PetroChina Co had its stock rating raised by Goldman Sachs & Co after recent declines in Hong Kong trading increased the attractiveness of buying shares in the nation's biggest oil company.
PetroChina was upgraded to "buy" from "neutral," with the target price for its Hong Kong-traded, or H, shares unchanged at HK$17 (US$2.20), Goldman Sachs analysts including Kelvin Koh wrote in a research note.
"We believe PetroChina's H shares are attractively valued versus its Chinese oil peers on most measures," the analysts said. "Its current valuation premium versus global peers is warranted by its more sustainable earnings outlook, solid execution track record and potential asset injection upside."
PetroChina declined 34 percent from a record close of HK$19.9 on November 1. The world's largest company by market value trades at about 16 times earnings in Hong Kong, compared with 14 times for Exxon Mobil Corp and Royal Dutch Shell Plc's 10 times, Bloomberg News reported.
Macquarie Securities Ltd raised its rating on PetroChina to "neutral" from "underperform," analysts David Johnson and Vivian Wong wrote in a research note. The company, China's second-largest refiner, will benefit from wider margins on processing crude into fuels, they said.
PetroChina rose 7.4 percent, the biggest gain since October 15, to HK$14.18 on Friday.
China Petroleum & Chemical Corp, the nation's biggest refiner, had its stock upgraded to "outperform" from "neutral" at Macquarie as "returns in the refining sector in China are likely to improve substantially over the next one to two years," Johnson and Wong said.
Sinopec, as the refiner is known, rose five percent to HK$11.66 at the close.
Cnooc Ltd, China's third-biggest oil producer, was upgraded to "neutral" from "underperform" because of higher oil prices in 2007, the Macquarie analysts said. Cnooc gained 5.6 percent, the biggest gain in more than a month, to HK$13.86.
(Shanghai Daily January 7, 2008)
