Sinopec Corp.(00386) 海通国际·2024-09-09 04:07Investment Rating - The report initiates coverage with an "Outperform" rating for China Petroleum & Chemical Corporation (386 HK) at a current price of HK6.09 [2][19]. Core Insights - The company aims to enhance identification and promote enterprise valuation through share buy-backs and high dividend yields, with a planned annual cash dividend payout ratio of no less than 65% over the next three years [4][24]. - In the first half of 2024, the company reported revenue of RMB 1,576.1 billion, a decrease of 1.1% year-on-year, while net profit attributable to shareholders was RMB 35.7 billion, an increase of 1.7% year-on-year [4][24]. - The exploration and production segment benefited from rising oil prices, with Brent crude averaging USD 83.42 per barrel, up 4.38% year-on-year, and a 2.97% increase in oil and gas equivalent production [4][9]. - The refining segment saw a revenue increase of 2.8% year-on-year but a significant profit decline of 37.6% [12]. - The chemical segment reported a revenue increase of 5.3% year-on-year but incurred an operating loss of RMB 3.164 billion, indicating ongoing challenges in this area [15][17]. Revenue and Profit Forecast - Revenue projections for 2024-2026 are RMB 3,218.0 billion, RMB 3,298.7 billion, and RMB 3,331.7 billion respectively, with net profit estimates of RMB 72.7 billion, RMB 74.4 billion, and RMB 76.5 billion [3][19]. - The diluted EPS is forecasted to be RMB 0.60, RMB 0.61, and RMB 0.62 for 2024-2026 [19]. Business Segment Performance - The exploration and production segment's operating profit increased by 14.7% year-on-year, driven by higher oil prices and production levels [9][10]. - The refining segment's operating income was RMB 749.67 billion, but profits fell due to decreased margins on diesel products [12][13]. - The chemical segment continues to struggle, with a reported loss and declining production of key products like ethylene [15][17]. Market Position and Valuation - The company has a market capitalization of HK5.54 to HK$6.09 based on a P/B multiple of 0.8 times the 2024 BPS [19].