Sinopec Corp seems a worthwhile bet, if one believes oil prices will fall, according to analysts. The mainland petrochemical giant, formally known as China Petroleum & Chemical Corp, began its initial public offering in Hong Kong yesterday with its H shares priced at HK$1.47 to $1.77. It will raise $23.8 billion if shares are fixed at the mid-point of $1.62. Tung Tai Securities associate director Kenny Tang Sing-hing said: 'Sinopec is being priced at six to nine times earnings and I think that is quite reasonable.' The firm's key products are refined petroleum and petrochemicals. The markets for these that Sinopec dominates are growing at a pedestrian 4 per cent to 7 per cent a year, meriting a low price-earnings ratio. 'When the stock goes up to double-digit PEs, the upside will become very limited. I would advise investors to take profit then,' Mr Tang said. Earnings could grow more rapidly than expected if Sinopec's raw material, crude oil, staged an orderly retreat. Every US$1 off a barrel of oil would put an extra 4 per cent on Sinopec's bottom line. In that way, downstream play Sinopec is a mirror image to the stock market's other big mainland oil and petrochemical play, PetroChina, which derives most of its earnings from upstream oil extraction. 'It is really a commodity price call,' RBC Investment Management portfolio manager Aaron Pong Wing-sing said. 'If you think oil prices will continue to be high, go with PetroChina. If you think they are falling, go with Sinopec.' RBC itself has yet to make the call itself and place an order for Sinopec, which closes its retail offer on Thursday. Mr Pong is pleased that Morgan Stanley Dean Witter, which conducted the successful China Unicom listing, is the underwriter. He reckoned Morgan Stanley had struck a fair balance between the company and market on the pricing. 'It does help if the underwriter is not going to oversqueeze on the price which crimps the upside potential,' he said. Kim Eng Securities research head Stephen Brown agreed pricing was fair but said investors could not gauge the management quality, which would take six months to a year to assess. Sinopec will list American depositary shares on October 18 and shares in London and Hong Kong the following day.