While investors continue to look for plays on rapidly expanding growth in China, Zacks senior Chinese market analyst Paul Cheung, CFA is reiterating his Buy recommendation on Sinopec (SNP) shares. His report contains the following:
Sinopec recently reported strong quarterly results for the first quarter of 2007. While a number of uncertainties remain, we believe that the near- to medium-term environment supports its continued upstream production growth and downstream capacity expansion.
Moreover, Sinopec's integrated petrochemical and refining businesses are expected to benefit from possible price reform for refined products in China. Therefore, we are maintaining our Buy recommendation on Sinopec.
Currently, SNP ADRs [American Depositary Receipts] are trading at 11.6x our 2007 earnings estimate, lower than its global and Chinese peers. SNP ADRs are also trading at 10.7x our 2008 earnings estimate, still lower than its global and Chinese peers. Given the company's good position to leverage China's strong economic growth, we see upside potential from current levels. Our $120.00 price objective reflects a P/E [price-to-earnings] multiple of 12.3x our 2008 earnings estimate.
Read the full analyst report on SNP
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