Event
National Development and Reform Committee recently released Trail Measures on Petroleum Price Management.
Our Analysis and Estimation
We consider this is a transitional policy.
It will continue to favor the petroleum refining industry.
Petroleum price is unlikely to be above USD130 per barrel.
It is most possible that petroleum price will run below USD80 per barrel.
It is a favor to China Petroleum & Chemical Corporation.
Investment Suggestion
We predict 2009-2011E EPS of China Petroleum & Chemical Corporation (600028) to be Rmb0.64, Rmb0.70 and Rmb0.75, representing dynamic P/E ratio at 16x, 15x and 14x respectively based on current share price; “Recommend” rating is maintained. Since low petroleum price will last for a long time, “Neutral” rating is hereby maintained for PetroChina (601857).