DJ MARKET TALK: ML Ups PetroChina, Sinopec Targets 2007/10/04 16:47 1536 [Dow Jones] STOCK CALL: Merrill Lynch ups PetroChina (0857.HK) target to HK$16.50 from HK$12.80, raises Sinopec (0386.HK) target to HK$12.50 from HK$9.60; keeps both at Buy call. House says new target for both stocks based on long-term oil price US$60/bbl, weighted average cost of capital 10.6%, a 30% premium above net present value (HK$12.80 for PetroChina, HK$9.55 for Sinopec), strong market liquidity. Adds likes PetroChina on strong domestic gas market, exploration upside; likes Sinopec on China's huge demand for fuel, possible fuel pricing reform. Says stocks appear expensive after recent run-up, "when viewed in the context of HK-listed China stocks they are still trading at substantial discounts." PetroChina now off 3.6% at HK$13.50, Sinopec off 2.7% at HK$9.15; HSI off 2%. |
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