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Director’s Cut
CNOOC growth to outpace sisters
James Hubbard has initiated coverage on the three sisters of China’s oil and
gas sector, CNOOC (883 HK), PetroChina (857 HK) and Sinopec (386 HK).
With China’s oil production expected to peak in 2013, while oil demand rises at
4-5% a year, the country’s oil imports are set to rise dramatically in coming
years. China’s gas industry is also set to quadruple by 2020 to be the third
largest globally. As a result, James favours stocks with exposure to the growth
of China’s oil and gas sector. That said, he would steer clear of the refining
sector, as regulated prices are likely to result in losses more often than not.
James’ top pick is CNOOC, as it has an attractive 2P reserve life of 19 years,
plus top quartile production growth of 5.5% out to 2015. This is a stronger
production profile than either domestic or major global peers. Looking forward,
he expects the shares to re-rate through and beyond the January strategy day
as delayed deals move forward, oil leaks are fixed and confidence in 2012 and
beyond production growth is restored.
James also likes PetroChina as it can deliver production growth of 3.2% to 2015
from its dominant China gas upstream and pipeline position, while most of its
global super major peers will do well to avoid declines.
Until we see a refining policy change, James thinks Sinopec will struggle. He
believes Sinopec’s defensive qualities are overrated and given its refining
exposure and lower upstream production growth prospects, he argues it should
trade on a lower multiple than CNOOC or PetroChina
Highlights
With European PMIs falling, Dan McCormack is positive on telecoms,
favouring Vodafone (VOD LN) and Deutsche Telecom (DTE GR).
David Rickards says returns are typically stronger when revisions are
negative, but rising, a situation that could occur in December 2011.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Director’s Cut
CNOOC growth to outpace sisters
James Hubbard has initiated coverage on the three sisters of China’s oil and
gas sector, CNOOC (883 HK), PetroChina (857 HK) and Sinopec (386 HK).
With China’s oil production expected to peak in 2013, while oil demand rises at
4-5% a year, the country’s oil imports are set to rise dramatically in coming
years. China’s gas industry is also set to quadruple by 2020 to be the third
largest globally. As a result, James favours stocks with exposure to the growth
of China’s oil and gas sector. That said, he would steer clear of the refining
sector, as regulated prices are likely to result in losses more often than not.
James’ top pick is CNOOC, as it has an attractive 2P reserve life of 19 years,
plus top quartile production growth of 5.5% out to 2015. This is a stronger
production profile than either domestic or major global peers. Looking forward,
he expects the shares to re-rate through and beyond the January strategy day
as delayed deals move forward, oil leaks are fixed and confidence in 2012 and
beyond production growth is restored.
James also likes PetroChina as it can deliver production growth of 3.2% to 2015
from its dominant China gas upstream and pipeline position, while most of its
global super major peers will do well to avoid declines.
Until we see a refining policy change, James thinks Sinopec will struggle. He
believes Sinopec’s defensive qualities are overrated and given its refining
exposure and lower upstream production growth prospects, he argues it should
trade on a lower multiple than CNOOC or PetroChina
Highlights
With European PMIs falling, Dan McCormack is positive on telecoms,
favouring Vodafone (VOD LN) and Deutsche Telecom (DTE GR).
David Rickards says returns are typically stronger when revisions are
negative, but rising, a situation that could occur in December 2011.
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