The comparative analysis of value creation drivers: The case study of PetroChina and SHELL

Abstract

The goal of the paper is to provide managerial implications to PetroChina and Shell by comparing the two companies’ intrinsic value creation drivers. The paper adopts combination methods of quantitative research and qualitative research. The residual earning model is used for getting intrinsic value and value creation drivers. The qualitative research explains the result of quantitative research by analyzing external and internal variables. The main results of the paper: PetroChina is fairly valued and Shell is undervalued by the market. The major value creation drivers of the two companies are similar, but their degrees of impact on the value are different. These differences major come from the external conditions the two companies operate in. PetroChina is too dependent on the Chinese market and government which can make PetroChina’s performance unstable in the future. Shell’s administration expense and financial cycle are two factors that may obstruct its value creation.