Shanghai Petrochemical reported better than expected second-half results for last year, analysts said.
The company on Wednesday said it had earned an annual 726.47 million yuan (about HK$676.34 million) last year, against an interim of 317.92 million yuan, indicating a second-half net of 408.55 million yuan.
Goldman Sachs analyst Huang Shumin yesterday said a drop in crude-oil costs and an adjustment in its product mix had been key factors boosting the company's bottom line in the second half.
ING Barings senior analyst Alexandra Conroy said the firm had a high sensitivity to operating costs, meaning a slight fall in crude and raw materials costs would have a strong impact on its net.
She said the company paid on averge 1,110 yuan a tonne for crude in the second half, 3 per cent lower than the 1,141 yuan a tonne in the first half.
'The mainland market is quite bad, and the margins are quite low. With the company running a high operational gearing, changes in either product prices or in raw material costs will have a significant impact on its net.' A 10 per cent rise in crude oil will result in a 17-18 per cent decline in net profit, she said.