Citigroup raised its target price for CNOOC (ADR: CEO, Hong Lpng 00883) to HK$20 from HK$17, and maintained its “buy” rating. The research house estimated FY2011 EPS, to be released on March 28, at RMB1.68 compared to consensus of RMB1.54. Citi increased its FY2011/12/13 estimates by 3%/6%/7% factoring in the government’s decision to cut the Windfall profits tax from 1 November 2011. It also reduced its oil and gas production volume growth estimate from 3% to 0.5% for FY2012 on the back of management’s guidance for a 0-3% range.

Nomura initiated coverage of CNOOC with a “buy” rating and a target price of HK$20. It said CNOOC aims to transform itself from a Bohai Bay shallow water driller to a global player with deepwater and unconventional resources base to drive long-term growth. Nomura believes CNOOC is likely to generate 5.4% production CAGR in 2013-18, mostly from deepwater Liwan gas projects and overseas. Although 5.4% CAGR is not a high number, CNOOC has robust cash generation of US$14-17bn pa and cash holdings of US$4.5bn to further raise the bar.

Cnooc bucked the HSI’s decline, ended up 0.68% at HK$17.86 (ADR $230.31).