PetroChina Co., Ltd.'s (PetroChina) common stock price has appreciated significantly since our previous update report, which we believe reflects positive investor sentiments and the recent crude oil price appreciation. Going forward, we anticipate a y-o-y decline in the yearly average crude oil price in FY 2009, which will negatively impact the company's revenues and operating income over our 6-12 month investment horizon....

In FY 2009, we expect PetroChina’s top-line to decline on a y-o-y basis, as we forecast crude oil prices will remain at low levels. We also expect the slowdown in demand for hydrocarbon products will continue through FY 2009. We have forecast PetroChina’s crude oil output will decline 4.0% y-o-y in FY 2009, with refined products sales volumes set to decline 5.4% y-o-y in the same year. In December 2008, the government of China revised its fuel…

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In view of our negative outlook for crude oil prices, we expect a decline in the company’s top-line during FY 2009, particularly in the E&P;segment. However, this will lower input costs within its R&M;segment and coupled with an anticipated lower payment of special oil levies, we expect an improvement in margins in FY 2009. In FY 2010, we expect revenues to improve y-o-y in line with our anticipated…