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Sinopec's 1H17 Profit Surges Y/Y Backed by Chemical Segment

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China Petroleum and Chemical Corporation (SNP - Free Report) , also known as Sinopec, reported net profit of 27.9 billion yuan ($4.06 billion) or 0.231 yuan per diluted share for the first half of 2017. The bottom line surpassed the year-ago profit level of 19.2 billion yuan ($4.14 billion) or 0.165 yuan. The surge in profit can be attributed to outstanding performance of Chemicals segment. Moreover, increase in natural gas volumes also contributed to the growth.

Operational Performance

During the first half of 2017, Sinopec’s crude oil production decreased 5.3% year over year to 145.98 million barrels. Nonetheless, natural gas volumes increased 16.3% year over year to 452.12 billion cubic feet in the same period. Domestic crude oil production declined 4.1% year over year to 123.16 million barrels, while overseas volumes slipped 11.5% year over year to 22.82 million barrels. Total oil and gas production inched up 1.1% year over year to 221.38 million barrels of oil equivalent.

The company’s Refining business recorded a 1.6% year-over-year growth in refinery throughput to 117.79 million tons. It also produced approximately 74.11 million tons of petroleum products, up 1.2% from the prior-year period.

The Marketing and Distribution segment sold 98.55 million tons of refined oil products, up 1.4% year over year.
 
The Chemicals segment recorded an operating profit of 12.2 billion yuan during the first half of 2017, up 25.6% year over year.

Capital Expenditure

Capital expenditures for the first half of 2017 totaled 15.953 billion yuan. Out of this, 6.870 billion yuan was spent on exploration and production projects. Sinopec spent 3.672 billion yuan on the Refining segment, while the Chemical Business segment was allocated 2.594 billion yuan. The company had set aside 2.500 billion yuan for the Marketing and Distribution segment.

A total of 317 million yuan was used for Corporate and Other purposes, such as construction of R&D facilities and IT projects.

Price Performance

Moreover, over the last three months, shares of Sinopec have lost 8.8% compared with the industry’s increase of 0.2%.



 

Zacks Rank & Key Picks

Currently, Sinopec carries a Zacks Rank #3 (Hold). A few better-ranked players in the energy sector include TransCanada Corporation (TRP - Free Report) , Transmontaigne Partners LP (TLP - Free Report) and Range Resources Corporation (RRC - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.  

Headquartered in Calgary, Canada, TransCanada is a midstream energy firm in North America. The company delivered an average positive earnings surprise of 4.06% over the last four quarters.

Transmontaigne, headquartered in Denver, CO, involves in transporting and storing refined petroleum products. The firm delivered an average positive earnings surprise of 6.60% over the last four quarters.

Based in Fort Worth, TX, Range Resources is an independent oil and gas company, engaged in the exploration, development and acquisition of U.S. oil and gas resources. The company’s 2017 earnings are estimated to grow 1587.17%.

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