Macquarie Research said there is significant upstream operational overlap between PetroChina and Sinopec that could in theory drive 20-25% EBIT gains, if the Exxon-Mobil or BPAmoco mergers of 15 years ago are used as a benchmark.
The WSJ reported on 17 February that China's leadership has asked its economic advisers to explore ways of consolidating the nation's oil industry, including combining PetroChina with Sinopec, and CNOOC with Sinochem.
However, the research house said such potential merger upside would likely entail redundancies of the order of 70-110 thousand employees, which it sees as politically unacceptable at this stage.
Macquarie said any PetroChina-Sinopec and/or CNOOC-Sinochem merger would logically have to start with the parents merging and then the listcos could be merged either simultaneously or possibly. It does sees significant CNPC-CPCC upstream overlap.
For CNOOC-Sinochem, the research house said it struggles to see potential synergies that would materially improve the current CNOOC investment case.
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