Citigroup reiterated its Buy rating on PetroChina Co. (00857.HK) with a HKD10 price target, projecting the energy giant will outperform rival Sinopec Corp. (00386.HK) in the second quarter of 2026.
"We expect PetroChina's earnings in 2Q26 to again outperform those of Sinopec Corp," the bank's analysts said in a research note, citing strength in PetroChina's gas and upstream businesses.
The forecast follows a first quarter where PetroChina’s net profit rose 1.9 percent to 48.3 billion yuan ($7.07 billion) on lower revenue. In contrast, Sinopec’s net profit jumped 28 percent to 17 billion yuan, a result UBS notes was inflated by approximately 8.6 billion yuan in crude oil inventory gains.
Citi’s analysis suggests the market should look past Sinopec's Q1 headline beat, as rising crude costs are set to pressure its refining margins in the second quarter, an outlook shared by other analysts.
PetroChina's standout performance in the first quarter came from its natural gas division, where earnings before interest and taxes (EBIT) surged 40 percent year-over-year. This growth was driven by a 3.5 percent increase in sales volume and a 3 percent decline in import costs for pipeline gas, which successfully offset a 4 percent drop in average selling prices.
Citi believes PetroChina will continue to benefit from stable Russian crude oil supplies, giving it a cost advantage. The recent rise in liquefied natural gas (LNG) prices further enhances the competitiveness of PetroChina's pipeline gas operations.
Sinopec, however, faces a tougher second quarter. UBS analysts projected in a separate report that Sinopec's refining and chemicals businesses will face "significant pressure" due to higher crude oil costs, leading them to lower their 2026 earnings forecast for the company by 18 percent.
The dueling outlooks highlight the different exposures of China's state-owned oil giants amid global energy shocks. While both navigate a complex market, Citi's note signals a clear preference for PetroChina's integrated model and upstream advantages. Investors will watch the upcoming Q2 results to see if the forecast divergence materializes.
This article is for informational purposes only and does not constitute investment advice.
