prices are due to The development of alternative energy sources has been curbed, which will benefit the performance of the three major airlines. Therefore, in the medium and long term, the stock prices of the three major airlines are expected to bottom out and rebound.
Oil stocks should continue to benefit from high oil prices in the short term, while the long-term prospects depend on the ability of these companies to get rid of their dependence on the oil business and turn to new energy and new business development.
This article comes from Hong Kong stock decoding
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