[ET Net News Agency, 24 October 2019] Citi Research lowered its target price for
Sinopec Shanghai Petrochemical (SPC)(00338) to HK$3.4 from HK$3.5 and maintained its "buy"
rating as UBS considers it as an overlooked beneficiary of IMO2020.
The research house said SPC's 3Q19 net profit of Rmb535mn (down 53% YoY) was due to a
slight improvement in Chem offset by continuous weakness in refining. Selected chems
spread (BD/benzene/ MEG) recovered in 3Q. Refining remained weak due to some inventory
losses, higher OSP, and narrow light-heavy crude differential.
UBS cut its FY2019-21 EPS forecasts by 2% to 25% to reflect a lower GRM (gross refining
margin) assumption on higher VLCC (Very Large Crude Carriers) freight rate and higher OSP
(official selling prices) assumptions. (KL)