Investment Rating - The report assigns a "Buy" rating to Sinopec Engineering (2386.HK) with a target price of HKD 6.22, indicating that the current stock price is undervalued [2][9]. Core Views - Sinopec Engineering, backed by Sinopec Group, is positioned to benefit from both domestic and international market opportunities, with a strong financial performance and a commitment to high dividends driving potential value re-evaluation [1][2][8]. Summary by Sections Company Overview - Sinopec Engineering is a major integrated engineering service provider and technology patent holder in the refining and chemical engineering market, primarily controlled by Sinopec Group [15][17]. - The company has a robust financial structure with a debt ratio around 60% and minimal interest-bearing debt, generating significant financial income [1][45]. Business Scale and Competitive Advantage - The company ranks among the top three domestic petrochemical engineering firms, offering a comprehensive range of services across the entire refining engineering value chain [1][28]. - In 2023, the company achieved a revenue of CNY 56.22 billion, with a slight year-on-year increase of 6%, and a net profit of CNY 2.33 billion, reflecting stable profitability [28][35]. Market Opportunities - Domestic market growth is expected to stabilize due to ongoing large-scale projects, while international orders, particularly from the Middle East, are anticipated to surge, with new contracts signed in 2023 amounting to CNY 21.4 billion, a 198% increase year-on-year [1][9]. - The company is well-positioned to leverage Sinopec Group's resources and the Belt and Road Initiative to expand its overseas market presence [1][8]. Financial Performance and Valuation - The company maintains a high dividend payout ratio of 65% and a dividend yield of 9.9%, significantly higher than its A-share peers [1][49]. - The report forecasts revenue growth from CNY 59.2 billion in 2024 to CNY 68.1 billion in 2026, with net profits expected to rise from CNY 2.64 billion to CNY 3.18 billion over the same period [2][3]. Investment Thesis - The combination of high profitability, substantial dividends, and low valuation relative to peers suggests that Sinopec Engineering is poised for a re-evaluation of its market value, particularly in the context of ongoing state-owned enterprise reforms [1][2][8].
中石化炼化工程：投资价值分析报告：平台优势+海外机遇共筑未来，低估值+高分红驱动价值重估