UBS: Lowering oil price forecasts and "Big Three Oil" target price, with a preference for Petrochina (00386) in the chemical sector.

UBS released a research report stating that it has adjusted its profit forecasts for the "big three" oil companies. It is expected that PETROCHINA (00857) will have profits of 169.3 billion, 168.4 billion, and 173 billion yuan for the fiscal years 2024 to 2026; Petrochina Chemical (00386) will have profits of 67 billion, 75.8 billion, and 84.8 billion yuan; CNOOC (00883) will have profits of 152.9 billion, 150.1 billion, and 154.2 billion yuan respectively. The target prices for the "big three" have been adjusted, with PetroChina's target price lowered from HK$10.4 to HK$9.7, Sinopec's target price lowered from HK$6.6 to HK$6.3, and CNOOC's target price lowered from HK$31 to HK$29.5. The "big three" have all been given a "buy" rating. UBS stated that it has lowered its average price forecast for Brent crude oil this year to $80 per barrel, with forecasts for 2025 and 2026 lowered to $75 per barrel each. The bank believes that demand issues remain the main downside risk for oil prices, especially with the slowdown in the Chinese mainland economy. UBS has revised down its forecast for global daily oil demand growth this year to about 1 million barrels, and for mainland China daily demand growth to about 300,000 barrels. In addition, the bank has also lowered its forecast for global oil demand growth in 2025 to about 1 million barrels per day. The report stated that since the third quarter, shares of PetroChina, Sinopec, and CNOOC H-shares have fallen by approximately 27%, 13%, and 16% respectively, due to concerns about falling oil prices and weak demand in China. The bank believes that the valuations of the "big three" oil companies are attractive. The forecasted dividend yields for this year for PetroChina, Sinopec, and CNOOC H-shares are 9.3%, 8.5%, and 7.6% respectively. Furthermore, UBS expects oil prices to remain high in the second half of this year and in the long term (estimated at $76.5 and $75 per barrel respectively). The bank's preference order is Sinopec, CNOOC, and PetroChina.