PetroChina tops Exxon as world's largest group
A 160% jump in the first deals at the Chinese oil group propel it above Exxon as the world's largest company by market value
PetroChina, Asia’s largest oil and gas company, became the world’s first company to be valued at more than $1 trillion (£480.38 billion) when asset-hungry Chinese investors piled in to buy shares on their debut yesterday.
Shares in PetroChina, listed at 16.70 yuan (£1.08), almost tripled in value with an opening price of 48.60 yuan, exceeding analysts’ expectations of 35 yuan and leapfrogging Exxon Mobil to become the world’s most valuable company by market capitalisation.
But PetroChina’s strong start on the Shanghai Stock Exchange was as much a warning of a growing Chinese market bubble as it was a reflection of investor demand. Urging caution over investor fever on the Chinese markets, Wen Jinbao, the Chinese Premier, said: “The government will take measures to prevent asset bubbles and avoid huge fluctuations in the stock market.”
Shares in PetroChina closed up 163 per cent at 43.96 yuan, or about 55 times earnings per share – far above the average of 18 times for oil firms globally but still below an average of about 80 times for other China-listed oil and gas stocks. Exxon Mobil, by contrast, trades at about 13 times earnings.
In addition, PetroChina is far less profitable than its rival. First half results showed PetroChina’s net profit at $10.9 billion compared with Exxon’s $19.5 billion.
Wang Jing, an analyst at Orient Securities in Shanghai, said: “The opening price is really too high as far as PetroChina’s corporate fundamentals are concerned.”
Only 13 per cent of the company, which is already listed in Hong Kong and New York, has been floated. The rest remains in the hands of its state-owned parent China National Petroleum.
Rising global oil prices also fuelled PetroChina’s surge. The price of US crude steadied at $95.03 a barrel today, but remains within sight of last Thursday's record $96.24. Last week China raised domestic fuel prices by as much as 10 per cent to ease the burden on PetroChina: the company is unable to pass on the higher crude costs because of government price controls at the petrol pump.
Overall, the Shanghai market lost 2.5 per cent yesterday but is still up around 110 per cent this year. A lack of investment opportunities for domestic savers put off by interest rates running below inflation, and eagerness for a stake in China’s red-hot economy, are expected to continue to bolster prices.
The PetroChina offer, the world’s biggest this year, drew a record $456 billion - a sum greater than the gross domestic product of Belgium - in subscriptions from retail and institutional investors.
