正文
PTR’s $1 trillion market cap has become the headline financial news all over the world this week. The fact that in one overnight, PTR leaped over Exxon to become the World’s biggest company (indeed it doubles Exxon’s market cap of $480B) did not bold well with the market at all - it symbolizes how crazy the Chinese capital market has become. The headline news combined with the report that China will delays its plan to allow domestic investors to buy HK shares directly help knock down some 1,500 points off Hang Sang index on Monday, its biggest 1-day point loss ever. The bloodshed carried over to the US soils, as we witnessed one of the heaviest losses in many Chinese heavyweights such as FXI, PTR, SNP, CHL, etc yesterday.
But is PTR really a $1 trillion company? It depends on how you calculate its market cap. To see this, PTR’s share outstanding consists of 3 tranches: 21 billion H-shares, 4 billion A-shares, and 158B non-floating shares owned by the government. Here is how they come up with that magic $1 trillion: A-share price =45 RMB x (4+158) = 7245; H-share price = 17 hk$ x 21 = 357. Since HK$ and RMB are roughly in-par, we have a total value of 7602 billion RMB/7.5 = 1.01 trillion US$.
The flaw with this calculation is we have used that thinly traded 4B Chinese A-share (representing less than 2.2% outstanding) as the price to value the non-floating government shares. But whoever with some understanding of the situation in China knows that it is very unlikely the government will ever sell those shares to give up their control of this national strategic company. We could just as well use the H-share price to value those shares, which would give PTR a market cap of $427B, well below Exxon’s $480B.
I also want to compare a few key parameters between these two oil giants:
~~~~~~~~Exxon ~~~~~~ PTR
Shares outstanding ~~~5.55 B ~~~~~~ 183 B
% of shares floating ~~~99% ~~~~~~ 11.67%
# Employees ~~~82100 ~~~~~~ 463670
Revenue ~~~$378 B ~~~~~~ $101 B
Earnings ~~~$38 B ~~~~~~ $19 B
5-yr Sale growth rate ~~~12% ~~~~~~ 23%
5-yr Oil reserve growth rate ~~~6% ~~~~~ 19%
One other thing to note is that 1 ADR share in the US represents 100 H-shares. And finally, I currently do know own PTR.
But is PTR really a $1 trillion company? It depends on how you calculate its market cap. To see this, PTR’s share outstanding consists of 3 tranches: 21 billion H-shares, 4 billion A-shares, and 158B non-floating shares owned by the government. Here is how they come up with that magic $1 trillion: A-share price =45 RMB x (4+158) = 7245; H-share price = 17 hk$ x 21 = 357. Since HK$ and RMB are roughly in-par, we have a total value of 7602 billion RMB/7.5 = 1.01 trillion US$.
The flaw with this calculation is we have used that thinly traded 4B Chinese A-share (representing less than 2.2% outstanding) as the price to value the non-floating government shares. But whoever with some understanding of the situation in China knows that it is very unlikely the government will ever sell those shares to give up their control of this national strategic company. We could just as well use the H-share price to value those shares, which would give PTR a market cap of $427B, well below Exxon’s $480B.
I also want to compare a few key parameters between these two oil giants:
~~~~~~~~Exxon ~~~~~~ PTR
Shares outstanding ~~~5.55 B ~~~~~~ 183 B
% of shares floating ~~~99% ~~~~~~ 11.67%
# Employees ~~~82100 ~~~~~~ 463670
Revenue ~~~$378 B ~~~~~~ $101 B
Earnings ~~~$38 B ~~~~~~ $19 B
5-yr Sale growth rate ~~~12% ~~~~~~ 23%
5-yr Oil reserve growth rate ~~~6% ~~~~~ 19%
One other thing to note is that 1 ADR share in the US represents 100 H-shares. And finally, I currently do know own PTR.
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