PetroChina posted (28 October) 9M26 revenue/attributable net profit (NP)/ recurring NP of RMB2,321.1/155.77/158.90bn (+7.0/+21.9/+23.7% YoY), with 3Q26 revenue/attributable NP of RMB793.6/51.84bn (+10.4/+21.6% YoY, +0.3/-6.8% QoQ). Recurring NP in 3Q26 was RMB53.37bn. Attributable NP for the quarter was slightly higher than our preview forecast of RMB50.2bn, mainly due to higher-than-expected crude oil processing volume and improved profitability of refined products. Considering the company's "stabilize oil and expand gas" strategy combined with its integrated value chain advantages, we maintain OVERWEIGHT on both the A- and H-shares.
Higher oil prices and gas output expansion in 9M26 drive strong YoY upstream profit growth
For 9M26, crude oil output was 698.6mn barrels (-2.2% YoY), with domestic/ overseas output at -0.2/-12.0% YoY. Marketable natural gas output reached 4,069.4bcf (+2.3% YoY). Realized crude oil price was USD77.65/barrel (+18.5% YoY). Supported by higher gas output and cost control, operating profit of the Oil, Gas, and New Energy segment grew by 19.7% YoY to RMB152.02bn. Segment operating profit for 3Q26 reached RMB51.58bn (+29.4% YoY), within which overseas oil and gas equivalent output rose by 24.2% QoQ to 45.3mn barrels, indicating operational recovery overseas.
Earnings forecasts and valuation
Considering evolving geopolitical uncertainties, we prudently maintain our 2026/2027/2028 attributable NP forecasts at RMB199.1/194.5/193.7bn, with EPS at RMB1.09/1.06/1.06. Converting at a 0.86 HKD/RMB exchange rate and combining A/H peer valuations (2027E Wind/Bloomberg consensus average of 13.5/9.2x PE), and considering the company's tangible results from its "stabilizing oil and expanding gas" strategy, we assign 14.5/10.0x 2027E PE, for our target prices of RMB15.37/HKD12.33 (previous: RMB15.48/HKD13.31, based on 14.2/10.5x 2026E PE). Maintain OVERWEIGHT on both.
Risks: substantial volatility in international oil prices, risk of China's economic recovery falling short of expectations.