Shanghai Petrochem Losses Mount
Shanghai Petrochemical (SHI - Analyst Report), one of the largest petrochemical enterprises in China, reported third quarter 2008 results on October 29. In the reported quarter, the company recorded a loss per share of $0.04, compared to a loss of $0.0017 per share in the year-ago quarter.
High crude prices and government caps on refined oil products were the contributing factors to the loss. Operating revenue in the quarter rose 33.77% to $2.19 billion. For 2008, the company expects to incur a significant loss, compared to a profit of $205.11 million in 2007.
Revocation of government price controls in the future, higher crude oil prices, and increased competition are some of the major concerns for the company. However, the companys strong fundamentals, strong management and operating efficiency are expected to improve stock performance in the future. Hence, we rate it a Hold and set a target price of $19.
Read the full analyst report on SHI
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