PetroChina (PTR), China’s largest oil and gas producer, is up over 3.5% after releasing its fourth quarter earnings this morning. Profit for the fourth quarter of 2013 was up 21% compared to the fourth quarter of 2012. The annual profit of 2013 was up 12.4% compared to 2012. In its press release, the company stated that it carried out strict investment management policies emphasizing returns on investment that resulted in capital expenditures falling by 9.6%.
Here is its outlook for 2014 from PetroChina’s press release:
“In 2014, the world economy is expected to continue to recover, albeit at a slow pace. External demand is expected to maintain stable. As China’s economy is entering into a new phase of development, the inelastic demand for oil and gas in China is expected to maintain rapid growth. The Company will continue to reinforce the implementation of the three strategies, namely, resources, market and internationalization, stick to the guidelines of quality, profitability and sustainable development, emphasize the development of its principal business of oil and gas, and strengthen the momentum of its innovation effort to maintain steady growth of its production, operation and business performance.”
The stock is owned by nine of the gurus that we are following and at historically low levels for price-to-book (0.51) and price-to-sales (1.05). Using GuruFocus.com’s reverse DCF calculator, PetroChina will have to maintain an earnings growth of 3.33% in order to be fairly valued at its current price. It had only had an earnings growth rate of 2.7% over the past 10 years, but it grew at 12.4% for 2013. If it can maintain the growth of 2013, the stock is largely undervalued.