- Buy Entry – 9.8 Target – 11.0 Stop Loss – 9.2
- CNOOC Limited is a Hong Kong-based investment holding company principally engaged in the exploration, production and trading of oil and gas. Its businesses include conventional oil and gas businesses, shale oil and gas businesses, oil sands businesses and other unconventional oil and gas businesses. The company mainly operates businesses through three segments. The Exploration and Production segment is engaged in the exploration, development and production of crude oil, natural gas and other petroleum products. The Trading segment is engaged in the trading of crude oil, natural gas and other petroleum products. The company mainly operates businesses in China, Canada, the United Kingdom, Nigeria, Indonesia and Brazil, among others.
- Probably no significant production hike. The news that OPEC+’s meeting this week would likely end with no significant production target increase also bolstered prices to a significant degree. Last Thursday, five OPEC+ sources suggested that OPEC+ was likely to keep its production targets for September steady with August levels. Two OPEC+ sources said that the group could discuss a small output hike. The market is aware, however, that even a hike in production targets is unlikely to result in an actual OPEC+ production boost due to chronic underproduction compared to the group’s current targets. WTI closed at US$98.28/bbl, and Brent closed at US$103.63/bbl last Friday.
- Positive interim profit guidance. The net profit attributable to equity shareholders of the company for 1H22 is estimated to be between RMB70.5bn and RMB72.5bn, representing an increase between RMB37.2bn and RMB39.2 bn, and representing an increase between approximately 112% and 118% YoY. The higher oil prices mainly drove the surge in profits in 1H22.
- The updated market consensus of the EPS growth in FY22/23 is 72.5%/-5.2% YoY, respectively, translating to 3.3×/3.5x forward PE. The current PER is 5.4x. FY22F/23F dividend yield is 15.4%/11.4% respective. Bloomberg consensus average 12-month target price is HK$14.61.