PetroChina (PTR), Exxon Mobil (XOM): An Energy Play On China’s Growth

China Petroleum & Chemical Corp (ADR) (NYSE:SNP) (also known as Sinopec) explores for, develops, and produces crude oil and gas throughout China.  Also one of the largest companies in the world, it is controlled by the China Petroleum Corp. just like PetroChina Company Limited (ADR) (NYSE:PTR).

Unlike PetroChina, however, Sinopec is more of a downstream oil company.  It only produces about 25% as much raw crude oil as PetroChina, but produces 60% more refined products. China Petroleum & Chemical Corp (ADR) (NYSE:SNP) trades at a significantly cheaper valuation (10.3 times earnings); however it is not projected to grow its revenues as quickly as PetroChina.  Income investors may prefer Sinopec due to its higher dividend yield of 4.1%.

ExxonMobil, the world’s largest corporation in terms of revenues, is one of my favorite investments of any kind.  A much less risky play than either of the Chinese companies, Exxon Mobil Corporation (NYSE:XOM) trades for just 9.3 times earnings, and is projected to grow by about 6% annually going forward.  Income investors may prefer one of the other big oil companies, since Exxon only pays 2.5% annually.

Conclusion

While Exxon Mobil Corporation (NYSE:XOM) is definitely the safest way to go here, investors who believe in China’s growth and can stomach a little more volatility may want to take a look at PetroChina Company Limited (ADR) (NYSE:PTR) or China Petroleum & Chemical Corp (ADR) (NYSE:SNP) as a play on the increasing affluence of China’s middle class over the next decade or so.

Matthew Frankel has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.