An Alluring China Oil Play
Emerging Markets
DURING CRUDE OIL'S BULL RUN, Sinopec played the part of ugly sister, while the two other listed Chinese oil majors, CNOOC and PetroChina, were belles of the ball. Now with crude at about $60 a barrel -- 23% below its peak -- and Beijing edging toward oil-product pricing reforms, investors should re-examine Sinopec's charms, some analysts and fund managers say.
Sinopec, or China Petroleum & Chemical (ticker: SNP), is largely a downstream operator. Only 8.7% of its 493 billion Chinese yuan ($62.4 billion) first-half operating revenues came from exploration and production. The rest mainly was from refining, marketing, distribution and petrochemical production. Beijing lets crude-oil prices move in line with international markets -- but has controls on refined-oil products to avoid civil unrest. In the past two years, this has hurt Sinopec, which is listed in Hong Kong, Shanghai, New York and London. Losing money for each barrel of oil it refines, it has remained profitable overall, thanks to its high-margin oil-production operations -- and subsidies from the government.
In this year's first half, Sinopec netted CNY21.4 billion, 8.9% above the year-earlier level. Before interest and tax, exploration and production contributed CNY33.3 billion in earnings, while refining posted a CNY16.6 billion loss. Last year, exploration and production provided 70% of Sinopec's profit, despite contributing less than 10% of revenue, says brokerage Core Pacific-Yamaichi.
Now, Sinopec's refining losses have finally stopped, Lehman Brothers said in a recent research note. Comments Gordon Kwan, an analyst with CLSA Asia-Pacific Markets: "The rest of the world's [oil majors] are suffering, but Sinopec is laughing all the way to the bank." He rates the stock Outperform and says its Hong Kong-listed shares are heading toward his target of HK$6. "At this point, Sinopec's valuation is still attractive," he adds. The stock, recently at HK$5.31, is about 13% below his target.
Observes Lehman Brothers: "Sinopec remains the cheapest sector stock in terms of price-earnings, at only 6.5 times" its estimated earnings for next year.
Rival PetroChina (PTR) is predominantly an upstream play, while CNOOC (CEO) is China's sole offshore producer. Analysts have only just begun marking down their earnings forecasts, while waiting to see if oil can meaningfully rebound. The same rationale likely explains why they've only just begun to upgrade their views on Sinopec.
CNOOC's earnings per share are expected to fall only 6.8% next year, despite oil's price plunge, according to Thomson Financial's consensus estimate, while PetroChina's are expected to stay flat.
Sinopec's profits are expected to rise 13%, according to Thomson, but that forecast could easily prove to be conservative, given the leverage within its refining operations. Lawrence Lau, an analyst with BOCI Research, thinks that earnings could jump by up to 45% next year; he has one of the highest price targets for the stock: HK$6.89; it's now some 24% below that.
The Chinese refinery sector has drawn investment from foreign firms such as ExxonMobil (XON) and Saudi Aramco. Keeping price controls in place may discourage further investment, warns Steven Yuan of Sun Hung Kai Financial Group. However, he expects "a more flexible pricing regime going forward."
Another reason to like Sinopec is the long-term potential of the Puguang natural-gas fields in Sichuan province, which might boost its gas reserves by 8.6 times. The value of the discovery this year will grow with the likely liberalization of Chinese gas prices, which are also now controlled, says DBS Vickers.
Also, Sinopec's state-owned parent, China Petroleum, which holds 71.2% of Sinopec, may inject into the listed company some of the assets it's been buying abroad, in places like Africa and the former Soviet Union. And Sinopec's big chain of gas stations in wealthy southeastern China promises to keep returning steady profits. Operating profits from the unit have grown at a 13% annual pace in the past five years, and are a play on China's rising middle class and car-ownership.
Of course, there are potential pitfalls. Oil could jump sharply again, or Beijing might forgo the expected pricing reforms and instead give motorists a break by ordering a price cut at the gasoline pump to reflect the drop in crude prices. Barring those possibilities, however, Sinopec looks undervalued.
中国石化：一只诱人的中国石油类股
在原油价格一路走高的时候，中国石油化工股份有限公司(China Petroleum & Chemical, 简称：中国石化)如同舞会上的灰姑娘一样并不受人关注，而另外两家大型中国石油上市公司──中国海洋石油总公司(CNOOC, 简称：中海油)及中国石油天然气股份有限公司(PetroChina, 简称：中国石油)──却是众多投资者倾慕的对象。现在原油价格已跌至每桶60美元左右，比高点时回落了约23%，加之北京不断推进石油产品价格改革，一些分析师及基金经理人称应该重新挖掘中国石化的魅力。
中国石化基本上属于石油行业的下游运营商。它上半年运营收入为人民币4,930亿元（合624亿美元），其中仅有8.7%来自勘探与开发，其他收入主要来自炼油、市场营销、分销以及石化产品生产。中国政府允许原油价格随国际市场浮动，但是为了防止国内市场不稳定，它对炼油产品的价格实行控制。在过去的两年中，这种政策对中国石化产生了巨大的负面影响。不过，虽然炼油业务出现了亏损，但中国石化整体仍处于盈利状态，这要得益于高利润率的石油生产业务以及政府的补贴。中国石化已在香港、上海、纽约及伦敦上市。
今年上半年，中国石化的净利润为人民币214亿元，比上一年同期高8.9%。勘探与开发业务的利息和税项前利润为人民币333亿元，而炼油业务亏损人民币166亿元。经纪公司京华山一(Core Pacific-Yamaichi)称，去年中国石化70%的利润来自勘探与开发，尽管这项业务的收入占公司总收入的比例不到10%。
雷曼兄弟(Lehman Brothers)在最近的一份研究报告中指出，中国石化炼油业务的亏损势头终于停止了。里昂证券亚太区市场(CLSA Asia-Pacific Markets)的分析师戈登?克万(Gordon Kwan)评论道，全球（其他主要石油生产商）都在遭受损失，唯有中国石化笑看利润增长。他把对中国石化的评级为“强于大盘”，并表示中国石化的H股正在逼近每股6港元的目标价格。“这样看来，中国石化的定价仍然具有吸引力，”他补充道。中国石化H股股票最近为5.31港元，比其目标价格低约13%。
雷曼兄弟评述称，基于对明年的收益预测，中国石化市盈率仅为6.5倍。从这个方面来看，它仍然是石油类股中最便宜的。
中国石化的竞争对手中国石油显然是一家上游企业，而中海油则是中国唯一一家海洋石油生产商。分析人士们在观望石油价格能否明显反弹的同时开始调低对这两家公司的收益预期。同样的道理或许能够说明他们开始调高对中国石化收益预期的原因。
据Thomson Financial的普遍预期，尽管石油价格继续下跌，但中海油明年的每股收益预计仅会下跌6.8%，而中国石油将与今年持平。
据Thomson Financial预计，中国石化的利润将增长13%。但是考虑到它的炼油业务的杠杆作用，这个预测相当保守。中银国际研究有限公司(BOCI Research)的分析师刘志成(Lawrence Lau)认为，中国石化明年收益的增长幅度可能会高达45%。他对中国石化H股的目标价格为6.89港元，现在该股比这个预期低24%。
中国炼油行业吸引了埃克森美孚(ExxonMobil)及沙特阿美(Saudi Aramco)等众多外国公司的投资。新鸿基金融集团(Sun Hung Kai Financial Group)的袁晓口(Steven Yuan)警告称，北京继续控制价格的做法将打击外国公司进一步投资的积极性。不过，他预计北京将推出“更加灵活的定价体系”。
青睐中国石化的另一个理由是，该公司在四川省发现的普光天然气田的长期发展潜力。普光气田有可能使中国石化的天然气储备提高8.6倍。DBS唯高达(DBS Vickers)称，随着中国天然气价格可能进一步市场化，今年这个新发现的价值将进一步升高。目前，中国的天然气价格也受政府控制。
另外，中国石化的母公司中国石油化工集团(China Petrochemical)可能会向这家上市公司中注入其在海外收购的部分资产，如在非洲以及前苏联等地收购的资产。中国石油化工集团是一家国有企业，它持有中国石化71.2%的股份。中国石化在富裕的中国东南沿海城市拥有巨大的加油站网络，它们也带来了稳定的利润。这部分业务的运营利润在过去五年中以每年13%的速度增长，这是中国新兴中产阶层不断壮大以及拥有私家车的家庭不断增多的体现。
当然，还有一些潜在的问题。原油价格可能会再次飙升，或者北京可能放弃外界期待已久的价格改革，转而要求加油站降低汽油价格来体现原油价格的下降并且降低驾车人的压力。不过，除了这些可能性之外，中国石化股票看上去价格仍然偏低。
Jon Ogden
