Two positive news from PetroChina’s 2020 interim result
On 27 August 2020, PetroChina (0857) released its 2020 interim result. Under the severe macroeconomic environment and collapse of oil price, PetroChina ‘s sale for 2020 first half was downed by 22.3% YOY. As a result, PetroChina made a loss of RMB 29.983 billion which is -205.5% YOY. However, there are two positive signs in this 2020 interim result.
Loss is narrowing
Compare with the 2020 Q1 result, the loss in Q2 start to narrow down. PetroChina report a loss of RMB 16.23 billion for 2020 Q1, which mean the loss for 2020 Q2 was about RMB 13.753 billion. The loss was decreased by 15.2%. The narrowing of loss may due to the cutting of capital expenditure and reduction of operating expense. Both capital expenditure and operating expense were down by 11% and 16.9% YOY.
2020 interim dividends
Come as a surprise, the board of PetroChina has declared an interim dividend of RMB 0.08742 yuan per share for 2020. This is 12.5% increase by comparing to interim dividend of RMB 0.07765 yuan per share for 2019. As most of the oil company has reduced their dividend payment to save cash, this move from PetroChina just show it still have a strong balance sheet. The 2020 interim dividend total for RMB 16 billion and PetroChina ‘s cash and cash equivalents total for RMB 90.3 billion as on June 30, 2020. Once the sell of pipeline business complete in future, PetroChina’s balance sheet will be further strengthen and able to provide a better dividend payment.
The management believed that the international crude oil market is expected to remain in excess of demand, and the rebound of international oil prices is still facing great uncertainty. It remains a tough environment for oil company in the second half of 2020. Therefore, it should not be any expectation on PetroChina’s stock price. However, as the management increase its interim dividend and able to maintain dividend policy. PetroChina may be a suitable candidate for the investor who weight on dividend payment.