This report is read as follows:

Through the establishment of market-oriented incentive mechanism and the integration of multiple financial business sectors, the company is expected to significantly increase the synergy effect, improve the profitability of the sub-sector and the company as a whole, improve the space significantly, and have the scarce advantage of financial control full license of central enterprises.

Main points of investment:

For the first time, the target price is 12.12 yuan per share, and the "overweight" rating: PetroChina Capital's 2018-2020 net profit is expected to be 7.699 billion yuan, 8.492 billion yuan and 9.37 billion yuan, corresponding to EPS0.85 yuan, 0.94 yuan and 1.04 yuan. Through the comparable company valuation method and segment valuation method, give it the target price of 12.12 yuan per share, corresponding to the current market price of 10.27 yuan per share, a premium of 18.01%, and give the "overweight" rating.

The financial control platform set sail, and the combination of industry and finance creates synergy: PetroChina Capital has a complete financial license, integrates the financial business plate within the Petrochina Company Limited system, and extends from serving Petrochina Company Limited Group to serving the energy and oil industry chain under the combination of industry and finance. and then expand to serve "Belt and Road Initiative" and other relevant national initiatives. Through the establishment of a market-oriented performance system and the integration of business development channels, it is expected to enhance the degree of marketization of subsidiaries, increase synergy and enhance the company's ROE level in the future.

The lack of supervision will gradually be made up, and the scarcity of the financial control platform of central enterprises is expected to be highlighted: the management methods of financial control companies are approaching, and regulators will increase supervision over the disadvantages of financial control companies, such as regulatory arbitrage, conflicts of interest, alienation from reality to deficiency, and so on. we believe that it is possible to supervise the financial control company through license plate access, capital constraints and other conditions. PetroChina Capital, as one of the industrial financial control platforms under the central enterprises, has a high probability of successfully obtaining the financial control license in the future. under the background of higher industry threshold access, CNPC is expected to become the target of the scarcity financial control company and get the market premium.

Catalyst: financial control regulation landed, and the company's performance exceeded expectations.

Risk hint: regulatory measures are stricter than expected, Petrochina Company Limited Group business expansion slowed down, macroeconomic decline.