[ET Net News Agency, 19 January 2018] Deutsche Bank lifted its target price for
PetroChina (PTR)(00857) to HK$6.28 from HK$5.77, and maintained its "hold" rating.
As the largest producer and seller of natural gas, PTR struggles to keep up with the
surge in gas demand (+20% in 2017), as its production is growing at 5%, said the research
house.
Its oil production will likely also continue to decline in 2018 due to previous years'
cut in capex after the oil price crash. As a result, PTR would be forced to import more
gas and particularly expensive LNG to make up for the shortage.
DB forsees the import losses remaining elevated at RMB20bn+ until 2020. Impending O&G
reforms, such as the potential to remove the company from its pipeline network, would also
break up the monopoly.
It expects PTR to achieve an ROE of 4% in 2018, but the stock is trading at 0.7x P/B,
which DB believes is a rich valuation. (KL)