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Wednesday July 28, 2010
Asian favorites: Sinopec (SNP) and CNOOC (CEO)
by Larry Edelson, editor Real Wealth Report  Asian markets — in particular, the Chinese stock market — represents the best long-term value in the world today. We also believe resource stocks remain in a bull market. Two favorites are Sinopec (SNP) and CNOOC, Ltd. (CEO). By focusing on my Asian natural resource dynamos, you’ll be getting in or adding to your positions at what I think are dirt-cheap levels with huge long-term upside potential. China Petroleum & Chemical, commonly called Sinopec, is Asia’s largest refiner by capacity. Sinopec is a petrol-octopus, with tentacles reaching into every facet of oil: From exploration and development to marketing, distribution, storage, trading and petrochemical production, Sinopec is a leader. 
Latest data on proven energy reserves: Sinopec has around 3.01 billion barrels of crude oil along with 2.9 trillion cubic feet of natural gas. In 2010, the company plans to produce 42.55 million tons of crude oil, 12 billion cubic meters of natural gas and 8.69 million tons of ethylene. All told, Sinopec has title to more than 5 billion barrels of oil. At today’s average price of say, $85 a barrel, that amounts to a reserve asset worth as much as $485 billion. Sinopec’s share price has a current P/E of just 7.74. I think Sinopec is still a high-value, low-risk way to buy into China’s oil consumption boom. China National Offshore Oil Corp. — CNOOC, Ltd. — engages in the exploration, development and production of crude oil, natural gas, and petroleum products. Most of CNOOC’s activities are concentrated in the Bohai Bay and China Sea regions. However, the company’s interests range farther afield, including equity interests in oil and gas properties in Indonesia, Australia, Canada, Morocco, and Myanmar. In the first quarter of 2010, CNOOC made five new oil and gas discoveries offshore China and completed the drilling of five appraisal wells with its partners. Notably, CNOOC recently announced its total unaudited revenue in the first quarter of 2010 surged 118.5% to 30.49 billion yuan ($4.46 billion). Up more than 21% already this year, I think CNOOC’s share price is heading much higher to well over its 2008 high of $218.20. I encourage you to jump in and buy or add to these resource favorites, with a long-term view of holding them for the next two to five years as core long-term positions. Learn more about this financial newsletter at Larry Edelson's Real Wealth Report. |
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