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PetroChina Co. Ltd.

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Based on a number of near-term challenges, the investment thesis on PetroChina is recalibrated to a Strong Sell. There are concerns regarding prospects for the company’s oil production growth, considering its heavy exposure to significantly mature-producing areas. A limited international operation and an ambitious investment program gives investors more reason to steer clear of the stock. Persistent marketing headwinds, reflecting slow domestic refined products demand growth and fierce competitions, also keep us worried. While the company’s leverage to the high-growth Chinese market is expected to help sustain its upstream growth momentum, the fuel price caps and heavy taxes offset most, if not all, of the Chinese market positives. Consequently, investors are advised to sell PetroChina.


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