Goldman Sachs: Raises target price for CNOOC (00883), PetroChina (00857), and Sinopec (00386), raises earnings forecast for this year and next by 2%.

Goldman Sachs released a research report stating that the target price of CNOOC (00883) has been raised from 21.1 Hong Kong dollars to 31 Hong Kong dollars; with a rating of "buy". The target price of Petrochina (601857.SH) A shares has been raised from 11.8 RMB to 15.3 RMB, and the target price of Petrochina (00857) Hong Kong shares has been raised from 8.6 Hong Kong dollars to 11.5 Hong Kong dollars; with a rating of "buy". The target price of China Petroleum & Chemical Corporation (00386) Hong Kong shares has been raised from 3.6 Hong Kong dollars to 4.9 Hong Kong dollars, and the target price of China Petroleum & Chemical Corporation (600028.SH) A shares has been raised from 4.8 RMB to 6.7 RMB; with a rating of "neutral", and it is expected that due to oversupply in the chemical market, Sinopec's free cash flow will be weaker than upstream companies within its coverage. In the past three years, CNOOC and Petrochina have shown strong cash flow generation ability, with their Capital Return on Capital Invested (CROCI) ranking among the top in the global industry, proving that their valuation should converge. Looking ahead, it is expected that they will maintain a top free cash flow yield of around 10%. Goldman Sachs' analysis reinforces CNOOC's leading cost advantage, with its future production assets breakeven point for Brent crude oil as low as around $30 per barrel; while Sinopec benefits from strong upstream natural gas profits and significant cost-saving potential. Goldman Sachs estimates that Sinopec using self-generated green power instead of external grid power, along with artificial intelligence and digital initiatives, may help lower the breakeven point for Brent crude oil to $8 per barrel by 2035 (forecasting $62 per barrel by 2025). It is believed that the current valuations of both companies are below industry average levels, and the implied long-term Brent crude oil price is between $60 and $70 per barrel, considering the bank's forecast for long-term oil prices post-2028 is at $75 per barrel, hence they have potential for revaluation. Goldman Sachs is transferring the primary coverage responsibility for the Petrochina giants - Sinopec, Sinochem, and CNOOC - from Nikhil Bhandari to Amber Cai. And the average earnings forecast for these three companies for 2026 to 2027 has been raised by approximately 2%.