EBSCN·2025-03-16 06:46Investment Rating - The report maintains an "Overweight" rating for the oil and petrochemical sector [5] Core Views - The geopolitical situation and supply-demand outlook remain uncertain, but the marginal cost of shale oil is expected to support oil prices. As of March 14, 2025, Brent and WTI crude oil futures closed at $70.65 and $67.19 per barrel, respectively, reflecting a week-on-week decline of 0.28% and 0.21% [1][9] - The "Big Three" oil companies (China National Petroleum Corporation, Sinopec, and CNOOC) are significantly undervalued compared to their overseas counterparts, with a forecasted price-to-book (PB) ratio of 0.78 for H-shares and 1.05 for A-shares, compared to 1.48 and 1.83 for North American E&P companies and integrated energy giants [2][20] - The "Big Three" exhibit strong earnings resilience during periods of declining oil prices, with projected net profits of CNY 1,620 billion for China National Petroleum, CNY 668 billion for Sinopec, and CNY 1,387 billion for CNOOC under a scenario of $70 per barrel oil prices [3][28] Summary by Sections Oil Price Support and Geopolitical Factors - The report highlights that geopolitical uncertainties and supply-demand dynamics continue to influence oil prices, with the IEA lowering global oil demand forecasts and a temporary ceasefire agreement between Russia and Ukraine [1][14] - The marginal cost of U.S. shale oil is approximately $64 per barrel, which is expected to play a role in stabilizing oil prices alongside OPEC+ [10][18] Valuation of "Big Three" Oil Companies - The valuation metrics indicate that the "Big Three" are trading at lower multiples compared to their international peers, with H-shares particularly undervalued [2][20] - The report emphasizes the return on equity (ROE) of CNOOC being superior to most integrated energy giants, while China National Petroleum's ROE is comparable to that of overseas leaders [2][20] Long-term Investment Value - The report asserts that the "Big Three" maintain excellent long-term investment value, supported by their operational efficiencies and strategic initiatives to enhance production and reduce costs [3][4] - The projected net profit growth for the "Big Three" under stable oil price conditions indicates a robust financial outlook, reinforcing their investment appeal [3][28]