Sinopec (600028): 2Q19 Operational Data Update and Roadshow Feedback
Company News Company status On July 29, Sinopec announced 2Q19 operating data: 2Q19’s oil and gas equivalent output reached 113 million barrels of oil equivalent, which was basically basically the same (crude oil output fell 2%, natural gas output increased 7%); crude oil processingThe volume was 62 million tons, an increase of 3% over the same period, while the output of major refined oil products 天津夜网 increased by 3% to 40 million tons; the diesel-to-gas ratio continued to increase to 1.
05; Ethylene crop production increased 11% to 3.
1 million tons; domestic sales of refined oil products increase by 2% each year, of which retail volume is basically flat each year, and direct sales and distribution volume increase by 7% each year.
We believe that the company’s 2Q19 operating data performance is solid, in line with our forecast of 2Q19 net profit attributable to mothers, or a trend of almost 15 billion, which is better than market expectations.
However, during the recent route demonstration, we found that investors’ opinions on Sinopec remained divided.
Comment on the interim dividend is the focus of market attention.
We expect that if the company’s medium-term dividend payout ratio can reach the maximum limit of 50% of the articles of association (profitable based on Chinese corporate accounting standards), it will release a positive signal to the market.
We maintain our forecast of a maximum dividend payout ratio of 80%.
At the same time, we expect the company’s dividend yield to be ahead of its peers and maintain Sinopec’s high-yield investment logic.
The bottom of profit is estimated at around 50 billion.
Some investors believe that Sinopec’s refining segment has higher profit risks, so they are more concerned about Sinopec’s profit situation in the next quarter and hope to measure the bottom of the company’s earnings.
Taking into account the company’s complete integrated layout advantages, we expect the bottom of profit in the next 2-3 years to be at least 50 billion.
Investors’ views on Sinopec remain divided.
During our recent roadshow, we found that investors’ views on Sinopec remained divided.
Even assuming a pessimistic scenario of bottom profits (approximately $ 50 billion) over the next two years, some investors still favor the company’s higher dividend yield.
Obviously, investors who are more concerned about the driving force of profit growth believe that they should avoid companies that may be in the industry’s down cycle in the next 2-3 years.
It is recommended to keep Sinopec-A / H outperform industry rating and earnings forecast unchanged.
Maintain A / H target price of 7 based on segment assessment.
30 yuan and 7.
50 builds, corresponding to 39% and 47% upside currently sustainable.
Sinopec A / H is currently trading at 0.
9 times and 0.
8 times 2019 P / B ratio.
Risks Oil price volatility; Macro demand deteriorated.