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Sinopec (SNP) Q3 Earnings Miss Estimates, Revenues Rise Y/Y

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China Petroleum & Chemical Corporation SNP, also known as Sinopec, reported third-quarter 2018 earnings per American Depositary Receipt (ADR) of $2.11, missing the Zacks Consensus Estimate of $2.51. The bottom line, however, was higher than $1.31 a year ago.  

Revenues increased 33.4% year over year to $772,718 million yuan.

Increased refinery throughput and higher oil and natural gas prices supported Sinopec’s Q3 numbers. The results were partially offset by a rise in operating expenses. Notably, since the release of third-quarter results late last month, the stock has gained almost 8%. 

Operational Performance

Exploration and Production: During the nine-month period ending Sep 30, 2018, Sinopec’s crude oil production decreased almost 2% year over year to 216.49 million barrels. Although oil production in the domestic market increased a marginal 0.2% year over year to 186.50 million barrels, overseas volumes slipped 12.6% year over year to 29.82 million barrels.    

Natural gas volumes increased almost 6% year over year to 713.77 billion cubic feet in the same period. Also, total oil and gas production rose 0.8% year over year to 335.34 million barrels of oil equivalent.     

For the nine-month period ending Sep 30, the company’s average realized oil price rose to $65.12 per barrel from $47.05 a year ago. Realized natural gas price also improved 13% from $5.23 per thousand cubic feet to $5.91.

Refining: The company’s Refining business recorded refinery throughput of 182.74 million tons (up 3% year over year). It also produced approximately 116.13 million tons of petroleum products, which represents a 3.5% rise from the first nine months of 2017.

Marketing and Distribution: The Marketing and Distribution segment sold 147.78 million tons of refined oil products, which reflects a 1.6% year-over-year decline.

Chemical: During the nine-month period ending Sep 30, 2018, the production of ethylene increased almost 3% year over year to 8,784 thousand tons from 8,534 thousand tons.

Also, production of Synthetic resin was 12,171 thousand tons as compared with 11,791 thousand tons in the year-ago period.  

Operating Expenses

The company saw total third-quarter 2018 operating expenses of 748,429 million yuan, higher than 562,670 million yuan a year ago.

Capital Expenditure

Capital expenditures in the first nine months of 2018 totaled 48.012 billion yuan. Out of this, 19.8 billion yuan was spent on exploration and production projects. Sinopec spent 9.7 billion yuan on the Refining segment, while the Chemical segment was allocated 6.3 billion yuan. The company had set aside 9.7 billion yuan for the Marketing and Distribution segment.

China Petroleum & Chemical Corporation Price, Consensus and EPS Surprise

China Petroleum & Chemical Corporation Price, Consensus and EPS Surprise | China Petroleum & Chemical Corporation Quote

Zacks Rank & Other Key Picks

Sinopec currently has a Zacks Rank #2 (Buy). Other prospective players in the energy space areHess Corporation HES, Enterprise Products Partners L.P. EPD and Murphy Oil Corporation MUR. While Hess and Enterprise Products sport a Zacks Rank #1 (Strong Buy), Murphy carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.    

Hess beat the Zacks Consensus Estimate in three of the last four quarters, the average positive earnings surprise being 230.5%.

Enterprise Products surpassed the Zacks Consensus Estimate in the prior four quarters, the average positive earnings surprise being 9.3%.

Murphy has an average four-quarter positive earnings surprise of 96.5%.

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