[ET Net News Agency, 1 November 2019] Goldman Sachs lowered its target price for
PetroChina (00857) to HK$5.45 from HK$5.6 and maintained its "buy" rating.
The research house said PetroChina reported a disappointing 3Q results on higher gas
import losses, ongoing weakness in downstream/marketing margins and weaker realized oil &
gas prices in E&P.
Downstream competition from the 2 new mega independent refiners (Dalian which is online,
Zhoushan which starts in 2020) is likely to get worse before it gets better. Pipeline
reform is facing delays as negotiations with government continue.
Goldman expects negative FCF (free cash flow) in 2019, however, it expects the stock's
valuation appeal to increase beyond the pipeline reform, and as production & reserves
growth is delivered. Goldman cut its 2019-21 earnings forecasts by 18%/6%/8% on the 3Q
result. (KL)