Morgan Stanley lowers target price for "Three Oil Giants," with PETROCHINA (00857) performing the best in natural gas business last year

Morgan Stanley released a research report stating that the energy upstream business maintained steady growth last year, with exchange rate fluctuations basically offsetting the decline in oil prices. The increase in natural gas prices and sales growth also supported the profitability of the upstream business. In addition, the downstream business performed as expected weaker year-on-year, and PETROCHINA (00857) had the best performance in its natural gas business last year. As for PetroChina, Morgan Stanley lowered the operating profit of the upstream business to reflect the impact of weak crude oil prices in the fourth quarter of last year, and also adjusted the Brent crude oil forecast assumptions. Due to lower-than-expected refining margins and chemical price differentials in the fourth quarter, profit forecasts for refining and chemical businesses were lowered. However, the bank raised the operating profit of the natural gas business to reflect better-than-expected demand for natural gas power generation, industrial boilers, and rural gas replacements, as well as higher-than-expected natural gas profit margins due to natural gas price reforms. Overall, the bank lowered PetroChina's profit forecasts for 2024 and 2025 by 2% and 6%, respectively. Morgan Stanley lowered the H-share target price of PetroChina from 8.76 Hong Kong dollars to 8.3 Hong Kong dollars and gave it a "hold" rating. As for PetroChina Chemical (00386), Morgan Stanley expects the company to face higher profit pressure than upstream companies. In this profit forecast, the bank noted that its performance may be worse than previously expected. Therefore, the bank significantly lowered its profit forecasts for Sinopec to reflect a worse-than-expected weakness in downstream business, as well as potential significant impairment losses in the downstream business last year. Morgan Stanley lowered the H-share target price of Sinopec from 5.63 Hong Kong dollars to 4.95 Hong Kong dollars and gave it a "market perform" rating. As for CNOOC (00883), Morgan Stanley lowered its forecast for petroleum sales revenue to consider the weak oil price factors in the fourth quarter of last year, and adjusted its oil price forecast for the 2025/26 fiscal year. In addition, the bank lowered CNOOC's profit forecast for the 2024 fiscal year by 4% and the 2025 fiscal year by 1%, while also adjusting its H-share target price from 21.8 Hong Kong dollars to 20.7 Hong Kong dollars, giving it a "hold" rating. Nevertheless, the bank believes that CNOOC still has good earnings potential.