Sinopec Kantons shares up 7pc after 63.4pc jump in first-half profit
Shares of Sinopec Kantons, the oil trading and energy logistics arm of the mainland’s second largest oil and gas producer, China Petroleum & Chemical (Sinopec), rose 7 per cent on Friday morning after it posted a 63.4 per cent year-on-year jump in interim profit.
Net profit amounted to HK$377.02 million for the first half of the year, up from HK$230.86 million in same period last year.
The main profit growth driver was its crude oil terminal joint ventures, which posted a 38 per cent year-on-year rise in profit contribution to Sinopec Kantons to HK$317 million. Six of the terminals are on the mainland and one is in Europe.
Also lifting profit was its crude oil jetty services operation, which saw operating profit rise 40.3 per cent year on year to HK$139.6 million.
Crude oil trading and vessel charter services both remained loss-making, to the tune of a combined HK$22 million in the first half, narrowed from a loss of HK$98 million in the same period last year.
Revenue dropped 73 per cent year on year to HK$3.51 billion from HK$13 billion, after Sinopec Kantons slashed its crude oil trading sales by 76 per cent to HK$3 billion as it shifts its business focus to energy logistics.
Nomura Securities’ head of regional energy research, Gordon Kwan, wrote in a note that the first-half profit amounted to 54 per cent of his full-year forecast of HK$700 million, excluding a potential acquisition from its parent of a gas pipeline linking Yulin in Shaanxi province to Jinan in Shandong.
“This suggests robust profitability in the existing joint venture operators despite the delay of the asset injection, which we believe will materialise in late fourth quarter,” he wrote. “Anticipation of this injection in the coming weeks could help the stock outperform.”
Sinopec Kantons shares were trading at HK$6.55 late in the morning session.