Sinopec Engineering

Sinopec spin-off touts edge through efficiency push

PUBLISHED : Friday, 10 May, 2013, 12:00am
UPDATED : Friday, 10 May, 2013, 5:40am

Sinopec Engineering, a China Petrochemical spin-off, said its listing will boost its overall efficiency and profitability through its ongoing consolidation of eight subsidiaries.

The company, which was created in September, promises reasonable returns for investors through a mix of organic and inorganic growth models as some advanced technologies may be obtained through overseas acquisitions.

"The listing of Sinopec Engineering will propel our efficiency and competitiveness in the global market while bringing in a more compelling compensation scheme to retain talent," Cai Xiyou, chairman of Sinopec Engineering, told a media briefing in Singapore yesterday. The listing was timed with the firm's plan to internationalise its business but it needed to match the company's earnings target, Cai said.

The state-owned firm, which builds petrochemical and refining plants, plans to raise about US$2.1 billion through its Hong Kong initial public offering. About 40 per cent of the fresh capital will be used to fund engineering and construction operations, while 23 per cent will finance research and development, the prospectus says.

Seven cornerstone investors have pledged to commit a total US$350 million to the new Sinopec Engineering shares.

Yan Shaochun, president of Sinopec Engineering, said the firm planned to expand overseas revenues and look for acquisition targets that could provide synergies to existing business. Yan declined to elaborate on potential deals, but Chinese firms in general face a shortage of advanced petrochemical and oil-refining technology.

Hong Kong investors yesterday were also given a briefing, led by vice-chairman Zhang Kehua.

Demand for oil and oil products in China has been soaring, with the country overtaking the US as the world's biggest net importer of oil. The company forecasts China's petrochemical engineering market will expand by an average 15.2 per cent to 241.2 billion yuan (HK$302.2 billion) in the five years to 2016.