PetroChina did not fare well after reaching $1 trillion in market cap
However, more than 86 percent of the company’s shares outstanding are held by PetroChina’s parent company — part of the government’s policy of retaining state ownership of strategically vital industries such http://internet-tarife.net/akcii-foreks/microsoft-ssha.html as energy. That left its Shanghai A shares at a 154 percent premium to the H shares, higher even than the 145 percent premium for the A shares of smaller Chinese rival Sinopec Corp (600028.SS ) (0386.HK ).
While times are good, PetroChina and a string of other state-controlled companies are cashing in on the euphoria with so-called A-share mainland listings. The oil and gas company raised 66.8 billion yuan, or $8.9 billion, ahead of its listing Monday by selling 4 billion shares at 16.70 yuan a share, the largest amount ever raised in a mainland initial offering. But only 13 percent of the company has been floated. The rest is in the hands of its state-owned parent China National Petroleum.
This is fed by blanket coverage in the media with newspapers, magazines and business websites carrying prominent stories about stock market winners. Weighed down by government-imposed price caps on gasoline, PetroChina’s refinery business is losing tens of millions of dollars a day, according to petroleum analysts. With China’s economy continuing to grow at double digit rates and no sign that investors are losing their appetite for the share markets, this price bule has so far been unaffected by issues that have shaken other markets, like mortgage defaults by low credit rated borrowers in the United States. The prices set on the Chinese exchanges, still largely isolated from the rest of the world by regulatory barriers that limit the amount of foreign money going into the stock markets and domestic money permitted to go out, bear little relation to company performance or to markets elsewhere. One effect of the sharp run-up in Shanghai’s stock market this year has been that some of the country’s biggest state-owned enterprises are trading with valuations usually associated with high-growth sectors.
China now has five of the world’s 10 most valuable companies. China Mobile, Industrial and Commercial Bank of China, China Life Insurance and Sinopec join PetroChina in the top ranks. The energy company’s soaring valuation underlines the frenzy among Chinese investors for new stock despite concerns that a bubble has formed in the country’s closed equity markets.
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PetroChina’s Hong Kong-listed shares (0857.HK ) plunged 8.2 percent to close at HK$18.00 on Monday, suggesting many international investors viewed the company as too pricey. But the massive demand for PetroChina shares was partly due to wild speculation that has gripped China’s stock market during a bull run that began last year, analysts said. That could hurt the stock and the overall market later on. China’s http://www.otctoolkits.com/audusd/ top oil producer became the world’s biggest listed company by market value at around $1 trillion, double the capitalization of the second biggest company, rival oil giant Exxon Mobil (XOM.N ), at $488 billion. PetroChina was established as a joint stock company with limited liabilities under the Company Law of the People’s Republic of China (the PRC) on November 5, 1999, as part of the restructuring of CNPC.
When it listed in Shanghai in 2007, bubbles in both oil and the Chinese equity market were primed to burst, while the global financial crisis was just around the corner. Measured against the 73 percent drop in China’s CSI 300 Energy Index over the past decade, PetroChina’s 82 percent retreat doesn’t look quite so bad.
- In 2014, Petrochina’s subsidiary Lanzhou Petrochemical was responsible for ethylene and ammonia leaks, benzene contamination of water supplies, and air pollution in Lanzhou.
- That could hurt the stock and the overall market later on.
- PetroChina’s U.S. shares were off sharply Monday, falling $28.56, or 11.2 percent, to $226.50 in afternoon trading.
- China now has five of the world’s 10 most valuable companies.
- The Shanghai shares are meant for domestic investors and are generally off-limits to would-be foreign buyers.
- PetroChina has not fared too well since the end of 2008, either.
Even if the government does loosen its grip, today’s market darlings are more likely to be found in the technology and consumer industries than in “old economy” sectors like oil. President Xi, who cemented his status China’s strongest leader in decades at last week’s Communist Party congress, has emphasized the need for more environmentally-friendly growth. His government is rolling out one of the world’s biggest electric car programs and has pledged to cap China’s carbon emissions by 2030. And as Citigroup Inc. analyst Nelson Wang points out, most of PetroChina’s shares are owned by the Chinese government, so the hit to minority investors hasn’t been as big as the loss in total market value might suggest.
We have lowered our A and H share target 14%, maintaining a Buy on H-shares but lowering A-shares to Hold. We believe industry reform will force monetization PetroChina’s pipeline assets, crystalizing unreflected value. We are bullish on the outlook for oil prices – but not as bullish as earlier in the year. We expect that OPEC will extend its production cuts to 2018, the catalyst for a Brent oil price recovery to $60/bbl by end-17.
Ten years after PetroChina peaked on its first day of trading in Shanghai, the state-owned energy producer has lost about $800 billion of market value — a sum large enough to buy every listed company in Italy, or circle the Earth 31 times with $100 bills. Bankers and http://negratinta.com/aapl/ brokers cheered when the opening price of 48.60 yuan flashed up on a screen at the Shanghai stock exchange, almost tripling the value of the 4 billion shares listed at 16.70 yuan each. We have lowered 2017, 2018 & 2019 earnings estimates by 4%, 22% & 23% respectively.
However, Bear Stearns noted, based on Wall Street consensus forecasts, PetroChina was trading at a 72 percent premium to Exxon Mobil based on a 2008 price-to-earnings valuation. “From an operational perspective, we see little reason for this disparity,” the investment bank said. PetroChina’s U.S. shares were off sharply Monday, falling $28.56, or 11.2 percent, to $226.50 in afternoon trading. The Shanghai shares are meant for domestic investors and are generally off-limits to would-be foreign buyers. Chinese investors likewise have limited access to overseas-traded shares, crimping the leeway for arbitrage between the markets.
Energy Giants Seek Chinese Minnows in Bid to Shift Gas Glut
In 2014, Petrochina’s subsidiary Lanzhou Petrochemical was responsible for ethylene and ammonia leaks, benzene contamination of water supplies, and air pollution in Lanzhou. The city government criticized the company http://pleonnewsroom.cz/usd-cad-prognoz/ and demanded an apology. Blame the financial crisis and a collapse in oil prices. When PetroChina made its debut in 2007 brent crude prices were at one point, above $140 a barrel. Today they are about half that.
