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Top three must change course
By Fu Chenghao |
January 8, 2009, Thursday
|
Print Edition
Print Edition
WHILE China's economic slowdown will continue to exert downward pressure on oil demand, the nation's top three oil companies should adopt different new year resolutions for their share price recovery, a brokerage report said.
But the focus will not be on the inevitable 2009 earnings drop in the sector, as the degree and timing of a sustainable share price rally will hinge on the market's confidence of earnings recovery in 2010, CLSA head of China energy research Gordon Kwan wrote in the report.
For PetroChina Co, the nation's top oil and gas producer, it must accelerate monetizing the vast gas reserves while reining in oil production costs, Kwan said. PetroChina has aimed to almost double the size of its gas pipeline network by the end of 2015 to meet growing demand.
Sinopec Corp, China's second-largest oil producer and the biggest refiner, should capitalize on the higher refining margin without government subsidies, thanks to the positive policy shifts, while mitigating potential losses in the chemicals business.
Both are co-listed in Hong Kong and Shanghai.
When it comes to Hong Kong-listed CNOOC Ltd, China's dominant offshore oil producer, it must deliver oil and gas growth of 7 to 11 percent at much lower crude oil prices to restore investor confidence, Kwan wrote. CNOOC is a pure upstream player. Energy stocks tend to "front run" oil prices by about six months as early cyclicals, he said.
But the focus will not be on the inevitable 2009 earnings drop in the sector, as the degree and timing of a sustainable share price rally will hinge on the market's confidence of earnings recovery in 2010, CLSA head of China energy research Gordon Kwan wrote in the report.
For PetroChina Co, the nation's top oil and gas producer, it must accelerate monetizing the vast gas reserves while reining in oil production costs, Kwan said. PetroChina has aimed to almost double the size of its gas pipeline network by the end of 2015 to meet growing demand.
Sinopec Corp, China's second-largest oil producer and the biggest refiner, should capitalize on the higher refining margin without government subsidies, thanks to the positive policy shifts, while mitigating potential losses in the chemicals business.
Both are co-listed in Hong Kong and Shanghai.
When it comes to Hong Kong-listed CNOOC Ltd, China's dominant offshore oil producer, it must deliver oil and gas growth of 7 to 11 percent at much lower crude oil prices to restore investor confidence, Kwan wrote. CNOOC is a pure upstream player. Energy stocks tend to "front run" oil prices by about six months as early cyclicals, he said.
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