CNOOC Soars in Shanghai Debut, Defies Weak Market

Thursday, April 21, 2022

China's CNOOC Ltd saw its stock surge as much as 44% in its Shanghai debut on Thursday in defiance of overall market weakness, as investors sought safety in the oil giant amid lofty energy prices and quickening inflation.

The stock started trade 20% higher than its offering price. But the Shanghai Stock Exchange almost immediately imposed a 30-minute trading suspension when the price hit the upper limit of the daily allowable band for new main-board listings, citing abnormal fluctuation.

The stock ended morning trade up 28.8% in a market that saw China's blue-chip index shed 1.4%. CNOOC's Hong Kong-listed stock was down roughly 3% after surging as much as 4.3%.

"CNOOC is being chased by investors who are seeking shelters in big caps with relatively low valuation and high dividends," said Linus Yip, chief strategist at First Shanghai Group. "The stock also whets market appetite at a time when oil prices are climbing and inflation accelerating."

China's largest offshore oil producer raised 28.08 billion yuan ($4.41 billion) in the country's 11th-biggest public stock offering. It said it would use the proceeds to fund one gas and seven oilfield projects in China and overseas, and to replenish capital.

"CNOOC represents historic investment opportunities due to high oil prices, low valuation, and consistent high dividend yields," Chen Shuxian, analyst at Cinda Securities, wrote on Thursday, adding CNOOC's market cap has the potential to double over the next few years.

CNOOC starts trading in Shanghai against a backdrop of a bleak stock market that has witnessed an increasing number of stocks dipping below initial public offering (IPO) prices.

A third of the roughly 100 companies newly listed this year in Shanghai and Shenzhen dropped below offer prices on debut, showed data from East Money Information. Some, including chipmaker Vanchip Tianjin Technology Co Ltd 688153.SS and electronics firm Rigol Technologies Co Ltd tumbled more than 30%.

Such debut performance - in sharp contrast with the first-day pop that once featured in China's stock markets - reflects the result of IPO reforms, as well bearish investor sentiment.

China's tough COVID-19 containment measures at a time of heightened geopolitical risk are also roiling its stock markets, sending the main benchmark stock index down 18% so far in 2022.

Yang Hongxun, an analyst at investment consultancy Shandong Shenguang, said many stocks that slump on debut are small caps with lofty valuations, whereas CNOOC was priced modestly.

CNOOC's Shanghai offering will make the top 10 of China's biggest listings if a greenshoe option is fully exercised Refinitiv data showed. Its shares were priced at 10.8 yuan, 23.88 times earnings, or 1.05 times net assets.

The Shanghai sale came after CNOOC was delisted in October by the New York Stock Exchange after the U.S. government added the firm to a trade blacklist citing suspected connections to China's military. CNOOC said it had operated in accordance with local laws.

State-backed peers PetroChina Co Ltd and China Petroleum & Chemical Corp (Sinopec) are already listed in Shanghai.  

(Reuters - Reporting by Jason Xue, Samuel Shen and Andrew Galbraith; Editing by Muralikumar Anantharaman and Christopher Cushing)

Categories: People & Company News Finance Energy People Industry News Activity Asia

Related Stories

Marine Masters Secures Wellhead Platforms Installation Job Off India

SLB Names Raman CSO, CMO

Petronas Preps for Sabah-Sarawak Gas Pipeline Decom Op

ADES’ Fourth Suspended Jack-Up Rig Gets Work Offshore Thailand

China’s CNOOC Brings Bohai Sea Oil Field On Stream

AI & Offshore Energy: The Higher the Stakes, the More Value AI Creates

Floating LNG Conversion Job Slips Out of Seatrium’s Hands

TVO Selects Collins to Head Australian Ops

Valeura Boosts Production at Jasmine Field with Five New Wells Now Onstream

Velesto Completes Removal of Wrecked Naga 7 Jack-Up Rig Off Malaysia

Current News

Jadestone Submits Field Development Plan for Assets Off Vietnam

Woodside Inks Long-Term LNG Supply Deal with China Resources

CNOOC Starts Production at Two New Oil and Gas Projects

Argentina YPF to Shed Offshore Exploration Projects

Cairn India Might Invest in US Oil Servicing Firms to Increase Production

All Gas from Conrad’s Mako Field to be Sold to Indonesia’s PLN

ORE Catapult and Japan’s FLOWRA to Jointly Advance Floating Wind

Shell Hires Noble’s Drillship for Work in Southeast Asia

Second Hai Long Substation Heads to Project Site Offshore Taiwan

Shell Launches Next Phase of Malaysia's Deepwater Project with First Oil Production

Subscribe for AOG Digital E‑News

AOG Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

https://accounts.newwavemedia.com