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China Petroleum & Chemical Corp Class H 00386

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Stock XHKG Rating as of
HKD 4.80 +0.03 (0.63%)
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As of Delayed Price Closed
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Company Report

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Sinopec Earnings: Hit by One-Off Items; Dividend Payout Intact

Chokwai Lee

Sinopec’s 2023 net profit of CNY 58.3 billion, down 13% year on year, was below our expectation, largely due to impairment losses and a one-off levy for mineral rights concessions of CNY 7.4 billion. Meanwhile, operating statistics for 2023 including oil and gas output, refinery throughput, ethylene production, and domestic sales volume of refined oil products were in line with our expectations. We maintain our fair value estimate of HKD 5.60 per H-share (CNY 5.10 per A-share) after considering our latest energy price and foreign exchange assumptions. We think Sinopec’s H-shares are currently undervalued, supported by its attractive 2024 dividend yield of more than 8%.

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Price vs Fair Value

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00386 is trading at a 18% discount.
Price
HKD 4.62
Fair Value
HKD 7.80
Uncertainty
High
1-Star Price
HKD 9.26
5-Star Price
HKD 5.28
Economic Moat
Lyrx
Capital Allocation
Yjtjqxdd

Bulls Say, Bears Say

Bulls

The potential spinoff of its marketing division should provide a one-time gain to Sinopec and help strengthen its financial position.

Bears

As a state-owned company, Sinopec could place national interests, such as maintaining full employment, above those of investors, constraining cost cuts more than expected.

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Trading Information

Previous Close Price
HKD 4.77
Day Range
HKD 4.77–4.88
52-Week Range
HKD 3.64–5.47
Bid/Ask
HKD 4.80 / HKD 4.81
Market Cap
HKD 584.16 Bil
Volume/Avg
120.9 Mil / 105.2 Mil

Key Statistics

Price/Earnings (Normalized)
6.68
Price/Sales
0.16
Dividend Yield (Trailing)
7.89%
Dividend Yield (Forward)
9.21%
Total Yield
7.75%

Company Profile

China Petroleum & Chemical, or Sinopec, is one of China's national oil companies and one of Asian's largest integrated oil companies in terms of revenue. Its income is derived primarily from refining and marketing of oil products and petrochemical production. Sinopec has China's largest petrol station network with over 30,000 stations and enjoys significant market share in petrochemicals. Established in 2000 by China Petrochemical Corporation, a state-owned enterprise and majority shareholder, the company also owns oil and gas assets in Shandong and Sichuan provinces. It has a smaller global upstream presence than peers PetroChina and CNOOC. In 2023, Sinopec’s production of oil and gas equivalent was 504.09 million barrels. The firm also processed 257.52 million metric tons of crude oil.
Sector
Energy
Industry
Oil & Gas Integrated
Stock Style Box
Large Value
Total Number of Employees
368,450
Website
http://www.sinopec.com

Competitors

Valuation

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Metric
00386
00883
00857
Price/Earnings (Normalized)
 6.686.567.42
Price/Book Value
 0.671.200.87
Price/Sales
 0.161.970.41
Price/Cash Flow
 2.65—2.71
Price/Earnings
00386
00883
00857

Financial Strength

Metric
00386
00883
00857
Quick Ratio
 0.401.870.56
Current Ratio
 0.902.020.96
Interest Coverage
 6.1132.5210.52
Quick Ratio
00386
00883
00857

Profitability

Metric
00386
00883
00857
Return on Assets (Normalized)
 2.57%13.34%6.86%
Return on Equity (Normalized)
 6.56%20.51%13.27%
Return on Invested Capital (Normalized)
 4.38%17.22%9.87%
Return on Assets
00386
00883
00857
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