Jefferies Initiates Coverage on PetroChina (PTR), CNOOC (CEO), & Sinopec (SHI), Sees New Energy Policy as Necessary
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Price: $46.85 --0%
Rating Summary:
10 Buy, 3 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 17 | Down: 14 | New: 17
Rating Summary:
10 Buy, 3 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 17 | Down: 14 | New: 17
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Jefferies anticipates a an energy policy overhaul in 2011 as energy consumption strains China's economy, security, and environment.
The firm believes the overhaul will feature price reforms, which they expect will benefit an upstream company that is rich in domestic assets while burdening the less well-endowed to venture overseas.
Jefferies reports that, "The 11th Five-Year Plan was built around energy subsidies and price controls.This policy dependence seems unhealthy for China's energy efficiency and security, and should end. We believe these policies will be phased out, replaced by an expanded social safety net and monetary flexibility made possible by a wealthier China."
Jefferies is initiating coverage on PetroChina (NYSE: PTR) (857 HK) with a Buy rating and price target of HK$15.00, as the firm believes regulatory curbs on its strong upstream assets will steadily dissolve due to strategic necessity.
The firm also initiates coverage on Sinopec (NYSE: SHI) (386 HK) with a Hold rating and a price target of HK$8.50, as the company’s upstream assets face similar depletion issues as CNOOC and regulators do not seem to prefer refiners.
Jefferies is initiated coverage on CNOOC (NYSE: CEO) (883 HK) with an Underperform rating and a price target of HK$15.00, on the belief that its domestic reserves are largely spent and that it faces a future of dilution as it pursues its growth imperative through expensive acquisitions.
The firm believes the overhaul will feature price reforms, which they expect will benefit an upstream company that is rich in domestic assets while burdening the less well-endowed to venture overseas.
Jefferies reports that, "The 11th Five-Year Plan was built around energy subsidies and price controls.This policy dependence seems unhealthy for China's energy efficiency and security, and should end. We believe these policies will be phased out, replaced by an expanded social safety net and monetary flexibility made possible by a wealthier China."
Jefferies is initiating coverage on PetroChina (NYSE: PTR) (857 HK) with a Buy rating and price target of HK$15.00, as the firm believes regulatory curbs on its strong upstream assets will steadily dissolve due to strategic necessity.
The firm also initiates coverage on Sinopec (NYSE: SHI) (386 HK) with a Hold rating and a price target of HK$8.50, as the company’s upstream assets face similar depletion issues as CNOOC and regulators do not seem to prefer refiners.
Jefferies is initiated coverage on CNOOC (NYSE: CEO) (883 HK) with an Underperform rating and a price target of HK$15.00, on the belief that its domestic reserves are largely spent and that it faces a future of dilution as it pursues its growth imperative through expensive acquisitions.
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