PetroChina Earnings: Downstream Operations Outperform Peers; H-Shares Undervalued

PetroChina’s cumulative nine-month net profit was up 10% year on year to CNY 131.7 billion, and beats the Refinitiv consensus. After updating our latest energy price and foreign exchange assumptions, we raise 2024-25 earnings estimates by 6%-17%. Consequently, our fair value estimate rises to HKD 6.50 per H-share (CNY 6.10 per A-share) from HKD 6.20 (CNY 5.70). We think PetroChina’s H-shares are currently undervalued, with an attractive 2024 dividend yield of more than 8%. However, CNOOC remains our top pick in the sector, given its cost efficiency and robust production growth.