汇丰银行-中国-石油与天然气行业-中国石油与天然气：中国的大企业仍然很有吸引力-2019.1.12-27页.pdf

Disclosures&Disclaimer This report must be read with the disclosures and the analyst certifications in the Disclosure appendix,and with the Disclaimer,which forms part of it.Issuer of report:The Hongkong and Shanghai Banking Corporation Limited View HSBC Global Research at:https:/ THIS CONTENT MAY NOT BE DISTRIBUTED TO THE PEOPLES REPUBLIC OF CHINA(THE PRC)(EXCLUDING SPECIAL ADMINISTRATIVE REGIONS OF HONG KONG AND MACAO)Oil market conditions rapidly changed from tight to loose in 4Q18 due to a confluence of factors The sharp fall in oil prices hurt 2018 estimates and has important consequences for our modelling While we lower our estimates,our new target prices imply upside after the correction in share prices On 11 January 2019,we lowered our Brent assumption in Oil in 2019,Range bound:OPEC cut meets US shale glut.We now reduce our forecasts for China Oil&Gas majors after incorporating our new price deck.Our 2019e Brent assumption of USD64/b reflects our view of a slow recovery in prices from USD59/b 1Q19e.Our Brent price assumptions for 2019/20/21e are US64/70/70/b,compared to USD80/85/75/b previously.Our new Brent assumptions are about 10%or USD7/b below consensus for 2019e;and about even with consensus for 2020e.Our price progression takes into account two main factors:1)seasonal weakness in demand in the first quarter of the year,and 2)IMO2020-related factors starting to influence market behaviour in the second half.Estimate changes.Aside from incorporating our latest Brent assumptions,we also input HSBC FX strategists latest USD-RMB forecasts.As a result,we adjust our net income forecasts over 2018e/19e/20e/21e as follows:CNOOC-10%/-35%/-25%/-9%;PetroChina-2%/-28%/-22%/-8%;Sinopec 1%/-12%/-9%/-5%.Our valuation methodology is largely unchanged for PetroChina and Sinopec we use lower return-adjusted 2019e PB target multiples driven by the subdued ROEs in RMB terms:PetroChina(0.91x vs 1.07x previously)and Sinopec(1.09x vs 1.16x previously);for CNOOC we take an average of 2019e and 2020e BVPS multiplied by PB multiples of 1.50 x and 1.38x,respectively,vs using only our 2019e multiple of 1.71x previously,helping us to capture production growth from Guyana,which targets first oil in March 2020.Despite the sharp fall in oil prices,we see opportunities arising from the recent sell-off.Our target prices imply average upside of c39%and our preferred names remain the same:CNOOC(Buy,upside 31%)with a new lower target price of HKD16.69(from HKD19.76).Sinopec-H(Buy,upside 32%)with a new lower target price of HKD7.95(from HKD8.33),PetroChina-H(Buy,upside 40%)with a new lower target price of HKD7.03(from HKD8.11).While PetroChina has slightly more implied upside,CNOOC is more correlated to oil and we believe should be investors first choice for a recovery.Sector risks include:economic growth rates,currency volatility,trade policy friction,geopolitical risks,China energy sector reforms,relative price competitiveness of various fuels,cost inflation,and tax reform.12 January 2019 Thomas C.Hilboldt*,CFA Head of Resources&Energy Research,Asia Pacific The Hongkong and Shanghai Banking Corporation Limited .hk+852 2822 2922 Jingyi Zhang*Associate The Hongkong and Shanghai Banking Corporation Limited .hk+852 2996 6590 Gaopeng Qiu*Associate Shanghai *Employed by a non-US affiliate of HSBC Securities(USA)Inc,and is not registered/qualified pursuant to FINRA regulations China Oil&Gas EQUITIES OIL&GAS China China majors still look attractive,despite our lower price deck EQUITIES OIL&GAS 12 January 2019 2 Target and estimate changes,HSBC vs.consensus,and comparable valuations Ex.1 China Oil Majors summary changes Market cap 3m ADV TP Rating Upside/Name Ticker(USDm)USDm Price New Old New Old downside CNOOC Ltd.883 HK 70,852 121 12.72 16.69 19.76 Buy Buy 31%PetroChina 857 HK 186,532 78 5.03 7.03 8.11 Buy Buy 40%PetroChina A 601857 CH 186,532 57 7.33 6.30 7.20 Hold Hold-14%Sinopec 386 HK 91,787 94 6.01 7.95 8.33 Buy Buy 32%Sinopec A 600028 CH 91,787 103 5.35 7.08 7.42 Buy Buy 32%Total/Avg 349,171 91 24%Source:HSBC estimates,Bloomberg.Prices as at 9 January 2019.We make modest changes to 2018e forecasts and cut our 2019-2020e forecasts.CNOOCs share price continues to demonstrate the highest correlation to oil price movements.By moving USD8/b below consensus oil in 2019e our 2019e CNOOC EPS forecast is below consensus in 2019 by 17%,primarily on our lower oil price assumption.Ex.2 Changes to our EPS estimates(RMB/sh)_ New _ _ Old _ _ Change _ 2018e 2019e 2020e 2018e 2019e 2020e 2018e 2019e 2020e CNOOC 1.29 1.10 1.43 1.44 1.69 1.92 -10%-35%-25%PetroChina 0.35 0.35 0.41 0.36 0.49 0.53-2%-28%-22%Sinopec 0.60 0.66 0.68 0.59 0.76 0.75 1%-12%-9%Avg 3%-25%-19%Source:HSBC estimates,Bloomberg Ex.3 HSBC estimates vs consensus(RMB/sh)_ HSBC New _ _ Consensus _ _HSBC/Consensus _ 2018e 2019e 2020e 2018e 2019e 2020e 2018e 2019e 2020e CNOOC 1.29 1.10 1.43 1.26 1.32 1.34 2%-17%7%PetroChina 0.35 0.35 0.41 0.32 0.38 0.39 9%-8%5%Sinopec 0.60 0.66 0.68 0.62 0.62 0.64-3%6%6%Avg 3%-6%6%Source:HSBC estimates,Bloomberg Ex.4 Asia Oil Majors valuation table Stock Target Price Diff.to Rating 3M ADV Mkt Cap _ PE _ _ P/B _ _ ROE%_ _ DY%_ Company Code Price Price Crncy TP(%)USDm USDm 17a 18e 19e 17a 18e 19e 17a 18e 19e 17a 18e 19e CNOOC Ltd.883 HK 12.72 16.69 HKD 31%Buy 120.8 70,852 20.0 8.1 10.0 1.21 1.17 1.11 7%14%11%3.9%4.6%4.4%PetroChina 857 HK 5.03 7.03 HKD 40%Buy 78.0 186,532 34.7 11.9 12.2 0.63 0.65 0.64 2%5%5%3.0%4.6%4.1%Sinopec 386 HK 6.01 7.95 HKD 32%Buy 94.3 91,787 12.3 8.7 8.1 0.8 0.82 0.79 7%10%10%9.6%6.9%7.4%Kunlun Energy 135 HK 8.43 11.35 HKD 35%Buy 20.3 8,609 13.2 10.0 8.7 1.57 1.41 1.27 12%15%15%2.9%3.7%4.9%ONGC ONGC IN 145.30 180.00 INR 24%Buy 24.4 26,714 8.5 6.5 6.9 0.91 0.85 0.79 10%13%12%4.9%6.3%5.7%Oil India OINL IN 175.80 215.00 INR 22%Buy 4.0 2,858 7.3 5.9 6.8 0.71 0.69 0.64 10%12%10%6.6%7.0%6.4%PTT Plc PTT TB 48.25 52.90 THB 10%Buy 88.8 49,744 10.1 10.4 9.7 1.68 1.54 1.42 17%16%15%4.2%4.3%4.7%PTTEP PTTEP TB 121.50 163.00 THB 34%Buy 65.4 15,050 23.3 11.5 12.3 1.28 1.20 1.14 6%12%10%3.5%4.2%3.9%AAG Energy 2686 HK 1.24 1.93 HKD 56%Buy 0.1 506 18.6 7.9 5.6 0.69 0.63 0.57 4%8%11%0.0%0.0%0.0%Avg 32%55 50,322 16.5 9.0 8.9 1.05 1.00 0.93 8%12%11%4.3%4.6%4.6%China 39%78 89,445 19.8 9.3 8.9 0.98 0.94 0.87 6%10%10%3.9%4.0%4.2%India 23%14 14,909 7.9 6.2 6.9 0.81 0.77 0.71 10%13%11%5.7%6.7%6.1%Thailand 22%77 32,397 16.7 11.0 11.0 1.48 1.37 1.28 12%14%13%3.9%4.3%4.3%Small Cap 65%0 506 18.6 7.9 5.6 0.69 0.63 0.57 4%8%11%0.0%0.0%0.0%Source:HSBC estimates,Bloomberg.Priced as on 9 Jan 2018 3 EQUITIES OIL&GAS 12 January 2019 Target and estimate changes,HSBC vs.consensus,and comparable valuations 2 Crude oil price assumptions 4 CNOOC(883 HK,Buy,TP RMB16.69,CP RMB12.72)6 Sinopec(386 HK/600028 CH,H/A Buy/Buy,TP HKD7.95/RMB7.08,CP HKD6.01/RMB5.35)9 PetroChina(857 HK/601857 CH,H/A Buy/Hold,TP HKD7.03/RMB6.30,CP HKD5.03/RMB7.33)11 Share price performance 14 China Majors:valuation parameters 15 Disclosure appendix 21 Disclaimer 26 Contents EQUITIES OIL&GAS 12 January 2019 4 Crude oil price assumptions Even with the slump in prices in November/December,the Brent price averaged USD68/b in 4Q18.For the full year,Brent averaged USD71.6/b,31%higher than in 2017.Our price assumptions are in the table below.Also see Oil in 2019,Range bound:OPEC cut meets US shale glut(11 January 2019).Ex.5 HSBC oil and gas price assumptions summary(units as stated)Annual average 2014 2015 2016 2017 2018 2019E 2020E 2021E Brent USD/b 99.4 53.6 45.1 54.8 71.6 64.0 70.0 70.0 Previous 73.0 80.0 85.0 75.0 Change -1.4-16.0-15.0-5.0 WTI USD/b 92.9 48.8 43.4 50.9 64.8 57.0 66.0 68.0 Previous 66.1 74.0 81.0 73.0 Change -1.3-17.0-15.0-5.0 Quarterly average 1Q18 2Q18 3Q18 4Q18 1Q19E 2Q19E 3Q19E 4Q19E Brent USD/b 67.3 75.0 75.8 68.3 59.0 65.0 65.0 67.0 Previous 75.0 80.0 80.0 85.0 Change -16.0-15.0-15.0-18.0 WTI USD/b 62.9 67.9 69.5 59.0 51.0 57.0 59.0 61.0 Nymex gas USD/mBtu 2.85 2.83 2.87 3.73 3.50 3.00 3.00 3.00 UK spot gas USD/mBtu 8.6 8.6 8.6 9.0 7.7 6.5 6.5 7.8 Source:Bloomberg,HSBC assumptions For 2019e we assume an average Brent price of USD64/b(vs USD80/b previously),with a quarterly progression of USD59/65/65/67/b.This progression takes into account two main factors:1)seasonal weakness in demand in the first quarter of the year,and 2)IMO-2020-related factors starting to influence market behaviour in the second half.Thereafter,we assume an average Brent price of US70/b for both 2020e and 2021e(vs USD85/b and USD75/b previously),with an inflation-driven 2%pa annual rise thereafter.In the US,we forecast a WTI-Brent discount of USD7/b in 2019e,moderating to USD4/b by 2021e.The Bloomberg consensus for 2019e Brent peaked at USD75/b.It has fallen in recent months in response to deteriorating market conditions,and currently stands at cUSD70/b.For 2020e,consensus remains slightly higher at around USD72/b.A recent Dow Jones poll(14 December 2018)put the consensus at USD69/b for 2019e and USD70/b for 2020e.Ex.6 Brent crude:Bloomberg consensus for 2018-2020e,USD/b Ex.7 HSBC vs.consensus oil price forecast,USD/b Source:Bloomberg,as of 7 Jan 2019 Source:Bloomberg,HSBC estimates 5060708090100110Jan-14Jul-14Jan-15Jul-15Jan-16Jul-16Jan-17Jul-17Jan-18Jul-18Jan-192018c BRENT2019c BRENT2020c BRENT109995445557264707073727170-1-8-10-20020406080100120HSBCe-USD/bCPFC-USD/bHSBC vs.CPFC 5 EQUITIES OIL&GAS 12 January 2019 Recent macro research.We have updated the conditions in the macro energy environment in five notes since October 2018.The OPEC+agreement to reduce production levels over the first six months of 2019 should help to keep the market in balance in our view.11-Jan-19 Oil in 2019,Range bound:OPEC cut meets US shale glut 10-Dec-18 Oil Markets-OPEC+deal underpins crude prices 29-Nov-18 Oil markets-US supply growth could slow if current prices persist 14-Nov-18 Oil markets-Bearishness overdone as OPEC defends price 9-Oct-18 Oil markets-Entering a critical stage Recent performance.Over the course of 2018,both CNOOC and Sinopec performed better than peers and better than oil,and outperformed the broader MSCI Asia Pacific index(CNOOC has the strongest outperformance).PetroChina followed suit by outperforming MXAP and performing on par with oil.The outperformance was significant through the first nine months,after which there was a significant give-back of performance.We expect that equities can start to generate positive returns again from current levels given the commodity price complex has stabilized and started to move higher.Ex.8 China Majors share price performance vs Brent and MXAP(100 at 5 Jan 2018)Source:Bloomberg 0.750.800.850.900.951.001.051.101.151.201.251.301.351.401.451.50Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18Jul-18Aug-18 Sep-18 Oct-18 Nov-18 Dec-18CNOOCSinopecPetroChinaBrentMXAP EQUITIES OIL&GAS 12 January 2019 6 CNOOC(883 HK,Buy,TP RMB16.69,CP RMB12.72)Investment thesis.CNOOC is a 65%state-owned enterprise and one of the worlds largest pure E&P companies measured by market cap and production.Management is guiding for higher production over 2018-2020e,between 470mboe and 500mboe.These rising targets are consistent with a rising oil price outlook and we believe CNOOC is well positioned to meet its mid-term output targets.The company has a deep slate of projects in China and overseas markets,and significant reserve potential including the Stabroek block,Guyana.We estimate its all-in cost will stay stable at cUSD34-35/b in 2018-19e,making it cost-competitive among its global peers.In 2018,the companys capex plan is RMB70-80bn,up 50%-60%y-o-y.Despite the companys reiteration that its capex budget is firm,we see the likelihood of it underspending its capex budget for another year in 2018e.The companys 2018e capex budget can be funded with internal cash flow,with sufficient room for a 4-5%dividend yield,in our view.Estimate changes.We apply the following key changes:(1)our new Brent oil price assumptions and related oil and gas realizations;and(2)HSBC FX strategists latest 2018e/19e/20e average USD-RMB assumptions of 6.88/6.92/6.95.Over 2018e/19e/20e/21e our net income estimates decrease by 10%/35%/25%/9%.Our 2018e/19e/20e/21e estimates are 2%/-17%/6%/5%vs consensus and our TP is 2%above consensus.The sell-off creates opportunity,and we find the shares relatively attractive at 7.7x 2020e earnings,with forecast yield rising towards 6%.We maintain our Buy rating while cutting target price to HKD16.69(from HKD19.76).We value CNOOC using a near-term pure PB-based methodology.Specifically,we apply a PB multiple of 1.50 x 2019e BVPS of HKD11.15 to reflect the expected 2019e ROE of 11%;and a PB multiple of 1.38x 2020e BVPS of HKD12.09 to reflect 2020e ROE of 14%.We arrive at our target pricing by taking the average of the two.We modified our method this way due to visibility of incremental production from the Stabroek block in Guyana expected in 2020 that we would like to factor into our valuation.Our target multiple is consistent with the PB-ROE regression.Our target price implies upside of 31%,and we rate the stock Buy,supported by a rising production outlook and competitive all-in costs.Downside risks include:lower-than-forecast oil prices;production problems at CNOOC Ltd assets;unexpected cost inflation;higher-than-expected taxes;failed exploration;destructive M&A;and potential exclusion of hydrocarbon-related stocks from benchmarks.Fast tracking Stabroek.The Stabroek block is one of the worlds most significant offshore oil discoveries within this decade,with over 5bn boe of recoverable resources;CNOOCs share would be 1.25bn boe,or c30%of the companys total existing proved(1P)resources.This is a prolific hydrocarbon zone with much more potential and an excellent operator in ExxonMobil.It has resource potential for at least five floating storage,production,and offloading vessels producing more than 750kbd by 2025;CNOOCs 25%share would be a substantial 187kbd,which represents about 18%of current liquid production.Liza Phase 1 development is expected by management to begin producing up to 120kbd by March 2020,utilizing the Liza Destiny floating storage,production,and offloading vessel(FPSO);CNOOCs share would be about 30kbd or 3%of current liquid production.Liza Phase 2 is being accelerated and is expected to start up by mid-2022.The Liza Phase 2 project sanction is expected in early 2019;it will use a second FPSO with a design capacity of up to 220kbd.Sanctioning of a third development,Payara,is also expected in 2019,with start up as early as 2023.7 EQUITIES OIL&GAS 12 January 2019 Ex.9 Stabroek drilling results:well,payzone(LHS),and estimated recoverable resources(RHS)Source:ExxonMobil 05001,0001,5002,0002,5003,0003,5004,0004,5005,000050100150200250300350400450500May-15Jul-16Jan-17Jun-17Jan-17Jul-17Mar-17Oct-17Jan-18Feb-18Apr-18Jun-18Aug-18Dec-18Oil Pay(ft)Stabroek recoverable resource(mboe)Ex.10 CNOOC:PB ROE time series Ex.11 CNOOC:PB ROE scatter plot 1H01-1H18(Red=listing to 2008,Grey=2009+)Source:Bloomber