Back to top

Analyst Blog

On Aug 31, Zacks Investment Research upgraded China Petroleum and Chemical Corporation (SNP - Analyst Report) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

China Petroleum and Chemical Corporation (SNP or Sinopec), with its head office in Beijing, China, is one of the largest petroleum and petrochemical companies in Asia. The company is the second largest crude oil and natural gas producer, and the largest refiner and marketer of refined petroleum products in China. The company is also the largest producer and distributor of petrochemicals in the nation.

Supported by outstanding domestic results in oil and gas exploration, the company posted earnings per share of $1.92 per ADS in the second quarter of 2013 which jumped 36.2% year over year. The long-term expected earnings growth rate for the company is 6.9%.

Revenues in the first half, improved 5.0% to 1,415.244 billion yuan from 1,347.85 billion yuan in the prior-year period. During the six-month period ending Jun 30, 2013, Sinopec’s crude oil production grew 1.4% year over year to 165.4 million barrels, while natural gas volumes surged 11.8% to 324.1 billion cubic feet.

Domestic crude oil production increased 1.1% year over year to 153.7 million barrels, while overseas volumes increased 5.8% year over year to 11.8 million barrels. Total oil and gas production expanded 3.8% to 219.5 million barrels of oil equivalent.

The present valuation also makes the partnership attractive. The forward P/E multiple of 7.6% is at a discount of 21.6% to the peer group average of 9.7%. The ROE of the company currently stands at 12.5%, which is higher than the peer group average of 8.1%.  

The Zacks Consensus Estimate for 2013 has risen 9.6% in the last 30 days to $10.02 per ADS, reflecting year-over-year growth of 14.3%. For 2014, the Zacks Consensus Estimate increased 9.3% in the past 30 days to $11.28 per share, reflecting year-over-year growth of 12.6%.

Apart from China Petroleum, other operators in the sector having a favorable Zacks rank are Carrizo Oil & Gas Inc. (CRZO - Snapshot Report), Whiting USA Trust I (WHX - Snapshot Report) and Oiltanking Partners, L.P. (OILT - Snapshot Report). All these stocks presently sport a Zacks Rank #1 (Strong Buy).

 

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%