Investment Rating - The report assigns a "Buy" rating to the company with a target price of HKD 6.22, based on a projected PB of 0.8 for 2024 [2][8]. Core Insights - The company is a major engineering service provider under Sinopec Group, with strong financial performance and a significant portion of its revenue (57%) derived from Sinopec and its affiliates [1][17]. - The company has a competitive advantage in the refining engineering sector, covering the entire industry chain and maintaining a healthy financial structure with a debt ratio around 60% and substantial financial income [1][27]. - The company is poised for growth due to new opportunities in both domestic and international markets, with a notable increase in overseas contracts signed in 2023 [1][6]. Summary by Sections 1. Company Overview - The company is a large integrated engineering service provider and technology patent holder, primarily serving the refining and petrochemical markets [13][14]. - It was established in 2012 through the restructuring of several subsidiaries under Sinopec Group, making it the sole operator of Sinopec's refining engineering segment [14][16]. 2. Business Scale and Competitive Advantage - The company ranks among the top three domestic petrochemical engineering firms, offering services across design, consulting, engineering contracting, construction, and equipment manufacturing [1][21]. - In 2023, the company achieved a revenue of 56.22 billion, with a slight increase of 6% year-on-year, and a net profit of 2.33 billion, reflecting stable profitability [21][22]. 3. Market Opportunities - Domestic refining capacity expansion is nearing completion, while chemical production remains robust, supporting stable contract growth [1][6]. - The company has significantly increased its overseas contract signings, with a 198% year-on-year growth in 2023, benefiting from the Belt and Road Initiative [1][6]. 4. Financial Health and Dividend Policy - The company maintains a healthy financial structure with minimal debt and a financial income that constituted 39% of its pre-tax profit in 2023 [27][29]. - It has a high dividend payout ratio of 65% in 2023, with a dividend yield of 9.9%, significantly higher than its A-share peers [1][29]. 5. Profitability Forecast and Valuation - The company is expected to see revenue growth from 59.2 billion in 2024 to 68.1 billion in 2026, with net profits projected to rise from 2.64 billion to 3.18 billion during the same period [2][3]. - The report highlights that the company's current valuation is below that of its A-share peers, suggesting potential for upward revaluation amid ongoing state-owned enterprise reforms [2][7].
中石化炼化工程：平台优势+海外机遇共筑未来，低估值+高分红驱动价值重估