[ET Net News Agency, 25 October 2017] PetroChina (00857) will report 3Q results on 30
October. Citi Research expects that the quarterly EPS to be 2.8fen, a tad weaker than the
first two quarters and potentially the worst quarter in FY2017.
Oil price remains the biggest driver for its earnings. Although spot oil was up over
16% in 3Q, average oil price with 1-month lag, the proxy to its crude ASP, was actually
down versus 2Q, leading to lowered E&P earnings versus 2Q, said the research house.
Though not a leader in the fuel retail market, PetroChina had to respond to the fuel
price war by offering heavier discounts. Citi expects its marketing division to post
further deteriorating results in 3Q, in tandem with its rival Sinopec (00386).
Refining & Chemical segments are expected to improve versus 2Q on inventory gains and
better chemical spreads, also in line with the industrial trend.
Being the only bear in the market, Citi maintained its "sell" rating on the stock going
into 3Q results, on the back of delayed earnings recovery and dim earnings outlook, with a
target price of HK$4.2. (KL)