Graham Cunningham and his nine-member squad at Citi tumble back to third place after two years on top. Even so, the group impresses investors with its experience and the timeliness of its coverage. “Citi has been the first one to read the latest shift in technologies,” reports one fund manager, “and has been among the few that have been keeping a regular watch on events and pricing.” With members posted in Bangkok, Hong Kong, Mumbai and Sydney, the team publishes on 45 oil and gas stocks. Favorite among those is Hong Kong–based Sinopec Kantons Holdings. “The proposed sell-down of 30 percent of the company’s marketing business is a good way to realize value through both a higher multiple, by selling the division on a stand-alone basis, and potential earnings growth, by introducing partners who are experienced in nonfuel business operations in gas stations,” explains Cunningham. Moreover, Sinopec Kantons will be a significant beneficiary of China’s upgrade to its National Fuel Standards, whereby gasoline and diesel prices will rise, he notes. The team maintains a buy rating on the stock, with a target price of HK$8.25. In late April it closed at HK$7.93. “Graham is experienced and understands the market-sensitive catalysts for the major oil companies,” another backer offers. |
The 2014 All-Asia Research Team: Oil & Gas, No. 3: Graham Cunningham & team