Who smashed the A shares of PetroChina?

Chinese stockholders will probably never forget November 5, 2007. That day, PetroChina returned to A shares . The issue price was 16.7 yuan per share. At the opening, it was 48.60 yuan, up to 48.62 yuan. The single-day turnover was 70 billion yuan, and the market value was as high as 8.89 trillion yuan. The refreshed record of the human stock market is still there, but PetroChina’s scenery is long gone. The “most profitable company in Asia”, which has been declining for 12 years, has recently reached a record low, with a drop of nearly 90%, and its market value has evaporated by 7.31 trillion yuan.

According to the China Fund News, on November 1, PetroChina’s A-share market hit a record low of 5.84 yuan (RMB, the same below). Although the closing price increased slightly by 0.17% to close at 5.89 yuan, even at the closing price of the day, PetroChina’s first day high since its listing (pre-reinstatement) has fallen by as much as 87.27%, and the market value has evaporated by 7.31 trillion yuan.

2007 was a crazy time for China’s stock market. That year, the Shanghai stock index hit a maximum of 6,124 points. The bullish A-shares made people’s confidence explode and their enthusiasm soared. Each of the hundreds of millions of people who poured into the stock market was looking forward to the dream of wealth.

On November 5th of that year, PetroChina, under the halo of “the most profitable company in Asia”, rushed back to the A-share market with the bull head of the bull market, and set a number of new stock market records on the first day. Except for the opening price of 16.7 yuan / share, it rushed to 48.60 yuan, and then hit a record high of 48.62 yuan. Although the closing price was 43.96 yuan, it was also a 163.23% increase from the issue price. In terms of trading volume, PetroChina alone traded 6.99 billion yuan throughout the day, accounting for about half of the Shanghai market’s turnover, setting a record for the largest daily turnover of a single stock.

A large number of stockholders rushed into PetroChina at a high level, and even rumored that “for every dime increase in China Petroleum, the Shanghai Composite Index rose by about 6 points.” With the skyrocketing stock price, PetroChina’s total market value reached 8.89 trillion yuan (A + H shares), becoming the world’s largest listed company by market value.

Unfortunately, the bubble always bursts. Subsequently, the Shanghai Composite Index plummeted from 6,124 points and dropped to 1,664 points in 2008. Naturally, PetroChina also lost sight of it, plunging below 10 yuan all the way, losing even worse than the broader market. In the following 12 years, CNPC plunged into a quagmire and kept falling, becoming a well-deserved “retailer.”

From November 2007 to November 2019, for a full 12 years, PetroChina, which had endless scenery, was already the worst black memory in the hearts of investors. Because every time it attracts market attention, it is always PetroChina’s “stock price hits a record low again.” Not only has the stock price fallen into junk, the valuation has also plummeted, and the price-to-book ratio (PB) valuation has dropped to a very low level.

At the close on November 1, PetroChina’s A-share PB was 0.88 times, and the H-share PB valuation was 0.51 times. The market continues to issue exclaims from the “Buy Buffett”. In 2000, PetroChina landed in the Hong Kong stock market with an issue price of only HK $ 1.27 per share. Soon after listing, it fell below the issue price and fell to HK $ 1.10.

In 2003, Warren Buffett aggressively bought PetroChina’s H shares, becoming the third largest shareholder of PetroChina after BP. In 2007, when Buffett achieved more than 7 times the earnings, he reduced and sold Air Petroleum stocks. PetroChina then skyrocketed in A shares, and Buffett was ridiculed for “low-level mistakes.” But PetroChina’s defeat in these 12 years proved that the god of stocks is the god of stocks, and the leek is the leek. The real winner is the one who laughs at the end.

PetroChina disclosed in its third quarter report that the company achieved operating income of 1.81 trillion yuan in the first three quarters, a year-on-year increase of 5.1%; net profit of 37.282 billion yuan, a net profit of 48.658 billion yuan in the same period last year, a year-on-year decrease of 23.4%. That is to say, “Asia’s most profitable company” is not so profitable, because the impact of falling international oil prices and fierce competition in the domestic refined oil market has led to a year-on-year decline in operating results.

For this reason, Chinese netizens are very puzzled: international crude oil goes up, and you follow it, international crude oil goes down, you still go up, how did revenue increase by 5.1%, but profits fell by 23.4%? This account is really a mess, probably no one except CNPC itself. But for retail investors in the A-share market, the stock price that fell from more than 48 yuan to more than 5 yuan, and the evaporated 7 trillion yuan, are all real gold and silver. One of the most common questions asked by investors is: Where did our money go?

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