PetroChina’s 2022 Results Within Expectations; Fair Value Estimate Lowered on Weaker Oil Prices

PetroChina’s 2022 net profit of CNY 149.4 billion, up 62% year on year, is in line with its preliminary guidance. We cut our fair value estimate to HKD 4.80 per H-share (CNY 4.22 per A-share) from HKD 4.92 (CNY 4.28) after incorporating our latest energy price and foreign exchange assumptions. We think PetroChina’s H-shares are currently fairly valued, although the estimated 2023 dividend yield of about 8% should continue to support share prices. CNOOC remains our top pick in the sector given its cost efficiency and oil and gas output growth, while its H-shares also provide more than 8% estimated dividend yield in 2023.