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Petrochina Growth Forecasts

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PTR_logoAn Analysis of the growth rates in sales and income in the oil and gas industry in China reveals a declining trend. The analysis is performed for PetroChina (HKG:0857.HK)(NYSE:PTR)(SHA:601857), Sinopec (NYSE:SNP) and CNOOC Ltd (NYSE:CEO). The comparison was performed for the years starting from 2005 to 2007. The results of 2008 are not included in the analysis. The reason for the exclusion is the extreme nature of the year 2008. In this year, oil prices hit a record high reaching $140 per barrel. While it generated a jump in sales revenues, it also increased the amount of taxes paid by the industry. In addition, government regulations constrained the performance in 2008 due to caps imposed on oil sold locally.

Between the three major oil companies in China, Petrochina’s growth in income was mainly driven by growth in sales. This can be seen from the chart below. Sales and income declined in a consistent trend.

 

PTR_MA_1

However for Sinopec and CNOOC Ltd. (0883.HK: Quote, Profile , Research) (CEO: Quote, Profile , Research) it can be seen that sales and income growth are not consistent. This can indicate that growth in income was driven by lower/higher expenses or losses. This conclusion mainly holds for the year 2006. Growth rates for Sinopec Corp (0386.HK: Quote, Profile , Research)(SNP: Quote, Profile, Research) (600028.SS: Quote, Profile , Research) and CNOOC are shown below:

PTR_MA_2

PTR_MA_3

Forecasts of Sales and EPS for Petrochina

Based on the growth rates for sales and income of Petrochina, I expect the following for 2009:

PTR

2004

2005

2006

2007

2008

2009E

Sales

397,354.00

552,229.00

690,512.00

836,353.00

1,071,150.00

1,073,704.86

Income

109,051.00

133,362.00

143,511.00

146,750.00

114,431.00

160,206.20

EPS

0.62

0.75

0.80

0.82

0.63

0.89

The forecasted performance in 2009 is not based on results of 2008 based on the earlier discussion. All figured are in CNY millions.



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