BROKER CALL - PetroChina H-shares downgraded to 'underweight' - JP Morgan
HONG KONG (XFN-ASIA) - JP Morgan said it has downgraded PetroChina's Hong Kong-listed shares to "underweight" from "neutral" after the stock's 20 pct gain in the last three weeks.
The target price was kept unchanged at 8.75 hkd.
JP Morgan noted that PetroChina had performed strongly in recent weeks on expectations of lower windfall tax burden.
But it noted that such expectations go against previous signals of higher resource tax.
"We don't incorporate any changes to the windfall tax scheme currently, but recognize that increasing starting level (of tax payment) from 40 usd to 60 usd (per barrel) would potentially increase PetroChina's profits by around 15 pct," it said.
Since March 2006 the Chinese government has collected a windfall tax of 20 to 40 pct on the portion of the price of a barrel of oil above 40 usd.
JP Morgan added that value-added tax refund on imported crude could potentially lower PetroChina's refining costs by 9 bln yuan for the remaining three quarters.
JP Morgan prefers CNOOC for its upstream exposure and Sinopec among downstream plays.
At 12.13 pm, PetroChina was down 0.58 hkd or 4.95 pct at 11.52 and Sinopec was down 0.38 hkd or 4.46 pct at 8.14, while CNOOC was up 0.14 hkd or 1.01 pct to 14.04 after another spike in crude prices overnight.
Source: XFN