---
endpoint: analytics
pattern: Energy
status: done
latency_ms: 293267
conversation_id: 4ce013dc-151b-4b4a-aa48-ec0e43bad7c1
citations: 12
created: 2026-05-31 22:19:31Z
---

# How does PetroChina’s valuation compare to peers, and what justifies its premium/discount?

# PetroChina (857 HK / 601857 CH) – Valuation vs. Peers

## 1. Where PetroChina trades today (CLSA 2025 forecasts)

PetroChina-H currently trades at **~8x 25CL PE, ~0.6x PB, ~1.9x EV/EBITDA, with an 8.3% dividend yield** and a forecast 10.0% ROE [1][2]. CLSA labels this "an attractive level both relative to its own history as well as global integrated oils," reiterates **Outperform** with an unchanged SoTP-based TP of **HK$8.0 (H-share) / Rmb11.2 (A-share)**, and flags PetroChina as their most preferred name among the Chinese oil majors [1].

## 2. Peer-relative valuation – the Chinese oil majors

CLSA covers the three Chinese oil majors with broadly similar SoTP frameworks. The headline multiples diverge sharply:

| Metric (25CL) | **PetroChina (857 HK)** | **CNOOC (883 HK)** | **Sinopec (386 HK)** |
|---|---|---|---|
| PE (x) | **6.3** [2] | **4.8** [4] | **8.4** [6] |
| EV/EBITDA (x) | **1.9** [2] | **2.4** [4] | n/a (table not shown) |
| PB (x) | **0.6** [2] | **0.9** [4] | n/a |
| Dividend yield (%) | **8.3** [2] | **9.4** [4] | **8.5** [6] |
| ROE (%) | **10.0** [2] | **19.5** [4] | **6.4** [6] |
| CLSA rating | O-PF [1] | O-PF [5] | O-PF [7] |

Important nuance: the PE figures above use CLSA's adjusted historical/forecast base. PetroChina's actual reported PE on CLSA's revised revenue line works out to ~6.7x 25CL using their 24A base [2], while CNOOC's superior ROE/PE profile reflects its pure E&P, low-cost upstream model.

### Why CNOOC screens "cheaper" but isn't necessarily a premium target
CNOOC trades at **a clear discount on PE (4.8x vs. PetroChina's 6.3x)** and offers a higher yield (9.4% vs. 8.3%) despite **double the ROE (19.5% vs. 10.0%)** [2][4]. The discount is explained by CLSA's **15% NAV discount to reflect the lingering overhang from the US sanction applied to CNOOC** [5] — an explicit risk premium baked into the price target methodology. Strip that out, and CNOOC is being valued more conservatively than its returns justify.

### Why Sinopec trades at a higher PE
Sinopec's headline 25CL PE of 8.4x screens "expensive" vs. PetroChina, but that's a function of **depressed earnings (ROE only 6.4%, EPS down 17% YoY in 24A)** rather than richer multiples [6]. Its downstream-heavy mix (refining + chemicals + marketing) is the most cyclical of the three, and EPS growth of only +7.5% in 25CL keeps the multiple optically high.

## 3. PetroChina's SoTP – what justifies its valuation

CLSA's HK$8.0 SoTP-based TP for PetroChina-H breaks down as [3][11]:

| Segment | Rmb bn | HK$/sh | Methodology |
|---|---|---|---|
| E&P | 800.4 | 4.7 | DCF, 8% WACC, 0% terminal growth |
| Refining & Chemical | 220.6 | 1.3 | **4.0x 25CL EV/EBITDA** target multiple (peer-based) |
| Marketing | 120.0 | 0.7 | **3.0x 25CL EV/EBITDA** target multiple (peer-based) |
| Natural Gas | 291.5 | 1.7 | **1.2x PB** target multiple |
| Total Asset Value | 1,432.5 | 8.4 | |
| Net cash | 131.9 | 0.8 | |
| Minority interest | (196.5) | (1.1) | |
| **PetroChina-H TP** | **1,367.9** | **8.00** | |
| A-H premium | | 50% | 5-year historical average |
| **PetroChina-A TP** | | **Rmb 11.20** | |

The valuation rests on a **US$75/US$70 oil price assumption for 25/26CL and US$70 long-term**, with peer-based EV/EBITDA multiples for downstream segments (refining 4x, marketing 3x, chemical 4x), explicitly anchored to global comp transactions [3].

## 4. What justifies PetroChina's premium / discount

### Where PetroChina is at a "premium" (vs. CNOOC)
PetroChina trades at a **higher PE (6.3x vs. 4.8x) and PB (0.6x vs. 0.9x mix-adjusted) but lower EV/EBITDA (1.9x vs. 2.4x)** [2][4]. The PE premium is explained by:

1. **Earnings-mix diversification.** CLSA's investment thesis: *"A revival of its natural gas business and more resilient downstream profitability suggest PetroChina is now less reliant on its E&P segment relative to history. This should translate to more steady earnings even if oil prices are under pressure, giving investors confidence in its dividend sustainability."* [8] CNOOC is pure upstream — more leverage to oil price upside but also more downside if Brent rolls over.
2. **Natural gas as the structural re-rating driver.** Natural gas contributes Rmb 291.5bn (HK$1.7/sh) of CLSA's SoTP at a 1.2x PB target multiple — the only segment NOT valued on EV/EBITDA, reflecting its utility-like, long-duration earnings profile [3].
3. **No US-sanction overhang.** CNOOC carries a hard-coded 15% NAV discount for US sanctions [5]; PetroChina does not.

### Where PetroChina is at a "discount" (vs. global integrated oils)
CLSA explicitly frames PetroChina's 8x PE and 8% yield as **attractive relative to global integrated oils** [1]. The Chinese majors trade at lower multiples than Exxon, Chevron, Shell, BP and TotalEnergies despite comparable scale, for three structural reasons:

1. **Energy-transition risk premium is lower (and that is now a positive).** *"In China, the Chinese oil majors are less aggressive on their energy transition plans relative to global peers, and are generally considered a number of years behind global peers in terms of their pace... PetroChina is focused on natural gas and carbon capture (CCUS)."* [9]
2. **The "BP cautionary tale."** Following BP's 2025 reset of its aggressive transition strategy, CLSA argues the Chinese majors' slower transition pace is now being **reassessed favourably**: *"Rising geopolitical tension and elevated energy prices are likely to prompt a re-evaluation of current energy transition pathways, given some initiatives are now seen as impractical."* [12] BP itself was down 26% over Feb–May 2025 vs. ExxonMobil down only 3% [10] — validating that aggressive transition plans destroyed valuation.
3. **China-domicile discount.** ADR/H-share Chinese energy names structurally trade below US/European listed peers on geopolitics, governance perception, and dividend tax treatment — a discount CLSA implicitly treats as the source of upside (TP HK$8.0 vs. trading multiples implying mid-single-digit yield expansion potential).

### Where PetroChina is at a "premium" within itself (A-H spread)
The **A-share carries a 50% premium over the H-share**, equal to its 5-year historical average. This premium is propagated to peers — Sinopec and CNOOC's A-H premiums are explicitly set to PetroChina's [5][7]. This is a structural QFII / capital-control feature, not company-specific.

## 5. Bottom-line synthesis

PetroChina sits in the **middle of the peer triangle**:

- **Premium to CNOOC on PE / PB**, justified by earnings diversification (gas + downstream stabilizers) and no sanction overhang [8][3] — but **CNOOC's superior ROE (19.5% vs. 10.0%) and higher yield (9.4% vs. 8.3%) [2][4] argue the discount is overdone** and explains why CLSA also rates CNOOC Outperform with the largest upside (+36.5%).
- **Discount to Sinopec on PE**, but that's optical — Sinopec's higher PE reflects lower earnings power (6.4% ROE vs. 10.0%), not market preference [6][2].
- **Discount to global integrated oils**, justified historically by China-domicile risk and lower transition leadership — but increasingly attractive as **(a) the BP downfall validates "less is more" on transition spend** [12][9], (b) PetroChina's natural-gas pivot delivers utility-like earnings stability, and (c) the dividend yield of 8.3% is well-covered (net debt/equity turning to -7.3% in 25CL, dividend cover rising) [2].

**The "what justifies" answer:** the premium PetroChina earns over CNOOC is the **gas-driven earnings durability + clean balance sheet + no-sanction status**; the discount it earns vs. Exxon/Chevron is **China-domicile + governance perception + slower transition narrative** — with the second component increasingly looking like an opportunity rather than a fair penalty.

---
**Sources**

[1] PetroChina – O-PF (Bearing fruit) — CLSA (29 Apr 2025) — 607957521LinqAlpha.PDF
[2] PetroChina – O-PF (Bearing fruit) — CLSA (29 Apr 2025) — Financials table — 607957521LinqAlpha.PDF
[3] PetroChina – O-PF (Bearing fruit) — CLSA SoTP methodology — 607957521LinqAlpha.PDF
[4] CNOOC – O-PF (Steady as she goes) — CLSA (29 Apr 2025) — Financials table — 607957504LinqAlpha.PDF
[5] CNOOC – O-PF (Steady as she goes) — CLSA (29 Apr 2025) — NAV table with US-sanction discount — 607957504LinqAlpha.PDF
[6] Sinopec – O-PF (An uphill battle) — CLSA (28 Apr 2025) — Financials table — 607957289LinqAlpha.PDF
[7] Sinopec – O-PF (An uphill battle) — CLSA (28 Apr 2025) — SoTP NAV table — 607957289LinqAlpha.PDF
[8] Global energy (Beyond petroleum) — CLSA (11 May 2025) — PetroChina investment thesis — 607958889LinqAlpha.PDF
[9] Global energy (Beyond petroleum) — CLSA (11 May 2025) — Chinese oil majors transition pace — 607958889LinqAlpha.PDF
[10] Global energy (Beyond petroleum) — CLSA (11 May 2025) — Global peer 3-month price performance — 607958889LinqAlpha.PDF
[11] PetroChina – O-PF (All you need is yield) — CLSA (30 Mar 2025) — SoTP NAV table — 607954432LinqAlpha.PDF
[12] Global energy (Beyond petroleum) — CLSA (11 May 2025) — Reality check at half-time — 607958889LinqAlpha.PDF

## Citations

- [1] **607957521LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607957521LinqAlpha.PDF>
- [2] **607957521LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607957521LinqAlpha.PDF>
- [3] **607957521LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607957521LinqAlpha.PDF>
- [4] **607957504LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607957504LinqAlpha.PDF>
- [5] **607957504LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607957504LinqAlpha.PDF>
- [6] **607957289LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607957289LinqAlpha.PDF>
- [7] **607957289LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607957289LinqAlpha.PDF>
- [8] **607958889LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607958889LinqAlpha.PDF>
- [9] **607958889LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607958889LinqAlpha.PDF>
- [10] **607958889LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607958889LinqAlpha.PDF>
- [11] **607954432LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/03/607954432LinqAlpha.PDF>
- [12] **607958889LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607958889LinqAlpha.PDF>

