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Three Top Asian Energy Companies

Companies / Energy Resources Sep 05, 2008 - 01:42 AM GMT

By: Money_and_Markets


Best Financial Markets Analysis ArticleLarry Edelson writes: I'm writing this while on a short holiday in Macau, Asia's booming Las Vegas. And let me tell you (again) — judging by what I'm seeing in Macau, there are very few signs of a slowdown in Asia!

More than 1.5 million international visitors arrived in Macau in the first six months of 2008 — UP 47% over the same period last year.

Mainland China visitors to Macau soared to a record 8.8 million, and in total, a record 14.92 million tourists visited in the first half of this year, handing Macau's government a whopping 51.4% increase in gaming tax revenues.

Of course, that's Macau, and it may not represent the rest of Asia, right?

Wrong. I am seeing the same vibrant economies wherever I go on my current tour through Asia. In Hong Kong ... in Thailand (despite yet another government coup) ... and in the mother of all Asian economies, China.

Macau's casinos are  booming ... just like the rest of Asia!
Macau's casinos are booming ... just like the rest of Asia!

That brings me to my top three Asian energy dynamos — companies that are in the cat-bird seat to feed China's intensely growing energy needs. Given what I'm seeing here in Asia, and the current pullback in oil and gas prices, I think now is a great time to give you an update on them.

I've profiled these Asian energy dynamos before, and they've seen some nice gains — as much as 172.5% — before getting hit by some of the recent selling happening all around the world.

But even after reviewing those downdrafts, and adding in what I'm seeing on my current Asian trip, I think these shares are ripe for the picking, AGAIN. So let's review them ...

#1. China Petroleum & Chemical (SNP) is well off its highs, but I am VERY BULLISH on the company's prospects. Also known as Sinopec, the company is Asia's largest refiner by capacity, a giant that reaches every facet of the oil industry — from exploration and development to marketing, distribution, storage, trading and petrochemical production.

Sinopec has 3.03 billion barrels of crude oil reserves along with almost 2.9 trillion cubic feet of natural gas. Valued at current oil and gas prices, those reserves are worth a whopping $347 billion.

Sinopec is trading around $97 a share. That's more than double its price at the beginning of 2006 but down almost 50% from its record high, a great price level to buy or add to your shares in this blue chip Asian energy company.

And get this: Based on three-year expected earnings growth, Sinopec's share price is now trading at an unbelievably cheap price-to-earnings ratio of just over 12. The company is loaded with cash, loaded with growing revenues, expanding like crazy, and also paying a healthy 4% dividend to its shareholders.

Sinopec is a blue chip Asian energy company.
Sinopec is a blue chip Asian energy company.

If you don't have a long-term core position in Sinopec, consider buying the shares now. Or add to your existing position. Pack them away for the next two to three years, and I think you could triple your money .

#2. CNOOC Ltd. (CEO) is infamous for its attempt to purchase Unocal a few years back. Its shares are now trading at about $143, a deal when you consider this giant's 23%+ annual earnings growth and last year's high of more than $200 a share.

Plus, CNOOC's first half 2008 results were stellar: The company's oil and gas sales increased 63.9% compared with the same period last year, while its net profit jumped a whopping 89.3%.

To me, this looks like a great opportunity to buy some shares in this company.

#3. Yanzhou Coal Mining Co. Ltd. (YZC) is China's leading coal miner, with more than two billion tons of reserves, and production of more than 40 million tons a year.

Keep in mind that China is still over two-thirds dependent upon coal, and will be for a long time. Between the country's recent terrible winter storms (the worst in 54 years), recent earthquakes, record high coal prices, and China's still +10% GDP growth, I don't see how you can miss putting this stock in your portfolio as a core holding (or adding to any current shares you own).

YZC's shares split 5 for 1 earlier this year, and its current post-split level of $17.30 is equal to about $86.50, pre-split, meaning the stock is down about 26% from its peak of $116.73 last October.

First half 2008 revenues jumped an astounding 78.6%, while net income surged even more, up a huge 163.6%!

What about the current slump in energy prices? Should that turn you off from buying these shares? Heck no!

As I've told you previously, the pullback you're seeing in oil and gas prices is nothing more than a much overdue pause in the market, and all of my indicators continue to suggest (strongly) that we will see $150 oil and then $200 oil early next year.

So don't let any bearish comments on the energy markets steer you away from the long-term trends ... whether energy or Asia!

Best wishes,


P.S. To get specific buy-and-sell instructions for all the natural resource profit opportunities I follow, including follow-ups and flash alerts, subscribe to my Real Wealth Report now!

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