[ET Net News Agency, 22 June 2020] DBS Group Research lifted its target price for
Sinopec (00386) to HK$4.5 from HK$4 and upgraded its rating to "buy" from "hold".
The research house also raised its long-term oil price assumption from US$45/bbl to
US$55/bbl. DBS said Sinopec has underperformed its Chinese peers by 7-14% since mid-April,
reflecting concerns over inventory loss and margin squeeze as demand has yet to ramp up
substantially.
Looking beyond these concerns, recovery in oil prices should help to narrow E&P losses
and lower the risk of inventory loss. In addition, there could be a positive surprise if
the government waives "windfall tax" which is payable when oil prices fall below the
US$40/bbl floor, as well as from positive development on pipeline asset injections.
Meanwhile, the IPO of its marketing arm, which has received Cabinet approval, could
boost Sinopec's valuation by 10-15%. Healthy free cash flow should also support its high
dividend payout. (KL)
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00386 SINOPEC CORP
Nominal 
4.650 +0.070 (+1.528%) Others
22/06/2020 17:24
{I-bank focus}DBS upgrades Sinopec (00386) to "buy" & HK$4.5
| Remark: | Real time quote last updated: 19/04/2024 17:07 |
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