SINOPEC ENGINEERING(2386.HK):ATTRACTIVE SOE DIVIDEND YIELD PLAY WITH STEADY GROWTH
SINOPEC ENGINEERING(2386.HK):ATTRACTIVE SOE DIVIDEND YIELD PLAY WITH STEADY GROWTH
While the company conservatively guides for 2% YoY growth in the value of new orders in 2024, the value of new orders jumped 80% YoY to RMB33.8bn in 1Q24, already achieved 41% of its full-year target. The long order backlog will ensure steady growth for Sinopec Engineering (SEG) in the next couple of years. The domestic demand from building new petrochemical plants and green energy transition is abundant. After its overseas new orders tripled in 2023, we expect SEG to make further progress in developing overseas market. Its huge cash pile will continue to generate decent interest income to reduce earnings volatility and enable the company to keep high payout. We initiate coverage with a BUY with target price at HK$7.00.
長期的訂單積壓將確保中石化工程（SEG）的穩定增長，在未來幾年內，新建石化廠和綠色能源轉型的國內需求非常豐富。在其境外新訂單在2023年增長三倍之後，我們預計SEG將在開拓海外市場方面取得進一步進展。其大量現金儲備將繼續產生可觀的利息收入，以減少收益波動並使公司保持高分紅水平。我們以目標價7.00港元買入。
Key Factors for Rating
評級的關鍵因素
The value of SEG's new orders grew 11% YoY to RMB80.3bn in 2023, the highest level in ten years. The coverage of order backlog to turnover increased to 2.4x by end-2023, ensuring growth in turnover and profit in the next couple of years.
SEG的新訂單價值在2023年同比增長11％至人民幣803億元，達到十年最高水平。訂單積壓與營業額的覆蓋率在2023年底提高至2.4倍，確保未來幾年的營業額和利潤增長。
While the company conservatively guides for 2% YoY growth in the value of new orders in 2024, the value of new orders jumped 80% YoY to RMB33.8bn in 1Q24, already achieved 41% of its full-year target.
儘管公司保守地預測2024年新訂單價值同比增長2％，但2024年第一季度新訂單價值已同比增長80％至人民幣33.8億元，已經實現了全年目標的41％。
While the demand for building new oil refineries in China looks limited, the room for building new petrochemical plants remains abundant with self-sufficiency rate in terms of ethylene equivalent was just 67.4% in 2023. Chemical plants with total ethylene capacity of 18.2m tpa are already under construction and we expect SEG to secure further new orders from these projects.
雖然中國新建煉油廠的需求看起來有限，但建造新的石化廠的空間仍然充足，以乙烯當量自給率爲例，2023年僅爲67.4％。已經有總乙烯產能爲18.2m tpa的化工廠正在建設中，我們預計SEG將從這些項目中獲得進一步的新訂單。
The transition to green energy also offers new market opportunities for SEG. It has built the largest green hydrogen production line so far in China and we expect it to get the orders for two even bigger plants from Sinopec Group. In addition, it has also secured a new order to build a plant for green methanol which is in high demand amid the green transition of marine fuel.
綠色能源轉型也爲SEG提供了新的市場機遇。它已經建造了中國迄今爲止最大的綠氫生產線，我們預計它將獲得中石化集團另外兩個更大工廠的訂單。此外，它還獲得了建造綠色甲醇工廠的新訂單，在綠色航運燃料轉型的大背景下需求旺盛。
The value of new orders in overseas market almost tripled YoY to US$2.98bn in 2023. As it has successfully developed FEED and PMC business in Saudi Arabia and secured orders for design and consulting in four other countries, SEG is well- positioned to make further progress in overseas market.
境外市場的新訂單價值在2023年同比增長近三倍，達到29.8億美元。由於它已經在沙特阿拉伯成功開發了FEED和PMC業務，並在其他四個國家獲得了設計和諮詢訂單，SEG處於開拓海外市場的有利位置。
SEG's shares offer high dividend yield of 7.9%-9.3% for 2024-26E. It is especially attractive considering it is a subsidiary of a SOE under China's central government.
SEG股票的分紅率在2024-26年達到7.9％-9.3％，尤其得益於其作爲中國央企子公司的特殊地位，具有很高的吸引力。
Key Risks for Rating
評級的主要風險
Decline in gross margin.
毛利率下降。
Sharp rise in R&D expenses.
研發支出大幅增長。
Valuation
估值
We set our target valuation based on 6.5% average dividend yield for 2024-26E.
我們的目標估值基於2024-26年平均分紅率爲6.5％。
Our target price HK$7.00 is equal to 10.9x 2024E P/E.
我們的目標價爲7.00港元，相當於2024E P/E的10.9倍。
譯文內容由第三人軟體翻譯。
