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.