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China Petroleum & Chemical Corp ADR SNP

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Morningstar’s Analysis

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China Oil Majors Remain Undervalued but Near Term Uncertainties To Cap Performance

Chokwai Lee, CFA Senior Equity Analyst

Analyst Note

| Chokwai Lee, CFA |

Ongoing confusion over the status of Chinese ADRs following the flip-flop by the New York Stock Exchange to delist the three Chinese telcos is likely to weigh on the share price of CNOOC Ltd and its ADRs (CEO). To recap, CNOOC Ltd is the other notable company impacted by its parent being added to the banned list. Although PetroChina (PTR) and Sinopec (SNP) are not on the banned securities list, they may still be subject to weaker investor sentiment over perceived risks that President Trump could add more companies to the banned list before his term ends on Jan. 19. We keep our fair value estimates on CNOOC, PetroChina and Sinopec unchanged and we think their shares are undervalued (except PetroChina’s A-shares) at current share prices based on our expectation for oil prices to recover.

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Company Profile

Business Description

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.

Contact
No. 22 Chaoyangmen North Street, Chaoyang District
Beijing, 100728, China, People's Republic of
T +86 1059960028
Sector Energy
Industry Oil & Gas Integrated
Most Recent Earnings Sep 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type
Employees 402,206