China + Oil = Chinoil
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I took notes 3-4 days ago to put up some Chinese oil stock picks in addition to the Chinese stocks I mentioned in an earlier post. Though I never got around to a full write-up, I’ll mention them here in brief. If you’re going to play the insatiable Chinese energy demand you have to look at these Chinese oil-related companies.
CNOOC Limited (CEO) 70% state-owned oil company is aggressively expanding its reserves across the globe. It sports a PE of 19 and a 5yr growth rate of 30%+. It may be a more solid play than an Exxon Mobil (XOM).
Sinopec Shanghai Petrochemical Company Ltd. (SHI) - 16.5 PE and 20%+ 5 year growth rate. Sinopec is more of a vertically integrated producer exploring for petroleum and refining it to create petroleum products directly used in its own end products.
PetroChina Co. Ltd. (PTR) - 21.5 PE and 20%+ 5 year growth rate. PetroChina is the other “Big 3″ explorer/producer in China.
China Oilfield Services Limited (COSL) - an oilfield services provider in the offshore China market. COSL’s services cover each phase of offshore oil and gas exploration, development and production. This stock is listed in Hong Kong so unless you have a broker that allows you to trade international markets (such as Interactive Brokers for example) you won’t be able to trade it. COSL’s success lies in the aggressive exploration of the Chinese Big 3 oil companies. The demand is insatiable and COSL has a lower cost structure than other international oil services firms such as Halliburton.
If you thought our appetite for oil was bad, look at China. Their growth is astounding and so are these stocks. Own Chinoil for a good energy play.
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***Update***
10/17/2007 1pm
My trades today were quite timely.
As of 1pm today, Crude-oil futures surged to a new intraday record of $89 after news reports that Turkey’s parliament authorized a cross-border military offensive into northern Iraq to hunt down Kurdish rebels.
Red Oil Gushers
- CEO - Up 6.36%
- SHI - Up 13.6%
- PTR - Up 10.5%
- COSL - Down 2.7% (Not sure why)
I averaged a 6.94% one-day gain after accounting for the hit on COSL. With my leverage that’s just under 28% for one day. I can stop trading for the rest of the month if I wanted to, but there’s money to be made.
3 Comments on this post
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Ankur Desai said:
Hey Dax i was google searching about investment and i found ur blog.. Its really cool i like it.
I always like to follow warren buffett…. what he is doing in terms of his investments and i found one thing very intresting i.e. recently he sold all his stake in PETROCHINA .He believes that the Chinese stock market has overheated. Whats ur take on that
October 30th, 2007 at 8:20 pm -
Dax Desai said:
Thanks Ankur. I’ve been busy and didn’t commit the time to update my blog, but I’ve put up my most recent entry where I reflect on the past month’s performance. Since my style is more of a trader than a long-term investor, I tend to make different choices than Warren Buffett. Warren is awesome at his style - value investing. I unfortunately don’t have the traits he does. I tend to be more fluid in my trading. That said - I’m up over 10% on PetroChina. Would I own it next year or even next month? Well I can’t say about next year. Next month - Yes.
November 4th, 2007 at 9:51 pm
[...] 4 China Stock Picks on Oct 3 did particularly well with 3 of 4 up and 2 in double-digits. My Oct 17 Chinese Oil Stocks didn’t do as well as I hoped. I suspect it will take a little more time for them to get the [...]