Bank of America Securities: Raise oil price forecast, increase PETROCHINA (00857) target price to 8 Hong Kong dollars.

Bank of America Securities released a research report stating that the average price forecast for Brent crude oil in 2025 has been raised to $67 per barrel (previously $65 per barrel). The bank has raised the net profit forecasts for PETROCHINA (00857) for the fiscal years 2025 and 2026 by 16% and 10% respectively, to 157 billion yuan and 160 billion yuan, and has raised the H-share target price from HK$6.8 to HK$8; the A-share target price of Petrochina (601857.SH) has been raised from 9.5 yuan to 10 yuan (over the past 12 months, A shares have a 40% premium over H shares). In the second quarter of 2025, energy prices in the market continued to decline quarterly, with China Shipbuilding Industry Group Power coal and metallurgical coal prices falling by 12% and 9% respectively, Brent crude oil prices dropping by 11%, and Northeast Asia spot liquefied natural gas (LNG) declining by 12%. At the same time, energy demand remains weak due to the impact of renewable energy substitution, trade conflicts, and limited stimulus policies. In the first five months of 2025, China Shipbuilding Industry Group Power coal apparent demand was 1.647 billion tons, a decrease of 0.4% year-on-year; petroleum demand was 381 million tons, an increase of 0.8% year-on-year; natural gas demand was 174 billion cubic meters, a decrease of 0.9% year-on-year; and refined oil consumption was 153 million tons, a decrease of 6.7% year-on-year. Therefore, Bank of America Securities predicts that the profits of Chinese energy producers in the second quarter of 2025 will decline quarterly. Bank of America Securities predicts that PETROCHINA's second-quarter performance will meet expectations, with a net profit of 39.7 billion yuan in the second quarter of 2025, a quarterly decrease of 15% and a year-on-year decrease of 7%, driven by the following factors: (1) lower crude oil prices realized; (2) weak oil and gas demand; (3) flat performance in downstream business. The bank expects that its A-share buyback plan will be announced along with the second-quarter results. China Petroleum & Chemical Corporation (00386)'s second-quarter performance is expected to be lower than expected, with a net profit of 6.3 billion yuan, a quarterly decrease of 55% and a year-on-year decrease of 66%, due to reasons including: (1) lower prices realized for off-season oil and gas; (2) potential inventory losses leading to degradation of refining gross margins (GRM).