The Zhitong Finance App learned that CICC released a research report stating that it maintains the “outperform the industry” rating of Sinopec's refining and chemical project (02386), with a target price of HK$4.5. The company's 1H23 performance is in line with the bank's expectations. A dividend of HK$0.118 per share was announced during the period, with a dividend rate of 38% ($0.31). Cash on hand is about 20 billion yuan, which has already exceeded the total market value.

According to the report, the company's gross margin of 1H23 was 9%, down 1.3 ppt from the previous year and 1.6 ppt from the previous month. The bank believes that the main reasons are: 1) most projects in 1H23 are in the low gross margin stage; 2) the profit margin of the entire chemical industry declined. Looking ahead, the bank believes that with the smooth progress of the project, 2H23 gross margin is expected to improve month-on-month.

The bank said that new overseas orders signed by the company during the period may be a highlight. The company 1H23 completed a new overseas order of US$1,112 million, and the company announced (August 20, 2023) that it had successfully won an EPC contract for another large-scale project in the Middle East. The contract amount is expected to reach 1.3 billion US dollars. The contract amount has not yet been recorded in the amount of newly signed contracts and the volume of uncompleted contracts. The bank believes that in 2023, the company is likely to exceed expectations and complete the guidelines for new overseas orders (the beginning of this year indicated 1.5 billion US dollars for new overseas orders signed in 2023), but the total number of new orders signed throughout the year may meet the company's expectations.

Furthermore, the company announced that the “Proposal on the Stock Repurchase Implementation Plan” has been approved by the board of directors. The bank believes that the company will repurchase H shares with its own funds at an appropriate time to return to shareholders.