PetroChina Trading at a Premium

We are maintaining our Hold recommendation on PetroChina (PTR) following strong third-quarter results, which benefited from production gains and higher realized prices.

PetroChina ADRs have been weak in recent days, in line with the rest of the group, due to the pullback in crude oil prices and the broad turmoil in global markets. But they are hardly cheap. Based on most conventional valuation metrics, the ADRs are currently trading at a premium to the Chinese and other emerging market peers. The ADRs trade at a significant premium to the super majors, perhaps reflecting the company’s leverage to the high-growth Chinese market. Fuel price caps and heavy taxes offset most, if not all, of the Chinese market positives, in our view.

As such, we consider current valuation to be fair and prefer staying on the sidelines for now.

Read the full analyst report on PTR

Read the full analyst report on PTR