Bank of China International gave MI Energy (1555.HK) a purchase rating for the first time, with a target price of HK$2.60.

The bank said that MI Energy is the largest independent oil producer in China and holds 90% of foreign investment interests in the three cooperative oil exploration projects with China Petroleum (0857.HK) in Jilin Province. MI Energy has experience in mining in low-permeability oil fields. It is a low-risk, low-cost, and fast-growing oil producer. Based on 2011 core profit, the price-earnings ratio was only 7.5 times, which is attractive in valuation.

Bank of China International expects MI Energy's net profit to increase 2.8 times to RMB 418 million in 2010; the bank estimates that in 2012, profit could reach RMB 721 million, with a compound annual growth rate of 31%, mainly due to a sharp increase in production and a rise in crude oil prices.

MI Energy rose 2.39% yesterday to close at HK$2.14.