Laban Yu, the most popular energy analyst in Asiamoney’s Brokers Poll for the second year running, has a pertinent sense of his role in the market.
“My idea is these are all boring notes. But if someone reads one energy analyst, I want mine to be the one they read,” the Jefferies analyst says, adding that his research quite literally “rocks”.
Yu, a chemical engineer by education whom has a penchant for Hawaiian shirts on Fridays, invokes song lyrics when writing his reports: when he made the call in March that Chinese oil and gas company Cnooc’s earnings quality was inferior to its competitors, he concluded that the company would “Smile though your heart is aching”, a reference to lyrics in a song by Nat King Cole. And when the company had to suspend natural gas production in December due to a subsea pipeline leak, Yu pointed that “Oops!...I Did It Again”, named after the famous Brittany Spears song title.
The whimsical titles of Yu’s reports should not be mistaken for lightweight research. His analysis of the energy market is comprehensive, taking the deeper regulatory climate into account when issuing his prognoses.
Yu attributes his popularity with investors to China’s waning demand for coal, an area that he has more exhaustively analysed after launching new coverage of the sector this year. This makes his team unique as other desks in the region typically separate their coal coverage from that of oil and gas.
“We made a big call on China’s energy consumption and we’re still waiting for that to play out,” he explains. “But as China rolls out its economy to become more energy efficient, we think a lot of the estimates for coal are far too high and we’re calling for coal prices to drop.”
Yu’s top calls of the year included “Long Petro China and short Shenhua, China Coal and Yanzhou Coal,” as well as a bearish stance on Cnooc, building off his correct call in 2011 that the company’s performance would drop despite it having previously boasting a 40% growth in production.
In the coming months, Yu foresees oil and gas companies such as PetroChina being particularly interesting.
“At the end of 2011 regulators launched a pilot programme for gas, which has been slower to roll out,” he says, noting the regulation regards linking the price of natural gas with oil in two regions of China. “It appears very well thought out and is something we’re watching.”