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PetroChina Co Ltd ADR PTR

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Morningstar’s Analysis

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PetroChina’s 2020 Preliminary Net Profit Below Expectation; Recovery in 2021 On Track

Chokwai Lee, CFA Senior Equity Analyst

Analyst Note

| Chokwai Lee, CFA |

We keep our HKD 3.30 per H-share (USD 42.50 per ADR, CNY 2.88 per A-share) fair value estimate for now after PetroChina released a preliminary 2020 net profit of between CNY 16.7 billion and CNY 20.7 billion, down by 55% to 63% year over year. The results were below our forecast of CNY 25.1 billion, but we think investors should focus on the recovery of the earnings in 2021, with oil prices gradually rebounding since second half of 2020. As vaccine programs get under way in several parts of the world, a complete recovery--with normal travel behavior, and thus crude consumption--seems more likely than ever. While uncertainty on the coronavirus outbreak such as more transmissible strains and delays in vaccine rollout remains, we believe the shares (except A-shares) are still attractive for investors willing to hold through near-term volatility. Our crude oil midcycle forecast is unchanged at USD 60 per barrel for Brent.

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Company Profile

Business Description

PetroChina, the national champion that inherited the majority of Chinese onshore oil and gas assets, has developed into an international supermajor, with an expansive pipeline network that supplies more than 75% of China’s natural gas demand. It produces more than 1.4 billion barrels of oil equivalent of oil and gas annually and has more than 1.2 billion barrels of annual crude oil primary distillation capacity and roughly 21,000 service stations. The fluctuations in the prices of crude oil, refined products, chemical products, and natural gas have a significant impact on PetroChina’s revenue. State-owned China National Petroleum Corp is PetroChina’s controlling shareholder with a stake of more than 80%. The firm’s competitors in China are Sinopec and CNOOC.

No. 9 Dongzhimen North Street, Dongcheng District
Beijing, 100007, China, People's Republic of
T +86 1059986270
Sector Energy
Industry Oil & Gas Integrated
Most Recent Earnings Sep 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type
Employees 732,730