SINOPEC Engineering (Group) Co., Ltd. Class H (2386) AI Stock Analysis

• Market Cap: HK$26.15B
• Dividend Yield: 6.51%
• Average Volume (3M): 3.55M
• Price to Earnings (P/E): 9.8
• Beta (1Y): 0.26
• Revenue Growth: 12.37%
• EPS Growth: N/A
• Country: HK
• Employees: 15,935
• Sector: Industrials
• Sector Strength: 89
• Industry: Engineering & Construction
• EPS (TTM): 0.61
• Shares Outstanding: 1,426,960,400
• 10 Day Avg. Volume: 2,323,681
• 30 Day Avg. Volume: 3,545,472
• PEG Ratio: 0.70
• Price to Book (P/B): 0.45
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 2.20
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: HK$6.54
• Price Target Upside: 9.99% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 1

• Rating: 71 Outperform
• Price Target: HK$6.50 ▲(9.24%Upside)

SINOPEC Engineering's stable financial performance and attractive valuation are key strengths, with a strong balance sheet and low leverage. However, modest profitability and recent negative cash flow present challenges. The technical analysis suggests bullish momentum, but caution is advised due to overbought indicators. The lack of recent earnings call data means the stock score is based primarily on financials and technicals.

SINOPEC Engineering (Group) Co., Ltd. Class H Business Overview & Revenue Model

Company Description

SINOPEC Engineering (Group) Co., Ltd., together with its subsidiaries, provides engineering, procurement, and construction (EPC) contracting services in the People's Republic of China, the Kingdom of Saudi Arabia, Kuwait, Russia, Malaysia, and internationally. It operates through four segments: Engineering, Consulting and Licensing; EPC Contracting; Construction; and Equipment manufacturing. The Engineering, Consulting and Licensing segment offers design, consulting, research and development, feasibility studies, and compliance certification services. The EPC Contracting segment provides integrated engineering, procurement, construction, maintenance, and project management services. The Construction segment offers infrastructure for oil refining and chemical industries, oil and gas storage, pipelines transportation, construction, renovation, expansion, repair and maintenance services, and large equipment lifting, as well as transportation services in construction projects. The Equipment Manufacturing segment designs, develops, manufactures, and sells equipment and spare parts for oil refining and chemical facilities. The company also provides technical, and equipment selling and leasing services, as well as medicine, pesticide, and chemical research services. The company serves petrol refining, chemical engineering, aromatics, coal chemicals, inorganic chemicals, pharmaceutical chemicals, clean energy, storage and transportation facilities, environmental protection, energy saving, and other industry sectors. The company is headquartered in Beijing, China. SINOPEC Engineering (Group) Co., Ltd. is a subsidiary of China Petrochemical Corporation.

How the Company Makes Money

SINOPEC Engineering (Group) Co., Ltd. generates revenue primarily through its engineering, procurement, and construction (EPC) contracts. The company secures contracts from a diverse range of clients, predominantly in the oil refining, petrochemical, and chemical industries, to provide integrated engineering solutions. These contracts typically involve long-term agreements, with payments received at various stages of project completion. Additionally, the company benefits from strategic partnerships and collaborations with other industry players, enhancing its ability to deliver large-scale projects. The company's earnings are further supported by its strong presence in the Chinese market, where it leverages its expertise and established relationships to secure a steady pipeline of projects.

SINOPEC Engineering (Group) Co., Ltd. Class H Financial Statement Overview

Summary

SINOPEC Engineering demonstrates robust financial health with a strong balance sheet characterized by low debt levels and substantial equity. Revenue growth is consistent, contributing to a stable income statement, though margins indicate room for improvement in profitability. Cash flow presents some concerns due to recent negative free cash flow, highlighting the need for careful management of operational and capital expenses. Overall, the company is on a stable trajectory with potential for enhancing profitability and cash flow stability.

Income Statement

The company shows a stable revenue growth with a notable increase from 2023 to 2024. Gross profit margin is moderately healthy, hovering around 8-9%. However, the Net Profit Margin has remained stable at around 3-4%, indicating controlled expenses but limited profitability improvements. EBIT and EBITDA margins suggest operational efficiency but are not exceptionally high for the industry.

Balance Sheet

The company maintains a strong equity position with a Debt-to-Equity Ratio consistently below 0.1, indicating low leverage and financial stability. Return on Equity (ROE) is modest, reflecting steady but unspectacular returns on shareholder investment. The Equity Ratio is healthy, showcasing a solid balance sheet with a strong equity base compared to total assets.

Cash Flow

The cash flow position shows some volatility, particularly with negative free cash flow in 2024 due to significant capital expenditures and negative operating cash flow. The Free Cash Flow to Net Income ratio has dropped, indicating challenges in converting income to cash. However, the company has maintained positive cash flow in previous years, suggesting potential for recovery.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	64.20B	56.22B	53.03B	57.76B	52.35B
Gross Profit	5.34B	5.61B	5.61B	6.47B	5.71B
EBITDA	3.98B	3.79B	2.21B	2.32B	2.68B
Net Income	2.47B	2.34B	2.29B	2.13B	2.38B
Balance Sheet
Total Assets	81.51B	80.97B	78.68B	72.92B	71.47B
Cash, Cash Equivalents and Short-Term Investments	21.40B	24.88B	24.03B	18.67B	16.72B
Total Debt	572.33M	254.89M	271.04M	225.49M	327.07M
Total Liabilities	49.93B	50.12B	48.64B	43.79B	43.21B
Stockholders Equity	31.51B	30.84B	30.03B	29.12B	28.25B
Cash Flow
Free Cash Flow	-2.56B	2.12B	6.10B	2.29B	2.55B
Operating Cash Flow	-2.21B	2.52B	6.81B	2.94B	2.96B
Investing Cash Flow	2.53B	-2.66B	-905.08M	503.38M	-2.95B
Financing Cash Flow	-1.70B	-1.62B	-1.53B	-1.39B	-1.26B

SINOPEC Engineering (Group) Co., Ltd. Class H Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 5.95
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HK:2386, the sentiment is Neutral. The current price of 5.95 is below the 20-day moving average (MA) of 6.04, above the 50-day MA of 5.72, and above the 200-day MA of 5.62, indicating a neutral trend. The MACD of 0.08 indicates Positive momentum. The RSI at 51.39 is Neutral, neither overbought nor oversold. The STOCH value of 26.49 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for HK:2386.

SINOPEC Engineering (Group) Co., Ltd. Class H Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
1618	80 Outperform	HK$63.48B	5.51	5.56%	4.76%	-19.10%	-30.15%
3311	79 Outperform	$61.70B	6.29	14.62%	4.88%	1.21%	2.15%
3996	77 Outperform	€65.27B	4.94	8.19%	5.26%	4.81%	1.42%
0390	73 Outperform	$144.26B	3.27	8.83%	5.98%	-9.80%	-18.36%
2386	71 Outperform	HK$26.15B	9.78	7.81%	6.51%	12.37%	―
Sector *	59 Neutral	AU$1.64B	9.65	11.24%	3.67%	6.75%	3.18%
2068	53 Neutral	€13.82B	33.23	7.03%	―	2.57%	―

SINOPEC Engineering (Group) Co., Ltd. Class H Corporate Events

SINOPEC Engineering Announces Board Composition and Roles

SINOPEC Engineering (Group) Co., Ltd. has announced the composition of its board of directors, highlighting the roles and functions of each member. This announcement provides clarity on the leadership structure, which could impact the company’s strategic direction and governance, potentially influencing stakeholder confidence and the company’s market positioning.

SINOPEC Engineering Holds Successful 2024 AGM and Shareholder Meetings

SINOPEC Engineering (Group) Co., Ltd. recently held its annual general meeting for 2024, along with class meetings for domestic and H shareholders. The meetings, chaired by Mr. Jiang Dejun, saw significant shareholder participation, with compliance to legal and procedural requirements, indicating strong governance and stakeholder engagement.

SINOPEC Engineering Announces Final Dividend for 2024

SINOPEC Engineering (Group) Co., Ltd. has announced a final cash dividend of RMB 0.208 per share for the financial year ending December 31, 2024, which will be paid in Hong Kong dollars at a rate of HKD 0.224 per share. This announcement updates previous information regarding the currency, amount, exchange rate, and withholding tax details, impacting shareholders and investors, especially those involved in cross-border stock connect programs.

SINOPEC Engineering Reports Strong Q1 2025 Contract Growth

SINOPEC Engineering (Group) Co., Ltd. announced a significant increase in new contract values and backlog for the first quarter of 2025. The company secured new contracts worth RMB44.373 billion, marking a 31.4% increase from the previous year, and reported a backlog of RMB201.19 billion, a 16.5% rise from the end of 2024. Notable contracts include projects with Sinopec Maoming Petrochemical Company and Sonatrach in Algeria, indicating strong growth and expansion in the petrochemical sector. This development underscores the company’s robust market positioning and potential for sustained growth, benefiting stakeholders and enhancing its competitive edge in the industry.