Goldman Sachs: Raising Targets on China Oil Majors; Buy CNOOC and PetroChina; Transfer Coverage
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Goldman Sachs raised target prices on China's three major oil companies by an average of 37%, driven by rolling the valuation base year to 2027/28, easing concerns over a global oil demand peak, and company-specific catalysts. Goldman maintains a Buy rating on CNOOC (0883.HK) with a new 12-month target price of HK$31.00, up from HK$21.10. The target multiple increases from 3.0x to 4.6x, reflecting CNOOC's industry-leading cost position and robust free cash flow generation that support continued valuation convergence with global peers. The firm also rates PetroChina (0857.HK / 601857.SS) a Buy, setting new H/A share targets of HK$11.50 / RMB15.30, up from HK$8.60 / RMB11.80. This incorporates long-term cost savings from self-produced green power and AI initiatives, projected to lower Brent breakeven prices by $8/bbl by 2035. Sinopec (0386.HK / 600028.SS) remains Neutral with new H/A targets of HK$4.90 / RMB6.70, as chemical market oversupply results in weaker free cash flow compared to upstream peers. Currently, CNOOC and PetroChina trade at implied long-term Brent prices of $60-$70/bbl, below Goldman's forecast of $75/bbl. Analyst coverage transfers from Nikhil Bhandari to Amber Cai.