Investment summary 6
Switch our preference to oil 6
Why oil? 7
Limited benefit from gas price deregulation 9
Downside risk rising to refining margins 9
Supply glut in the making for chemicals 10
Value for growth will rise 11
Why oil? 13
HSBC base-case oil view 13
Potential catalysts to the upside, Asian perspective 13
Limited gains from gas price
deregulation 16
Prices will rise, margins not 16
Downside risk rising to
refining margins 18
Half-way deregulation 18
New oil pricing mechanism 19
CNOOC (883 HK) 22
Our top pick in Asia 22
2009-10e earnings revisions 22
Valuation 24
Company profile 24
Risks to our call 25
Financials & valuation: 26
PetroChina (857 HK) 27
Structural growth comes with policy risks 27
2009-10e earnings revisions 27
Valuation 29
Company profile 30
Risks to our call 31
Financials & valuation: 32
Sinopec Corp (386 HK) 33
Less certain on reform benefit 33
2009-10e earnings revision 33
Earnings sensitivity 34
Valuation 35
Company profile 36
Risks to our call 37
Financials & valuation: 38
Disclosure appendix 42
Disclaimer 47