Overview of China Petroleum & Chemical Corporation (0386.HK)
China Petroleum & Chemical Corporation (0386.HK) is one of the biggest petrochemical players in China, a (largely) state-owned business. For ease, let us use the abbreviation CPCC.
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With a Dividend yield of 8.04% and an ex-dividend date of 12 June 2023, I plan to load up more of this company’s shares by the end of the week.
CPCC summary of performance
Here is a summary of the financial data of China Petroleum 00386.HK for the last 5 years:
As you can see, the company's revenue and net income have been growing steadily over the past 5 years. However, the company's FCF has been declining slightly over the past few years. This is likely due to the company's increasing investment in new projects.
The company's EPS has also been growing steadily over the past 5 years. This is due to the company's increasing revenue and net income. The company's PE ratio is currently around 12.5, which is in line with the average PE ratio for the oil and gas industry.
As you can see, the company's earnings have been declining over the past 5 years. In 2017, the company's earnings were 79.8 billion HKD. However, in 2021, the company's earnings had declined to 66.3 billion HKD. There are a number of factors that could be contributing to the company's declining earnings, including:
The global economic slowdown
The rise of renewable energy
Increased competition from other oil and gas companies
Despite the decline in earnings, China Petroleum 00386.HK is still a large and profitable company. The company has a market capitalization of over 800 billion HKD and is one of the largest oil and gas companies in the world. The company is also a major player in the petrochemical industry. Overall, China Petroleum 00386.HK is a financially healthy company with a strong track record of profitability. The company is well-positioned to continue growing in the future.
<The above research is done via Google Bard>
My quick analysis of CPCC
Since 2019, we can see that revenue has been improving since 2020 and hit a record of CNY$3.3T in 2022. The net income fluctuates between CNY$33B to the latest $66B by 2022.
Both assets and liabilities have been increasing since 2019. Net debt fluctuates between CNY$82B to CNY$21B (2021). However, I am glad to see that the shares fell to 119,896,408 from 121,071,210 (2021).
For cashflow, I have concerns that FCF reached a negative CNY$37B for 20222, largely due to CAPEX of $153B and the repurchase of Capital Stock at $4.1B
Essentially, with PE (TTM) of 8.79, this looks to be a good investment. However, with pending recession, it is possible that China stocks would take a stumble when US suffers a recession. Let us research before investing.
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Do you think their investment in new projects will continue to benefit them in the long run?
That's great news that the company's EPS has been consistently growing.
Oh no, it's sad to hear that the company's earnings have declined.
Another great article
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