Monday, November 05, 2007

PetroChina is World's Largest Company, Tops $1T

SHANGHAI, China (AP) — PetroChina became the world's first company worth more than $1 trillion on Monday, surging past Exxon Mobil as the Chinese oil producer's shares nearly tripled in their first day of trading in China (see chart above, click to enlarge).

Adding the value of PetroChina shares traded in Shanghai, Hong Kong and New York — and those still owned by the government — the company's total market capitalization ballooned to just over $1 trillion, compared to Exxon Mobil Corp.'s $488 billion.

Bottom Line: PetroChina, at $1 trillion market capitalization, is worth more than Microsoft, Google, Procter and Gamble ($217 billion, not pictured above) and Wal-Mart combined ($966 billion), and is worth 5.5X the value of Wal-Mart.


At 11/05/2007 9:36 AM, Anonymous Anonymous said...

I think I've already seen you misspell it a couple of times, it might be worth pointing it out: it's Procter & Gamble, not Proctor...

At 11/05/2007 11:38 AM, Blogger Mark J. Perry said...

PR: Thanks, I fixed it.

At 11/05/2007 11:41 AM, Blogger Mark J. Perry said...

Yes, I did find one other post where I misspelled Procter and Gamble, and I aplogize.

"Mea maxima culpa."

At 11/06/2007 3:05 AM, Anonymous Anonymous said...

Here's an interesting followup from the November 6, 2007 WSJ:

How Big Is PetroChina?

PetroChina, for example, sold a mere 2.2% of its share capital to domestic investors in its Shanghai initial public offering. When those shares made their debut on the exchange Monday, their price rocketed to a close of 43.96 yuan (US$5.90) each, from the IPO price of 16.70 yuan.

Applying that price to all of PetroChina's outstanding shares would give the company a market capitalization of around $1.08 trillion, twice that of industry giant Exxon Mobil Corp., the company that, at least before Monday, had the highest market value in the world, at around $488 billion. But if you apply the price of PetroChina's Hong Kong-listed shares -- 18 Hong Kong dollars (US$2.32) each, as of Monday's close -- to all PetroChina's outstanding shares, then the company is valued at closer to $424 billion. The valuation of PetroChina's American depositary shares is close to the Hong Kong shares. Yet about 86% of PetroChina's shares are held by its state-owned parent and don't trade on any exchange, and it is hard to know what price they would fetch if all of them were actually to come to market.

"This does not mean that PetroChina is bigger than Exxon Mobil," says Zhou Chunsheng, a professor of finance at Cheung Kong Graduate School of Business in Beijing. "We cannot compare them based on stock prices, because their stock prices are obtained from different markets."

By law, Chinese investors can't invest significantly outside of China, and foreign investors are allowed to invest only tiny amounts in Chinese stocks known as Class A shares. That means prices reflect high demand from local investors with few other investment options.

Given that uncertainty, another way of valuing the company would be to apply prices only to what investors can actually buy and sell -- the so-called free float. The total value of PetroChina's publicly traded shares is about $72.5 billion. That's still large, but nowhere close to Exxon Mobil.

At 11/06/2007 3:17 AM, Anonymous Anonymous said...

Regarding the need to increase the supply of A shares, Dr. Mark Mobius said the following:

"A share companies have already raised more secondary equity this year than in all of 2006, and more is on the way."6

6. Source: Asia Pulse, January 16, 2007


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