On April 13, CNOOC (600938) released the “Announcement on Online Issuance Subscription Status and Winning Rate” of A-share IPO, and the online subscription of CNOOC’s A-share IPO was also announced.
Investors responded positively to the effective subscription of 234.21 times
As China’s largest offshore oil and gas production operator and natural gas producer, CNOOC is also one of the world‘s largest independent oil and gas exploration and production companies. Its main business is the exploration, development, production and sales of crude oil and natural gas. Previously, the company and the co-lead underwriters determined the issue price at 10.80 yuan per share based on the preliminary inquiry results, comprehensively considering factors such as the company’s fundamentals, industry, the valuation level of comparable listed companies, market conditions, and fundraising needs. A-share investors responded positively and enthusiastically participated in the subscription.
According to the “Announcement on Online Subscriptions and Winning Rates” issued by CNOOC, since the initial effective online subscription ratio is about 415.14 times, which is higher than 150 times, this public offering needs to start a callback mechanism. After the callback mechanism was activated, the final number of shares issued offline was 368 million shares, and the final number of shares issued online was 1.383 billion shares (including over-allotment).
After the callback, the winning rate of this online offering was about 0.43% (including the over-allotment part), and the effective subscription multiple reached 234.21 times (including the over-allotment part), reflecting the capital market’s recognition of the investment value of CNOOC.
Increasing Reserves and Production Drives Steady Growth in Performance
China’s dependence on oil and natural gas is relatively high. According to wind data, China’s oil imports in 2020 will reach 540 million tons, with an import dependence of 81%; natural gas imports will be 136.6 billion cubic meters, with an import dependence of 41%. It is imperative to improve the national energy security capability and accelerate the increase in domestic oil and gas reserves and production.
CNOOC actively responded to the policy and increased its exploration and development efforts. The scale of the company’s oil and gas assets has grown steadily, and it has continued to maintain its leading position in the country’s oil increments. According to statistics, CNOOC’s net oil and gas production has increased from 332 million barrels of oil equivalent in 2011 to 573 million barrels of oil equivalent in 2021, a record high and an increase of 72.59% over 2011; oil and gas reserves have increased from 3.190 billion barrels of oil in 2011 Equivalent growth to 5.728 billion barrels of oil equivalent in 2021, an increase of 79.56% from 2011.
According to the data, in 2021, CNOOC’s annual average oil price will be US$67.89/barrel, a year-on-year increase of 65.7%, and the average realized natural gas price will be US$6.95/thousand cubic feet, a year-on-year increase of 12.6%. The main cost of a barrel of oil is $29.49, maintaining a cost-competitive advantage. In the whole year, the oil and gas sales revenue was RMB 222.1 billion, a year-on-year increase of 59.1%, the net profit was RMB 70.3 billion, a year-on-year increase of 181.7%, and the basic earnings per share was RMB 1.57, reaching the best level in history.
In addition, CNOOC pointed out in its 2022 strategic outlook that the production targets for the next three years are 600 million to 610 million barrels of oil equivalent, 640 to 650 million barrels of oil equivalent, and 680 to 690 million barrels of oil equivalent. By 2025, the company plans to achieve a daily production target of 2 million barrels and an annual net production target of 730 million barrels of oil equivalent. The growth of oil and gas production will drive the company’s performance scale to further expand.
Focus on shareholder returns to create value investment options
While accelerating business development, CNOOC also attaches great importance to the return on investment to shareholders. Since its listing in 2001, the company has distributed a total of HK$354.2 billion in dividends, with an average dividend payout ratio of 43%.
For investors, generous dividends are also one of the important considerations for investing in CNOOC. According to CNOOC’s 2022 strategic outlook, on the premise that the proposed dividends in each year are approved by the general meeting of shareholders, the company’s annual dividend payout ratio is expected to be no less than 40% from 2022 to 2024; the absolute value of the annual dividend is expected to be Not less than HK$0.70/share (tax included). Taking into account the lower limit of dividends promised above and the issue price, the dividend yield corresponding to the issue price reaches 5.2%.
Industry insiders believe that as a pure upstream energy company that is scarce in the A-share market, CNOOC’s performance is closely related to market changes in crude oil prices. The current crude oil price is in an upward cycle, which is expected to continue to benefit CNOOC. After the company’s A-share listing, investors will share the current energy pro-cyclical dividends. (Yan Yun)