PetroChina Co. (857), the target of a government corruption probe that has ensnared a former chairman, posted a 19 percent increase in third-quarter profit as retail fuel pricing reforms reduced refining losses.
Net income rose to 29.8 billion yuan ($4.89 billion), or 0.16 yuan a share, in the three months ended Sept. 30, from 24.9 billion yuan, or 0.14 yuan, a year earlier, the Beijing-based company said in a statement to the Hong Kong stock exchange today. That compares with a 30.5 billion yuan mean estimate from a survey of eight analysts compiled by Bloomberg.
“After 10 quarters of consecutive losses in refining we see the first operating profit in the third quarter,” Simon Powell, head of oil and gas research at CLSA Ltd., said in a phone interview from Hong Kong. “That’s pretty eventful and comes as a result of price reforms.”
China uses its big three oil companies, of which PetroChina is the largest, to control domestic fuel prices and secure energy supplies from overseas to meet the burgeoning needs of the world’s second-biggest economy. The government shortened its price adjustment window to 10 days in March from 22 days to allow retail rates to reflect movements in global crude markets more closely.
PetroChina reduced refining losses by 17 billion yuan in the first nine months, compared with the same period a year earlier “as a result of taking advantage of the newly promulgated pricing mechanism for refined products,” the Beijing-based company said in the statement.
The shares rose 1.6 percent to HK$8.91 at the close in Hong Kong before the statement was released. The stock has declined 19 percent this year, compared with 0.8 percent increase in the benchmark Hang Seng index.
Four senior managers were removed from their posts in August after allegations of corruption. Former chairman Jiang Jiemin was dismissed from his post as head of the state assets regulator and is under investigation, the official Xinhua News Agency said Sept. 2.
The probe highlights President Xi Jinping’s willingness to tackle graft, which he has said threatens the communist party’s 64-year grip on power.
“The corruption investigation makes PetroChina a safer bet since the government will be watching the company more closely,” said Powell, who rates the stock a buy.
Oil and natural gas output rose 4.3 percent to 1.04 billion barrels in the first nine months, of which 101.4 million barrels were from overseas projects, according to the statement. Average realized crude price declined 3.6 percent to $99.85 in the nine months.
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