[20081112]Sinopec Shanghai Petrochemical (SPC) and Sinopec Yizheng Chemical F

NYboy

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.
 
 
下午开盘A股的S上石化和S仪化迅速封住涨停，而H股午市前上海石化上涨13%，仪征化纤上涨了43%。
 
我们联系到了上海石化，公司称基本面没有变化，而且对私有化的可能性也进行了否认，认为属于投机炒作。由于是否私有化由中石化决定，我们试图联系中石化，但是联系不上。
 
我们自己的分析有三种可能：
1.         投机炒作，反正现在也没什么好炒的。股价是H股先涨起来的，A股是跟涨，交易量还不是很大。
2.         不排除母公司（中石化）增持H股股票。上涨之前，两家公司的市净率均在0.5倍左右，虽然亏损，但是也不是很贵。
3.         私有化。我们认为这种可能性最低，问题有三：（1），目前两家公司都亏损，私有化将带来对中石化业绩的摊薄；（2），A股还很贵，AH价差很大；（3），中石化缺钱，尽管四季度现金流有所缓解，但是仍然很紧张。