PDF《中国石油化工股份有限公司》

12 个月较市场指数下跌 20%以上 投资评级定义和免责条款 投资评级定义和免责条款 投资评级定义和免责条款 投资评级定义和免责条款 Please see important notice on the last page.

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15 China Petroleum &

Chemical Corp. China Petroleum &

Chemical Corporation (Sinopec) is an integrated energy and chemical company, which takes in charge the eastern and coastal areas. The company accounts for 74% of China'

s total petroleum demand. Its downstream refining market and petrochemical operations are larger than its upstream assets. Earnings and profits lean on global oil prices, gross refinery margin. Downstream capability lifting up Recently, company acquired

5 refinery plants as well as operating rights of

63 gas stations from the parent group for about RMB3.66 billion. In order to further explore retail business growth, a gas station rebuild project costing RMB1.5 billion has been put on track. At the meantime, Sinopec has planned to build up three refinery plants in order to minimize gap between domestic supplies with demands. Sichuan-East Coast Natural Gas Transport Project has been put into operation and will reach

3 billion cubic meter by the year end. With the government price reform policy support, Sinopec is expected to benefit more from gas sector. One-off subsidy In 2007, company received no subsidy from the central government, with NDRC raised refinery product prices for RMB500/ton in November. We predict that one-off subsidy will be coming out soon, with the amount far more than 2005'

s and 2006'

s, helping release downstream refinery business loss. Valuation It is unlikely that refined product prices reach top in 2008, which will be negative to the share price. We estimate that EPS of year

08 and

09 is 0.80 and 0.78, respectively. Considering given PE ratio, our target price for Sinopec is HK$11.7. Valuation Table RMB million

2006 2007E 2008E 2009E 2010E Core-biz revenue 1,044,579 1,232,603 1,355,864 1,491,450 1,595,851 Growth 30.20% 18% 10% 10% 7% Net profit 50,664 55,521 69,285 67,659 66,101 Growth 28% 10% 25% -2% -2% EPS 0.58 0.64 0.8 0.78 0.76 ROE 22.10% 20.20% 21.70% 18.80% 17.78% P/E (x) 12.7 16.8 14.6 13.8 13.5 Source: Company data, China Merchants Securities (HK) estimates Target price:HK$ 11.7 Current price:HK$ 9.09

14 Feb

2008 Bloomberg:386 HK Reuters:0386. HK Stock data Share issued(m) 86,702.4 Total market cap(HK$bn) 788.12 52-week range(HK$) 5.55-13.4 Average daily turnover (HK$m) 3,189 Major shareholders % Sinopec Group 75.8% Templeton 6.1% Industry Oil &

gas Contact: China Merchants Securities (HK) (852)-31892162 Email : [email protected] Stock Performance Source: Bloomberg Natural Gas Transport Projects C Show Time! Buy (Initial Coverage) Please see important notice on the last page.

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15 Company Background China Petroleum &

Chemical Corporation (Sinopec) is a listed company on domestic and international stock exchanges with integrated upstream, midstream and downstream operations, prominent core businesses and a comprehensive marketing network. The Company was set up on Feb. 25th,

2000 by China Petrochemical Corporation (Sinopec Group) as the sole initiator. Sinopec issued 16.78 billion H sh........