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Thomas Streater

 
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  • Sinopec: Are Acquisitions An Ample Tonic? [View article]
    China's energy policy is gradually moving towards a market economy. Meanwhile, China Development Bank plays a very important role in financing energy projects, giving the Chinese super majors a distinct advantage in M&A and capex. SNP along with PTR are currently absolutely vital for supplying China with oil & gas products as between them they own and operate the vast majority of energy infrastructure.

    If you believe China will overtake the US in terms of size of the economy (and remember that for most of history China has had the largest economy in the world) then it makes sense that the super majors of China (PTR, SNP and CEO) should have a combined market cap larger than the super majors of the US (XOM, CVX and COP). I would bet that this would happen as soon as within the next ten years. A quick calculation using Yahoo! Finance market cap data shows the three Chinese majors are valued at $435B while the three US majors are valued at $700B.

    I imagine Mr Chanos is short iron ore / steel and maybe copper stocks that have exposure to China (perhaps the big three iron ore miners VALE, BHP and RIO?) because energy is continuously consumed and Chinese demand is generally rising along with GDP/capita, a natural development.

    As for pollution, natural gas is the obvious beneficiary sub-sector. Plays on this theme would include Hong Kong listed Kunlun Energy, Australian duo Woodside and Santos, and RDS.A / RDS.B, a super major with a leading natural gas portfolio in Asia including China.

    In the second half of this year, I plan to write about China's energy ADRs: PTR, SNP, CEO, SHI, YZC and HNP.
    Mar 9, 2013. 12:48 PM | 2 Likes Like |Link to Comment
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