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MarketScreener Homepage  >  Equities  >  Hong Kong Stock Exchange  >  CNOOC Limited    883   HK0883013259

CNOOC LIMITED

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Exclusive - Trump to add China's SMIC and CNOOC to defense blacklist: sources

11/30/2020 | 09:06pm EST
FILE PHOTO: U.S. President Trump speaks to reporters at the White House in Washington

WASHINGTON (Reuters) - The Trump administration plans to add China's top chipmaker SMIC and oil giant CNOOC to a blacklist of alleged Chinese military companies, escalating tensions with Beijing before President-elect Joe Biden takes office, according to sources familiar with the matter and a document seen by Reuters.

The Department of Defense (DOD) is poised to designate four more Chinese companies as owned or controlled by the Chinese military, bringing the total number to 35. A recent executive order issued by President Donald Trump would prevent U.S. investors from buying securities of the blacklisted firms starting late next year.

It was not immediately clear when the new additions to the blacklist would be published in the Federal Register, making the move official. But the list includes China Construction Technology Co Ltd and China International Engineering Consulting Corp, as well as Semiconductor Manufacturing International Corp (SMIC) and China National Offshore Oil Corp (CNOOC), according to the document seen by Reuters and four sources.

SMIC said it continued "to engage constructively and openly with the U.S. government" and that its products and services were solely for civilian and commercial use. "The Company has no relationship with the Chinese military and does not manufacture for any military end-users or end-uses," it said in a statement.

Shares in SMIC closed 2.7% lower on Monday.

CNOOC's listed unit CNOOC Ltd, whose shares fell by almost 14% on Monday, said in a statement that it had checked with its parent and no formal notice from relevant U.S. authorities had been received.

Asked about Washington's planned move, China's foreign ministry spokeswoman Hua Chunying said Beijing hoped the United States would not erect barriers and obstacles to cooperation and discriminate against Chinese companies.

Later on Monday, Bernstein Research downgraded CNOOC Ltd's stock to 'market perform' by applying a 30% discount to share price targets, citing sanction risks that range from a ban on U.S. funds owning CNOOC stock to prohibiting U.S. companies from doing business with CNOOC.

The DOD did not respond to a request for comment.

SMIC, which relies heavily on equipment from U.S. suppliers, was already in Washington's crosshairs. In September, the U.S. Commerce Department informed some firms they needed to obtain a license before supplying goods and services to SMIC after concluding there was an "unacceptable risk" that equipment supplied to it could be used for military purposes.

The expanded blacklist is seen as part of a bid to cement outgoing Republican Trump's tough-on-China legacy and to box incoming Democrat Biden into hardline positions on Beijing amid bipartisan anti-China sentiment in Congress. The Biden campaign declined to comment.

The measure is also part of a broader effort by Washington to target what it sees as Beijing's efforts to enlist corporations to harness emerging civilian technologies for military purposes.

Reuters reported last week that the Trump administration is close to declaring that 89 Chinese aerospace and other companies have military ties, restricting them from buying a range of U.S. goods and technology.

The list of "Communist Chinese Military Companies" was mandated by a 1999 law requiring the Pentagon to compile a catalog of companies "owned or controlled" by the People's Liberation Army, but DOD only complied in 2020. Giants like Hikvision, China Telecom and China Mobile were added earlier this year.

"Our government is right to treat these firms as puppets of the Chinese government," Republican Senator Tom Cotton said, when asked about the upcoming additions. Cotton, a China hardliner, had called on DOD to release the list last year.

TEETH FOR THE BLACKLIST

This month, the White House published an executive order, first reported by Reuters, that sought to give teeth to the list by prohibiting U.S. investors from buying securities of the blacklisted companies from November 2021.

The directive is unlikely to deal the firms a serious blow, experts said, due to its limited scope, uncertainty about the stance of the Biden administration and already-scant holdings by U.S. funds.

Still, top U.S. asset managers Vanguard Group and BlackRock Inc each own about 1% of shares of CNOOC's listed unit CNOOC Ltd, and together own roughly 4% of outstanding shares of SMIC, disclosures show.

Vanguard and BlackRock declined to comment.

Combined with other measures, the expected move deepens a rift between Washington and Beijing, already at loggerheads over China's handling of the coronavirus and its crackdown on Hong Kong.

Congress and the administration have sought increasingly to curb the U.S. market access of Chinese companies that do not comply with rules faced by American rivals, even if that means antagonizing Wall Street.

(Reporting by Alexandra Alper and Humeyra Pamuk; Writing by Alexandra Alper; Additional Reporting by Mike Stone in Washington, Josh Horwitz in Shanghai, Muyu Xu and Cate Cadell in Beijing, Chen Aizhu in Singapore; Ross Kerber in Boston; Editing by Marguerita Choy, Christopher Cushing, Louise Heavens and Tom Brown)

By Alexandra Alper and Humeyra Pamuk


© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
BLACKROCK, INC. -0.96% 735.05 Delayed Quote.1.87%
CHINA MOBILE LIMITED -2.76% 47.6 End-of-day quote.7.69%
CHINA TELECOM CORPORATION LIMITED -2.18% 2.24 End-of-day quote.4.19%
CNOOC LIMITED -5.57% 7.8 End-of-day quote.8.64%
LONDON BRENT OIL -1.92% 55.07 Delayed Quote.8.61%
SEMICONDUCTOR MANUFACTURING INTERNATIONAL CORPORATION -2.68% 27.25 End-of-day quote.23.30%
WTI -1.77% 52.063 Delayed Quote.10.00%
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Financials
Sales 2020 161 B 24 820 M 24 820 M
Net income 2020 22 872 M 3 529 M 3 529 M
Net Debt 2020 111 B 17 153 M 17 153 M
P/E ratio 2020 12,7x
Yield 2020 5,94%
Capitalization 291 B 44 921 M 44 924 M
EV / Sales 2020 2,50x
EV / Sales 2021 2,10x
Nbr of Employees 18 425
Free-Float 35,0%
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Technical analysis trends CNOOC LIMITED
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Mean consensus BUY
Number of Analysts 19
Average target price 8,87 CNY
Last Close Price 6,52 CNY
Spread / Highest target 94,6%
Spread / Average Target 36,0%
Spread / Lowest Target -1,78%
EPS Revisions
Managers and Directors
NameTitle
Ke Qiang Xu Chief Executive Officer & Executive Director
Guang Jie Hu President & Executive Director
Dong Jin Wang Chairman
Wei Zhi Xie Chief Financial Officer
Sung Hong Chiu Independent Non-Executive Director
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