UBS bought MI Energy (1555.HK) for the first time, with a target price of HK$3.00 because the stock's valuation was attractive (equivalent to 6 times the price-earnings ratio of FY2012).

UBS said that compared to peers around the world, the stock's valuation is attractive, especially since more than 90% of the company's reserves are crude oil. UBS expects MI Energy's production to grow 30% CAGR in 2010-2013. MI Energy is an independent upstream oil company operating low penetration oil fields in mainland China. It has signed a production sharing contract with China Petroleum (0857.HK).

UBS said that compared to China's major onshore oil producers, MI Energy has a good record of low cost and high profitability.

The stock closed at HK$2.17 throughout the day.