Sinopec cuts refining target
( 2001-08-10 11:03 ) (7 )

Chinese oil giant China Petroleum & Chemical (Sinopec) is to cut its crude oil processing target for this year as demand dips. The result will trim its bottom line.

Officials of Sinopec on Thursday confirmed the revision, but would not give details. Reports lower the target by slightly more than 3 per cent.

The news came the day the firm's A-shares debuted on the Shanghai stock market. They fell 2.1 per cent on Thursday to end at 4.27 yuan, close to their offering price of 4.22 yuan.

A senior company manager in Beijing said Sinopec had reduced this year's original target, to process 108 million tonnes of crude oil, to 105 million tonnes - roughly the same as last year, according to a report in Web site infocastfn.com.

The cut was prompted by decreased demand for processed products such as diesel, kerosene and petrol.

Sinopec official Chen Ge confirmed the No 2 Chinese oil and petrochemicals company would cut its refining volume.

"We will reduce the processing volume according to market conditions," he said.

"It should not have a big impact on our bottom line."

BNP Paribas Peregrine analyst Eva Chu estimates it could cost Sinopec about 200 million yuan (US$24 million) of net profit if processing volume is cut to last year's level.

Analysts had expected the company to have difficulty achieving this year's forecast of 11.5 per cent year on year net profit growth - to 18.02 billion yuan - as stated in its A-share prospectus.

HSBC Securities' forecast for Sinopec's net profit this year is 16 billion yuan based on mainland accounting standards, compared with 16.15 billion yuan last year.

A European brokerage analyst said Sinopec's more bullish forecast was probably because it was made earlier this year, when the market outlook was not as grim as it was a month ago.