[ET Net News Agency, 7 April 2020] Morgan Stanley raised its target price for Sinopec
(00386) to HK$4.8 from HK$4.39 and maintained its "overweight" rating.
The research house incorporated the 2019 actual results and roll over its earnings
estimates in 2020-22, which results in 1-2% upward earnings revisions in 2020 and 2021.
Morgan also revised down its capex and production assumptions slightly in consideration of
the lower oil price.
At the current oil price level of US$30-40/bbl, Sinopec is most defensive giving its
large downstream exposure, Morgan said. Around 70% of its earnings are from the refinery
and marketing business.
The stock is currently trading at 3.4x 2020 EV/EBITDA, 0.6x P/B with ROE of 4%,
attractive compared with its historical averages (past 12 years) of 1.2x P/B and 5.5x
EV/EBITDA. (KL)