PetroChina lost $23.4 billion last year. This picture shows a PetroChina gas station in Beijing.
CNPC released its earnings forecast on Jan. 30, and some analysts said CNPC’s report was “not candid,” saying it would lose up to 23.4 billion yuan in net profit after deductions in 2020, and that its market value had evaporated from its peak of 6 trillion yuan.
The report released by PetroChina on Jan. 31 reported that the company only said its 2020 results would decline, but did not state in its earnings forecast whether its 2020 results would be profitable or loss-making. According to PetroChina’s earnings preview, its 2020 net profit attributable to the mother company decreased by 25 billion yuan to 29 billion yuan year-on-year, and net profit after deductions fell by 73 billion yuan to 77 billion yuan.
However, calculations show that in 2019, PetroChina’s net profit before deductions was 45.677 billion yuan, and after deductions was 53.485 billion yuan, which combined with the aforementioned earnings preview found that its 2020 net profit after deductions was actually a huge loss of between 23.415 billion yuan and 19.515 billion yuan.
The report said that the huge difference in net profit attributable to the mother before and after deductions was mainly affected by the sale of pipeline assets by PetroChina, which sold some of its pipeline assets to National Petroleum Gas Pipeline Group Co. in December 2020, a transaction that generated a net gain of 32 billion yuan. The sale of the natural gas pipeline business also has a negative impact on PetroChina’s medium- to long-term operations.
As a result of the plague, PetroChina’s performance plummeted in 2020, and oil prices fell precipitously, in addition to a significant reduction in refined oil sales, whereby PetroChina made a huge provision for impairment of oil and gas assets. However, PetroChina’s performance forecast did not publicly disclose the specific amount of its impairment.
Meanwhile, PetroChina’s market value evaporated even more spectacularly. For a long Time, PetroChina has been the largest company in China in terms of market capitalization, with a total market capitalization of nearly $7 trillion. Today, PetroChina’s total market capitalization is less than $750 billion, a shrinkage of nearly 90% compared to the high point at the beginning of its listing fifteen years ago, and a market capitalization of over $6 trillion has evaporated.
Netizens have expressed their discontent with PetroChina, a state-owned enterprise that receives huge annual subsidies from the Chinese Communist Party authorities and still incurs huge losses.
Netizen “There are always tricky people” said, “Another loss, huh huh.”
“The years are suddenly late”: “Which year does China National Petroleum not lose money?” “Zi said” expressed agreement: “I have never seen a profit.”
Some netizens revealed the essence of PetroChina’s losses, “Free as I am”: “A company where people at the top and middle levels are floating around and the bottom is suffering.”
Some netizens also expressed dissatisfaction with CNPC’s monopoly status, with netizen “Guo Tianpei” saying, “Let private enterprises have the qualification to import refined oil and Crude Oil, and let foreign enterprises come in as well.”
Some netizens said: “PetroChina should be included in the Communist Party’s current crackdown on monopolies.
Many netizens believe that companies like PetroChina should be shut down.
“w-street”: “Net profit after deductions fell 73 billion yuan ~ 77 billion yuan, a corporate profit fell 76 billion, the share price should fall towards 1 yuan reasonable.”
“You Gen”: “Shut down and forget about it, high prices, poor oil products, the result is still losing money, such enterprises should be closed early.”
Net profit after deduction is the net profit after non-recurring profit or loss. Net profit after non-recurring gains and losses is simply an indicator reflecting the business performance of the enterprise, taking out the capital premium and other factors, and only looking at the high or low operating profit. In this way, the operating performance can be correctly judged.
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