Event:
Considering that crude oil price constantly rebounded in international market recently, China’s State Development and Reform Commission decided to upgrade price of gasoline and diesel by Rmb290/ton and Rmb180/ton separately from zero hour of March 25, 2009.
Our Analysis and Estimation:
Appreciation of product oil is favorable to China Petroleum & Chemical Corporation (600028) and PetroChina (601857); we upgrade 2009-2011E EPS of China Petroleum & Chemical Corporation (600028) to Rmb0.64, Rmb0.65 and Rmb0.72 respectively, and PetroChina (601857) to Rmb0.56, Rmb0.54 and Rmb0.60 separately.
Investment Suggestion:
As for the two giants, China Petroleum & Chemical Corporation (600028) has outperformed PetroChina (601857). With favorable factors such as exploration technology of China Petroleum & Chemical Corporation (600028) is more advanced; oil-gas field has entered into its summit; reserve replacement ratio constantly rallies with increasing oil-gas reserve; lowered loan rate reduces financial cost and international oil appreciation, the company is close to its best profitability, thus we upgrade rating of China Petroleum & Chemical Corporation (600028) to “Recommended”.