PetroChina Company Limited, together with its subsidiaries, engages in a range of petroleum related products, services, and activities in Mainland China and internationally. It operates through Exploration and Production, Refining and Chemicals, Marketing, and Natural Gas and Pipeline segments. The Exploration and Production segment engages in the exploration, development, production, and marketing of crude oil and natural gas. The Refining and Chemicals segment refines crude oil and petroleum products; and produces and markets primary petrochemical products, derivative petrochemical products, and other chemical products. The Marketing segment is involved in marketing of refined products and trading business. The Natural Gas and Pipeline segment engages in the transmission of natural gas, crude oil, and refined products; and sale of natural gas. This week, I fundamentally analyze PetroChina’s stock. I review PetroChina’s business, look at its key ratios, analyze the pricing structure, and derive the intrinsic value using Discounted Cash Flow (DCF) analysis. Since this is a long video, please feel free to use the time stamps in the video if you only wish to watch certain topics.
I review various key ratios such as Revenue, Net Income, Shares outstanding, Dividends, Payout Ratio, Free Cash Flows (FCF), Financial Leverage, Current Ratio, Debt to Equity Ratio, Return on Equity (ROE), Days Sales Outstanding (DSO), Days Inventory, Payable Period, Cash Conversion Cycle, Inventory Turnover, etc.
After taking into account the 10 year average free cash flow of $9,896 million, a 4% growth rate of FCF (growth for the next 10 years), 10% discount rate, 3% long term growth rate (growth from 10 year mark to perpetuity), 35 million shares outstanding, and $40,221 million of long term debt, the DCF analysis yields us an intrinsic value of $61.19 per share.
0:00 Introduction / Business Overview
2:09 Key Ratios Analysis
11:37 Pricing Structure
14:54 Discounted Cash Flow Analysis / Intrinsic Value
PetroChina’s Website: here
Morningstar Key Ratios Link: here.
Useful Resources here.
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