[ET Net News Agency, 1 November 2019] Goldman Sachs tweaked up its target price for
Sinopec (00386) to HK$5.7 from HK$5.65 and maintained its "buy" rating.
The research house said Sinopec had a disappointing 3Q on weak refining margins
(US$7.04/bbl versus Goldman's estimate of US$7.51/bbl), however, it has pointed to a
stronger 4Q refining earnings contribution.
Marketing was surprisingly solid, it does appear Sinopec is benefiting from the cheaper
third-party sourced product. Demand growth for commodity chemicals remains very strong
(year-to-date sales growth 10.1% and ethylene production growth 5.8%), however, margins
continue to weigh on EBIT contribution (down 31% year-to-date).
Goldman updated its 2019-21 earnings forecasts by +4%/+1%/+0% on the 3Q result. (KL)