Sinopec Engineering predicts crude oil below US$65

Business | 19 Aug 2019 4:23 pm

Sinopec Engineering (2386), expects oil prices to be below US$65 (HK$507) per barrel in the second half.

The company said the biggest uncertainty over oil prices was the United States’ government policy.

Sinopec Engineering has better expectations of securing projects from countries along the “Belt and Road Initiative'' in the second half, which is still the major target market of SEG.

South Aisa, Southeast Asia and Africa are also the target markets of overseas business expansion, and the refinery revamping and expansion project in Bangladesh is in the final negotiation bidding stage, with a relatively big chance of securing the project.

Revenue from overseas business in the first six months fell by 4.9 percent year-on-year to 5.93 billion yuan, and revenue proportion of overseas business fell by 7.9 percent to 26.1 percent from a year before.

The state-backed Sinopec Engineering, a unit of oil giant China Petrochemical, the parent of listed China Petroleum & Chemical (Sinopec) (0386), said net profit for the six months increased by 8.2 percent year-on-year to 1.2 billion yuan.

Revenue surged by 23.7 percent to 22.68 billion yuan from a year before.

The major builder of oil refineries and chemical plants in China and abroad, meanwhile, reported net cash outflow in operating activities of 4.96 billion yuan (HK$5.52 billion) for the six months ended June 30, up by 380.6 percent from the same period last year.

Chief financial officer Jia Yiqun said there has been a big slowdown in the payment for some large projects, including Zhongke Refining and Chemical Complex Project and Sinopec-SABIC Project and Sinochem Quanzhou Ethylene Project, which impacted cash inflow by 2 billion yuan.

The company has relatively weak control over the cash flow as it depends on the investment owners’ payment intentions, said Jia.

Jia expects the slowdown in payment to improve by the end of the year.

The basic earnings per share were 0.27 fen.

The company declared an interim cash dividend of 0.108 yuan per share.

Total value of new contracts in the first half was 33.22 billion yuan, down by 6.4 percent compared with the same period last year.

Shares of Sinopec Engineering edged up by 0.36 percent to HK$5.61 as of 3:10 p.m.

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