[ET Net News Agency, 7 January 2020] Morgan Stanley cut its target price for PetroChina
(00857) to HK$4.64 from HK$5.21 and maintained its "overweight" rating.
The research house said the "National Pipeline Company" was established in December
2019, with more details on valuation and restructuring likely to be released in 2020 that
should finally remove the overhang on PetroChina.
Assuming that the pipeline is valued at 1x P/B, it could introduce a favorable
risk-reward given PetroChina is trading at only 0.5x P/B. However, if the pipeline is
valued below book value, it is likely to become a negative catalyst. Investors would worry
about
further de-rating of pipeline assets in the long run. (KL)