China Petroleum & Chemical Corp (NYSE: SNP) has confirmed that it will release its Q2 2021 earnings on Monday, September 20, 2021.
What to look for
The Chinese economy maintained growth in the first quarter of Platt's Brent spot price averaging $60.9 per barrel, a 21.2% YoY. In addition, domestic refined oil products demand showed signs of recovery in the first quarter, with chemical products and natural gas demand maintaining steady growth. The company expects this momentum to continue into Q2 and reflect on the earnings.
Earnings: Stockearnig’s Estimated EPS is expected to beat Q1's earnings per share of $2.28. In the past 12 quarters, the company has reported a net loss in only two quarters, so in the current quarter, chances are it will post a net profit. In addition, historical EPS performance shows the company has beat estimates once (8%) and missed once (8%).
Revenue: In the first quarter, the company posted revenue of $88.99 billion with an operating income of RMB576.982 billion, a YOY increase of 4.1%. For the first half of the year, the company reported a net profit of $6.05 billion attributed to fuel demand recovery and oil prices rebound. Revenue for 1H 2021 was up 22.1% Yoy, with the company processing 126.11 million crude oil tonnes.
Stock movement: Since the last earnings release, China Petroleum, and Chemical Corp's shares have lost 0.6%. On the other hand, SNP shares have been UP 12 times in the last 17 quarters following the earnings release. So, historical price reaction suggests that the probability of shares going up after the company releases Q2 2021 results is 70%. According to the Stock Earnings algorithm, the predicted first-day move following earnings release is 1%, with the predicted move on the seventh day being 3%.
What analysts are saying
Recently Goldman Sachs analyst Nikhil Bhandari upgraded China Petroleum & Chemicals Corp from “Sell” to “Hold” with a target price of $61.98. Bhandari is optimistic that the new consumption tax in China will reduce affected oil products import and increase domestic crude runs. The analyst’s upgrade shows the improved downstream outlook.
Also, Morgan Stanley analyst Jack Lu upgraded SNP from “Hold” to “Buy” with a target price of KH$5.3. Lu stated that the company’s stock has underperformed by 11% relative to those of PetroChina since the start of March, which reflects the higher-than-anticipated impairment loss reported in Q4 and the shrinking oil inventory gain ahead of Q2 2021. According to Lu, the company's negatives have been priced in. He cited the reason for his upgrade as the possibility of earnings turnaround or break even in Inter-segment Elimination for subsequent quarters.
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