China Petroleum & Chemical Corp. (SNP)

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  • commenter
    omooc
    Jun 04 09:47 AM
    My Website
    Leery about Lehman - Fast Money Recap (6/3/08) [view article]
    Although I tried to read Speaking Alpha daily, I must admit that this is the first time I came across this post (Fast Money recap). I tried to view Fast Money daily - but the last segment (Final trade) is usually mumbled and not repeated. So, this post serves a very useful purpose, particularly for those slow-pokes like me.
    Before typing this comment, I re-read the title of this post. I think I know one reason why it had not attracted my attention earlier -- the heading is not attractive enough. In my view, it should read: Fast Money Recap - 6/3/08: Leery on Lehman.     Reply
  • commenter
    User 163362
    Jun 04 09:33 AM
    Leery about Lehman - Fast Money Recap (6/3/08) [view article]
    Love CHK... my thoughts on how to find more winners like CHK...

    20smoney.com/2008/06/0.../
     Reply
  • commenter
    Ozarker
    Jun 04 08:31 AM
    Leery about Lehman - Fast Money Recap (6/3/08) [view article]
    Whatever's good enough for Aubrey is good enough for me! Drill, drill, drill! Reply
  • commenter
    ygier
    Jun 04 08:18 AM
    Leery about Lehman - Fast Money Recap (6/3/08) [view article]
    Im also bullish on CHK. Aubrey reportedly bought another 400,000 shares of his own company between May 30th and June 2nd. Im not willing to bet against him, he has great determination! Wonder what the next news will bring? Have a Happy Day. Reply
  • commenter
    ygier
    Jun 04 08:15 AM
    Leery about Lehman - Fast Money Recap (6/3/08) [view article]
    Im also bullish on CHK. Aubrey bought another 400,000 shares between Friday May 30th and Monday June 2nd according to Market Insider. His kids also apparently bought a large number of shares. He is really sending a message. Wonder what news will come out next to make him soo bullish?? Reply
  • commenter
    Randy Kirk
    Jun 02 02:23 PM
    Sinopec: Potential for Growth [view article]
    Thanks for that comment Ex15:26 -- Sinopec as a whole is not losing money currently, as Sinopec has 4 divisions, upstream, marketing, chemicals and refining -- and refining is losing money, the other divisions are profitable.

    The extent to which Sinopec's refining division is losing money is a complicated matter, which doesn't translate easily into the press -- I've addressed Sinopec's refining division in an earlier article which can be found here: seekingalpha.com/artic...

    I can comment, last quarter was a bit of a surprise in terms of the size of the refining losses, however, SNP didn't provide much detail on their other divisions -- I suspect that they are expensing a lot of exploratory expenses in their upstream division, which didn't show any profit growth in the first quarter (which was a surprise, as oil prices were up significantly). But as Tahe, Puguang (as mentioned in the article above) come online, E&P profits should increase.

    Overall, the Chinese oil majors tend to move a lot day to day, with moves of -/+5% not uncommon -- much of this I believe is due to the movement of the overall Chinese markets, which are very volatile.

    Note sentiment towards Sinopec is currently at a nadir, as most endowments and EU related funds have divested Sinopec due to the Sudan issue, and there is a lot of resentment towards SNP by western oil majors due to SNP's aggressive attitude towards international oil acquisitions. This filters down to articles in the press.

    In terms of a pair trade, I generally go long and hold for a longer period of time (well over a year) so can't predict short term moves. Also, I can't predict what will happen to the price of oil over the short term.     Reply
  • commenter
    Ex15:26
    May 30 12:14 AM
    Sinopec: Potential for Growth [view article]
    Randy, thanks for your effort and great article.

    I don't own any energy stocks, but frankly am looking at them as potential short candidates for a temporary drop in oil px. (not saying this is one, just researching).

    Coming from a long perspective though, you mentioned above that SNP doesn't make money unless oil is less than $76 and in fact, they got a capital infusion from PRC to offset losses. Unless your view is that oil will come down, does it make sense to own SNP?

    In pricing action today, SNP moved up $5 - in your opinion is this a result of the falling price of oil (-4%).

    Further, I'm just speculating here, but they actually might be a lone firm out there in the energy space that actually increases with oil decreases? Could actually be some kind of pair trade...?



    Reply
  • commenter
    Randy Kirk
    May 28 01:41 PM
    Sinopec: Potential for Growth [view article]
    CEO is more straightforward -- also a good buy (in my opinion) -- CEO doesn't have the refining issues or the Sudan issues of Sinopec. Sinopec is selling at a slightly lower market capitalization than CEO currently -- unusual for an integrated oil major to sell at approximately $80Bn that is ranked #22 on Forbes Global ranking of the world's 500 largest companies.

    The relatively low market capitalization of Sinopec is I believe is mainly due to three issues
    1. Refining division -- this is currently losing money, although how much and what sort of subsidies and future price increases in the price of petrol within China is a point of debate

    2. Sudan divestment -- PetroChina is much more active in Sudan than Sinopec, (any activity there could be construed as a legitimate reason to sell however) and most funds and endowments which have divested PetroChina due to the Sudan have also divested Sinopec.

    3. International oil community resentment of Sinopec -- Sinopec has been very aggressive in bidding for international oil projects, which has driven up the price of oil projects for all oil majors -- this has led to a negative attitude in general towards SNP by oil majors and western oil publications.

     Reply
  • commenter
    Billz
    May 28 03:36 AM
    The Informal China Banking Sector is Growing [view article]
    For typical private business loan (underground lending as the author calls it), the interest is quoted by the month and need to be paid each month. So the interest does not compound and the total annual interest payments equals monthly payment x 12.

    Many Chinese private companies are having cash flow problem. One such example is Wan Song Real Estate company in ZheJiang province. Their total debt is over 5 Billion RMB and total equity is less than 100 million RMB. The company has over 3000 lenders, mostly local residents who try to get high income on savings. Initially the company offered interest rate of 2% per month, when the going got tough, the company tried to raise fund by offering monthly interest rate of 5% or 6%. In March, when the company failed to pay the monthly interest, lenders demanded principal back but there is no money to return. Unless the real estate market pick up significantly in the near term, the lenders will probably lose most of their money loaned to the company.

    I think this event will have chain effect of reduce liquidity in the undergound lending system, thereby drive up interest rates, increase the cost of doing business and drive more business into failure. China had good economic time for 30 years, it can not last for ever.     Reply
  • commenter
    omooc
    May 27 08:44 PM
    My Website
    Sinopec: Potential for Growth [view article]
    Good article; most comprehensive. Barron's seems to favor CEO. Reply
  • commenter
    sharpe_mind
    May 26 07:20 AM
    The Informal China Banking Sector is Growing [view article]
    China's reserves grew by nearly 75 Billion USD in April. Not a month you can attribute much to mark to market on FX or bond positions. This was three times the trade surplus plus FDI.

    The yuan barely moved in April as authorities capped the exchange rate around 7 in order to "stabilize expectations of further yuan appreciation"; clearly noone was convinced by this gesture.     Reply
  • commenter
    M. Pettis
    May 24 03:10 AM
    The Informal China Banking Sector is Growing [view article]
    I would be surprised if PetroChina didn't have access to bank loans, but remember that until the earthquake (and the January storms before that) there were attempts to cap lending growth, and a lot of companies have been screaming for capital. Reply
  • commenter
    M. Pettis
    May 24 03:08 AM
    China: Lots of Oil Price Speculation [view article]
    This is the problem -- as both of you indicate. There is certainly a cost in the short-term to relaxing oil prices, but the longer the price controls are in place, the more costly it is to maintain them (shortages, taxes, and misallocation) and the more costly to relax them. It has been pretty clear since at least last summer that oil price controls were becoming a real problem, but every few months something new shows up that creates a good reason not to relax them just yet. Those of us who think inflation is a monetary problem keep insisting that inflation will go up anyway, but unfortunately high inflation is the main excuse the government uses for not relaxing the price controls. This can easily get worse. Reply
  • commenter
    rlirph
    May 23 11:02 AM
    The Informal China Banking Sector is Growing [view article]
    5% a month or 80% compounded annual interest rate sounds like borrowing from loan sharks which also come with deaths/broken legs if loans are not repaid on time. This kind of loan arrangement has always existed in Asia in recent times. That's why Household Finance opened finance shops in Japan.

    Does any one know anything about PetroChina borrow money on this basis? The story was that last year PetroChina has money but cannot get them converted through official channels. The company was forced to borrow at ursury rates. I remembered reading the newspaper to that effect. When management was asked about it they gave a typical answer "I'll look into it and let you know" answer which raised more eyebrows.     Reply
  • commenter
    sharpe_mind
    May 23 02:24 AM
    China: Lots of Oil Price Speculation [view article]
    Not raising oil prices means no demand destruction and can be fiscally dangerous. This is turning into a major issue across Asia. China has the luxury (so far) of a solid fiscal situation, but you have to realize that China is effectively shorting crude oil. With China subsidizing levels here this also promotes a mis-allocation of resources, as areas of the economy which are least efficient are allowed to continue wasting oil. One can also argue that part of crude oil's rise is the fact that half the world subsidizes oil prices- preventing demand destruction- and with China as the world's fastest growing importer, subsidizing crude exacerbates this. Reply
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