Category: Money tips Release Date: 2006-02-21
Refined oil prices cut the long-awaited National Development and Reform Commission yesterday issued a circular, self-starting at 12:00 on January 14, will lower gasoline prices per tonne 220 yuan per ton to reduce ex-factory price of aviation kerosene 90. The price cut is the National Development and Reform based on international crude oil prices fell the normal adjustment made, due to reduced marginally, to a limited impact on the performance of Sinopec.
Background of the current oil refining industry, refined oil pricing mechanism conducive to the introduction of the current domestic gasoline prices are basically the same as with foreign and domestic diesel price is still lower than international market price of diesel fuel. International crude oil prices in the near future to maintain the tunnel, part of our domestic refined oil prices have been the case of integration with foreign countries is conducive to the introduction of refined oil pricing mechanism. If the "crude oil pricing," become a reality, the domestic refining industry is good.
The price reduction had limited impact on the performance of Sinopec in 2007 in accordance with our Sinopec crude oil processing volume forecasts, gasoline prices down 220 yuan / ton, and aviation fuel down 90 yuan / ton, following the static prices of Sinopec 2007 the impact of years of EPS was only -0.044 yuan / share, the impact is limited.
Performance prediction and investment advice we predict that Sinopec 2006 ~ 2008 earnings per share were 0.58 yuan, 0.76 yuan and 0.96 yuan, with reference to international oil companies, the average PE, and taking into account Sinopec's domestic monopoly, we believe that to give 12 ~ 15 times PE is more appropriate to 2007 EPS calculation, the target price range of 9.1 to 11.4 yuan, giving the short-term holders, long-term buy rating on the investment.
By the warm winter weather, oil prices have fallen steadily in Europe and America due to mild winter climate, a drop in demand for heating fuel oil, the United States a substantial increase in oil inventories, inventory, leading to international oil price increase in a row over 10 days below 60 U.S. dollars. The New York Mercantile Exchange, light sweet crude oil futures prices fell in January 11 a barrel 51.88 U.S. dollars / barrel in June 2005 hit a new low since. The weakness in oil prices is this the main reason for lower oil prices.
The lower prices of refined oil a limited impact on the performance of Sinopec National Development and Reform Commission yesterday issued a circular, self-starting at 12:00 on January 14, will lower gasoline prices per tonne 220 yuan per ton to reduce ex-factory price of aviation kerosene 90. The price cut is the National Development and Reform based on international crude oil prices fell normal adjustment made. After this adjustment, the domestic price of gasoline by 5,200 yuan factory base / ton down to 4980 yuan / ton, diesel base price of the factory will remain unchanged.
The current domestic gasoline prices are basically the same as with foreign and domestic diesel price is still lower than international market price of diesel fuel.
The reform of the domestic refined oil pricing mechanism of the delay in the introduction to the domestic refining industry in the first three quarters of 2006, suffered huge losses. The recent fall in international oil prices, domestic refined oil prices do not come down, which makes the petrochemical refining margins remained at 4-5 U.S. dollars / barrel level, although the Asia-Pacific refining margins compared to 7-8 U.S. dollars / barrel level is still low, but can rest assure that Sinopec's refining segment profits. If in the future we expect to launch a "crude oil cost method" as the basis of refined oil pricing mechanism, Sinopec will remain stable but relatively low refining margins.
Based on our 2007 Sinopec crude oil processing volume forecasts, gasoline prices down 220 yuan / ton, and aviation fuel down 90 yuan / ton, following the static prices of Sinopec in 2007 EPS of only -0.044 yuan / Unit, the impact is limited.
Performance prediction and investment advice we expect full year 2007 average price of international crude oil price of 60 U.S. dollars / barrel around this price, Sinopec 2007,2008-year EPS of 0.762 yuan and 0.958 yuan. The current international oil companies, the average PE of 10 times, but taking into account the Sinopec's domestic monopoly, we think that providing Sinopec 12 to 15 times price-earnings ratio is more appropriate to 2007 EPS calculation, Sinopec's target price range of 9.1 ~ 11.4 yuan. Current stock price in this range, but refined oil pricing mechanism, taking into account the introduction of the petrochemical refinery in the good expectations, thus giving the short-term holders of Sinopec, long-term buy rating.
