China Energy_ Oil_ Updating estimates for PetroChina, Sinopec, CNOOC post results

Summary of the Conference Call on China Energy: Oil Sector Companies Involved - PetroChina - Sinopec - CNOOC Key Points and Arguments Earnings Estimates Update - PetroChina: - 2024E EBITDA revised to RMB 469,147 million, a 2% increase from previous estimates - 2025E EBITDA revised to RMB 459,951 million, a 1% decrease - 2026E EBITDA revised to RMB 495,862 million, a 1% decrease [5][6] - Sinopec: - 2024E EBITDA revised to RMB 203,256 million, a 3% decrease - 2025E EBITDA revised to RMB 212,346 million, a 4% decrease - 2026E EBITDA revised to RMB 234,679 million, a 3% decrease [5][6] - CNOOC: - 2024E EBITDA revised to RMB 268,198 million, a 1% increase - 2025E EBITDA revised to RMB 263,099 million, a 1% decrease - 2026E EBITDA revised to RMB 285,458 million, a 1% decrease [5][6] Valuation Comparisons - PetroChina: - Current share price discounts a long-term Brent price of US$65/bbl - 2025E dividend yield is approximately 8$57/bbl - Expected FCF yield and dividend yield both around 8% for 2025 [10][12] - Sinopec: - Expected to experience weak FCF due to prolonged chemical market surplus and elevated capex [12][20] Price Targets - PetroChina: - New 12-month price targets set at HK$8.10/Rmb12.30, down from HK$8.20/Rmb12.70 [6][18] - CNOOC: - New 12-month price target set at HK$23.50, up from HK$23.30 [10][12] - Sinopec: - New 12-month price targets set at HK$4.50/Rmb5.60, down from HK$4.80/Rmb6.10 [12][15] Sensitivity Analysis - PetroChina: - Earnings positively correlated with oil prices, but the net positive impact on EBITDA narrows when oil exceeds US$85/bbl due to increased royalties [8][17] - **CNOOC**: - Clean exposure to oil price changes, but net benefits decrease slightly when oil prices rise above US$85/bbl due to increased royalties [11][12] Risks - PetroChina: - Risks include lower oil prices than expected and a more competitive gas market leading to earnings headwinds [17][19] - Sinopec: - Risks include fluctuations in oil prices and refining margins, as well as cost pass-through of imported LNG [20] Other Important Insights - The valuation of Chinese oil companies remains discounted compared to global peers, indicating potential investment opportunities [5][6] - The analysis suggests a preference for upstream companies like PetroChina and CNOOC over Sinopec due to expected weak FCF in the latter [12][20]