[ET Net News Agency, 23 August 2018] Citi Research raised its target price for Sinopec
Engineering (SEG)(02386) to HK$10.8 from HK$10.7, and maintained its "buy" rating.
The research house said SEG's 1H earnings of RMB1.1bn (+33% YoY) was in line. Excluding
Fx impact, core earnings increased 14% to RMB1.2bn. Topline came in at RMB18.3bn as major
EPC projects entering into peak execution phase.
But overall GPM shrank to 10.5% from 16.1% as of 1H 2017, primarily due to fewer settled
projects in 1H.
Citi noted that 1H new contracts doubled at RMB35.5bn, accounting for 74% of the FY2018
target. On top of the RMB19.6bn contract for Zhongke Project, Citi expects the other three
bases to make progress and contribute RMB60bn new contracts in FY2019-20.
It revise up its FY2018-20 core earnings forecasts by 2%/4%/4% mainly on higher EPC
revenues and interest income. (KL)