Why China Petroleum & Chemical (SNP) Stock Is Down Today

NEW YORK (TheStreet) -- Shares of China Petroleum & Chemical Corp. (SNP) are down 4.84% to $94.44 in pre-market trade after the company said it will sell a stake in its fuel retailing business for 107 billion yuan ($17.5 billion), a price lower than analysts estimated, Bloomberg Businessweek reports.

Sinopec, as the company is known, said the unit will sell a combined 29.99% stake to 25 investors including Fosun International (FOSUY) , run by billionaire Guo Guangchang. China Life (LFC) will buy 10 billion yuan of shares, while gas supplier ENN Energy Holdings (XNGSY)  committed 4 billion yuan, Sinopec said in an exchange filing yesterday.

A fund backed by Tencent Holdings (TCEHY) , Asia's biggest listed Internet company, is investing 10 billion yuan, according to the filing.

 

TheStreet Ratings team rates CHINA PETROLEUM & CHEM CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate CHINA PETROLEUM & CHEM CORP (SNP) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income and good cash flow from operations. However, as a counter to these strengths, we find that the growth in the company's earnings per share has not been good."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Powered by its strong earnings growth of 50.87% and other important driving factors, this stock has surged by 37.07% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Oil, Gas & Consumable Fuels industry average. The net income increased by 32.3% when compared to the same quarter one year prior, rising from $2,248.69 million to $2,974.25 million.
  • Net operating cash flow has significantly increased by 81.34% to $7,353.63 million when compared to the same quarter last year. In addition, CHINA PETROLEUM & CHEM CORP has also vastly surpassed the industry average cash flow growth rate of -5.22%.
  • CHINA PETROLEUM & CHEM CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CHINA PETROLEUM & CHEM CORP reported lower earnings of $8.47 versus $8.73 in the prior year. This year, the market expects an improvement in earnings ($9.65 versus $8.47).
  • You can view the full analysis from the report here: SNP Ratings Report
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