PetroChina Earnings: Robust Upstream and Natural Gas Sales Business

PetroChina’s first-quarter 2024 net profit of CNY 45.7 billion, up 5% year on year, was largely in line with our expectation. After incorporating our latest energy price assumptions, we increase our 2024-28 earnings forecasts by an average of 7%. Consequently, we raise our fair value estimate to HKD 6.80 per H-share (CNY 6.20 per A-share) from HKD 6.50 (CNY 6.10). We think PetroChina’s H-shares are currently fairly valued, and see more upside for peer, Sinopec’s H-shares. During the briefing, management emphasized that the firm will balance shareholders return and its investment needs in the long-term. In our view, this means that it is less likely that PetroChina will increase its current payout ratio of 50% significantly in the near term due to its expansion plan.