Focus on recovery in demand for Sinopec
After the oil major's 24pc profit rise for first half, analysts look for positive factors such as asset injections and lift from stimulus measures
Sinopec Corp's earnings per share (EPS) rose 21 per cent to 25 fen in the first half, less than half what analysts have projected for the whole of this year.
The Chinese oil major's net profit rose 24.1 per cent to 29.42 billion yuan (HK$36.99 billion) in the first half, beating PetroChina's 5.6 per cent increase.
"In the second half, we plan to sell 84.25 million tonnes of oil products in the domestic market," said the company, which is listed in Hong Kong, Shanghai, New York and London.
In the six months to June, Sinopec produced 9.2 billion cubic metres of natural gas, processed 115.4 million tonnes of crude oil and turned out 23.3 million tonnes of crude oil. The company sold 88 million tonnes of oil products in the first half.
"Sinopec has witnessed a slight improvement in oil product demand in July, although not significant. Sinopec does not expect any substantial demand recovery for petrochemicals this year in China. We expect the company's focus to be for assets where it can deploy its low-cost operating leverage with size likely to be US$1 billion to US$2 billion and deal returns accretive," a JP Morgan report said.
Standard Chartered this month cut its forecast for Sinopec's earnings per share by 8 per cent to 56 fen in anticipation of poor first-half results. But it raised its EPS forecast for next year by 7 per cent to 65 fen, factoring in the impact of the recent measures taken by Beijing to boost the economy.