Investment Rating - The report maintains a "Buy" rating for Sinopec Engineering (2386.HK) with a current price of HKD 5.54 [2][10]. Core Views - The strategic cooperation between Sinopec Group and China National Petroleum Corporation (CNPC) is expected to enhance long-term development and optimize the company's equity structure [3][4]. - The transfer of shares from Sinopec Group to CNPC, amounting to 21.998 million shares (5% of total shares), strengthens the partnership and resource sharing between the two energy giants [3][4]. - The company has seen a significant increase in new contracts, with a 65.6% year-on-year growth in the first three quarters of 2024, indicating strong market demand and operational capabilities [5][6]. - The diversification of contract sectors, particularly in refining and new coal chemical industries, reflects the company's expanding market presence and operational efficiency [6][7]. - The company is well-positioned to benefit from domestic and international market opportunities, particularly in the Middle East, due to its strategic initiatives and partnerships [7][9]. Summary by Sections Equity Structure and Strategic Cooperation - The share transfer enhances Sinopec Group's control to 61.09% while CNPC becomes the second-largest shareholder with 5% [4]. - This restructuring is seen as a move to improve governance and market recognition, facilitating value realization [4]. Contract Performance - In the first three quarters of 2024, domestic new contracts reached CNY 46.9 billion (up 32%), while overseas contracts surged to CNY 26.6 billion (up 202%), increasing the overseas contract proportion from 20% to 36% [5][6]. - The company’s EPC contract share rose from 54% to 74%, showcasing enhanced total contracting capabilities [5]. Market Opportunities - The domestic market is experiencing rapid development in the petrochemical sector, supported by government policies promoting energy efficiency and carbon reduction [7]. - The Middle East's capital expenditure in refining has exceeded USD 100 billion, presenting significant opportunities for Sinopec Engineering [7][9]. Financial Projections - The report forecasts net profits for 2024-2026 at CNY 2.638 billion, CNY 2.915 billion, and CNY 3.182 billion respectively, with corresponding EPS of CNY 0.60, CNY 0.66, and CNY 0.72 [10][12].
中石化炼化工程：公告点评：中国石油集团入股助力股权优化，加强战略合作利好长远发展