CNOOC Bernstien's top pick among APAC oil equities

Investing.com -- CNOOC (HK:0883 ) has been selected by Bernstein as the leading pick among Asia-Pacific oil equities for 2025, flagging its strong financial performance and undervalued stock position within the sector, in a note dated Tuesday.

The oil company stands out due to its free cash flow yield of 11%, making it one of the most compelling investment opportunities in the region. 

Analysts at Bernstein have said that CNOOC is not only highly undervalued compared to its peers but also boasts a world-class portfolio that has consistently delivered strong returns.

Despite an anticipated decline in oil prices, with Brent forecasted to average $70 per barrel in 2025, along with its strong operational efficiency and high dividend yield position it as a stable investment. 

Chinese oil majors, including CNOOC, have outperformed the broader market in 2024 due to superior cash flow and dividend yields, providing a buffer against macroeconomic headwinds and declining earnings growth across the sector. 

“We have Market-Perform ratings across APAC oil equities with CNOOC being the only Outperform,” said analysts at Bernstein in the note.

The analysts also noted the broader market context, where Chinese oil demand is expected to grow modestly by 0.2 million barrels per day in 2025, contributing to a total global demand growth of 1.1 million barrels per day. 

However, the sector faces challenges from potential supply growth outpacing demand and geopolitical uncertainties. 

Nevertheless, the strong dividend yields of Chinese oil majors, ranging from 7% to 9%, stand out compared to Western peers at 4% to 6%, offering a compelling case for income-focused investors.

As a result of its strong balance sheet and strategic positioning, CNOOC has been able to weather fluctuations in the oil market effectively. 

Source: Investing.com