Daily Brief Energy/Materials: PetroChina, Pan American Silver and more

• We doubt if PetroChina (857 HK) can sustain good performance in 2024. On historical patterns, it has never sustained as one of HSI’s best-performing stocks for two consecutive years. 
• Consensus growth forecasts of 4.4% and 4.3% for FY24-25 are likely wrong as this means FY25 will be the 5th straight year of growth. PetroChina does not behave like that. 
• Crude oil price has got back to the end-2022 level, but PetroChina’s share price is still 50% higher. A return to their high correlation before 2023 will lead to underperformance. 

Following our short update on the La Colorada Skarn preliminary economic assessment (PEA), we are revising our valuation of Pan American Silver (PAAS) to incorporate the Skarn’s risked NPV. We have also reflected up-to-date commodity prices and lower WACC thanks to the reduction in bond yields. Overall, our valuation of PAAS increases from US$22.7 to US$23.5/share. While the stock has recently been propped up by the strong gold price, we see the upcoming publication of the FY24 outlook and FY23 results as potential additional catalysts for the shares.