Dahua Jixian raised the reasonable value of CITIC Resources (1205.HK) from HK$0.53 to HK$0.97 (0.7 times the stock price/book value). Market sentiment improved due to improved financing conditions. However, Dahua maintained the stock's selling rating because its valuation was too high, which is equivalent to the predicted price-earnings ratio of 20 times in 2009. If oil prices remain low, the company may further write off oil assets. Dahua Jixian expects the company's operating profit for the first half of 2009 to drop by more than 80% compared to the same period last year. Due to weak oil prices, demand for commodities such as coal and steel is weak. Last year, the company wrote off oil assets of HK$6.42 billion; Dahua went on to say that if oil prices return to strength, Kazakhstan may also raise the oil tax rate.

CITIC Resources rose 13.59% yesterday to close at HK$1.17.