Oil firm stock down due to BP sale ( 2004-01-13 22:33) (China Daily By Xie Ye)
Shares in Chinese oil companies fell Tuesday on the Hong Kong stock market
after Britain oil major BP sold off its holdings in PetroChina -- the nation's
largest oil company -- to cash in US$1.65 billion.
BP, however, has no plan to sell off its holdings in other oil companies
including Sinopec -- the nation's second largest oil firm, and Zhenhai Refining
& Chemical-- a refinery unit of Sinopec, according to Daniel Teo,
vice-president of BP China.
But investors worried that the sell-off may trigger other strategic
shareholders including Royal Dutch/Shell and ExxonMobil to reduce their stakes
in Sinopec -- the second largest domestic oil firms. Sinopec's shares have
already touched a historical high, and almost tripled over the prices the
foreign companies bought.
BP, the world's third-largest oil company, yesterday concluded the selling of
its 2 per cent stake in PetroChina at HK$3.70 (47.4 US cents) a share to raise
HK$13 billion (US$1.65 billion).
Responding to the news, shares of PetroChina lost 2.48 per cent to end at
HK$3.9 (50 US cents) yesterday with the lowest dropping nearly 5 per cent.
The stock had fallen 17 per cent in the past five sessions, pondered by
rumours of the share sale.
"It is not a surprise for BP to sell off the holdings. BP wanted to sell it
for quite a long time," said an analyst with a Hong Kong-based Investment Bank.
"They want to sell any non-core assets."
BP bought PetroChina's stake as a strategic investor in the initial public
offering of PetroChina when the shares were valued at HK$1.28 (16.4 US cents).
BP, along with Shell and ExxonMobil, also have bought a combined 8.03 per
cent stakes in Sinopec. BP has a 9.4 per cent stake in Zhenhai.
Sinopec shed 1.54 per cent, falling to HK$3.2 (41 US cents) Tuesday.
Royal Dutch/Shell refused to comment on whether it will follow BP's move.
Teo said BP retains good relations with PetroChina, and committed to its
businesses with other partners in China.
Analysts agreed that the impact of will not last long. But they are divided
over the outlook of the Chinese oil companies.
"In the short-term, it is on the down-turn trend as investors worry whether
others will follow," said the Hong Kong analyst. "In the long-term, we don't
recommend it because they are overvalued... The high oil price already lasted
longer than expected. It will be on the downturn."
Another analyst from an investment bank based in Shanghai said Sinopec will
still maintain a good performance as its downstream business continues to pick
up.
JP Morgan said yesterday it had revised upwards its earnings forecasts for
the three Chinese oil majors on expected higher crude prices.
The investment bank said it has revised upwards China's largest oil and gas
producer PetroChina's earnings forecast by 13 per cent to 72.51 billion yuan
(US$8.8 billion) in 2004.
JP Morgan has also raised profit forecasts for Sinopec Corp by 12 per cent to
27.63 billion yuan (US$3.3 billion) in 2004.
BP in China
As one of the largest foreign investors in China, BP has invested more than
US$4 billion in the nation by the end of 2002.
BP has a 30 per cent stake in China's first liquefied natural gas (LNG)
terminal and trunk line project in Guangdong Province, with an estimated cost of
US$600 million.
A retail fuels joint venture between BP and PetroChina was formed in 2001 to
build 500 service stations in Guangdong.
BP is the only foreign company participating in China's aviation fuel
sector.
