标题: [20081112]Sinopec Shanghai Petrochemical (SPC) and Sinopec Yizheng Chemical F [打印本页] 作者: wandy 时间: 2008-11-12 16:36 标题: [20081112]Sinopec Shanghai Petrochemical (SPC) and Sinopec Yizheng Chemical F
Sinopec Shanghai Petrochemical (SPC) and Sinopec Yizheng Chemical Fiber (YCF) surged sharply by daily limit following the opening of the afternoon session. In the H-share market, SPC advanced 13% and YCF rocketed 43% before the close of the morning session.
According to our communication with SPC, the company indicates that its fundamentals remain unchanged, and rules out the possibility of privatization by Sinopec. Sinopec is not available for any comments.
We believe the unusual prices movements might primarily due to:
1. Market speculation; 2. Increasing shareholding in SPC-H and YCF-H by their parentco (Sinopec). Before the surge, P/B ratios of both companies stand at 0.5x. Although two companies are incurring losses, their valuations are not expensive. 3. Privatization: In our view, this is very unlikely, mainly because: 1) Privatization might dilute EPS of Sinopec as both subsidiaries are suffering losses; 2) Valuations of SPC-A and YCF-A are expensive, and the price spread between A-shares and H-shares are large; 3) Sinopec falls short of cash, though the condition of cash flow should improve in 4Q08.
