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China investors bet on asset injection for listed subsidiaries from "big 3" oil companies
CKN
2018/08/06 07:53:47
2,032

Aug 06, 2018 (China Knowledge) - Betting on the story of ownership reform of China's largest state-owned oil companies, A-share market investors now expect that the big 3 (namely Sinopec, CNPC and CNOOC) will inject assets into their listed subsidiaries.

Specifically, CNPC's Daqing Huake, as well as Sinopec's Shandong Taishan Petroleum and Sichuan Meifeng are regarded as shortlisted beneficiaries of asset injection theme by multiple institution investors. In addition, institutional investors believe that CNOOC's Shandong Haihua could become an integrated platform for related assets of the group.

An analyst of China Merchants Securities believes that: 1) given Daqing Huake is the sole A-share capital operation platform for CNPC; 2) the reform pace of CNPC has accelerated significantly since H118. unlisted assets and franchise of CNPC include engineering and technical services (upstream exploration oil service business), petroleum equipment manufacturing, R&D and other businesses. 3) Among them, most investors speculate that IPO of the group’s oil service business is just a matter of time. The conclusion is that Daqing Huake is expected to become a listed company as some oilfield service integrator soon.

Since July 20, Daqing Huake's share price has bottomed out. As of August 3, the company's share price has risen by 29.71% and the market capitalization is RMB 2.122 billion.

Taishan Petroleum is labelled as a sales and distribution company under Sinopec, mainly engaged in wholesale and retail of refined oil products; natural gas refueling business for vehicles and non-oil products business. According to institutional analysis, the company, as a listing platform for Sinopec, enjoys expectations for reform and restructuring and is expected to become an industrial integration platform.

Sichuan Meifeng is a chemical listed company controlled by Sinopec. In 2002, Chengdu Huachuan Petroleum Exploration and Development Corporation, a wholly-owned subsidiary of Sinopec, became the largest shareholder of Sichuan Meifeng. Sichuan Meifeng became the listed company of Sinopec Group since then. As of August 3, Sichuan Meifeng's market capitalization is RMB 32.95 billion.

Shandong Haihua is a leading company in the domestic ammonia-alkali process for the production of soda ash. As of last Friday's close, the company's market capitalization is RMB 5.567 billion. Many institutional investors believe that Shandong Haihua can become an integrated platform for assets injected by CNOOC.

Analysts believe that in recent years, these oil giants have integrated assets frequently amid ongoing mixed ownership reform of stated-own enterprises with 2 key goals. One goal is to integrate listed companies and group businesses and to establish one unified platform with better synergy and efficiency enhancement. Another goal is to improve the level of asset securitization of these parent groups.

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