China Petrochemical is recommended for the following reasons:

1: China Petrochemical's net profit dropped sharply in the last six months. The annual report for the first half of the year showed that its operating profit was-23.7 billion, and the state financial subsidy was 33.3 billion, so it was able to make a profit of 9.3 billion yuan. The reason why China Petrochemical lost money in the first half of the year is very simple. Due to the high CPI index in the first half of the year, NDRC did not adjust the price of refined oil according to the price of crude oil. Only on June 20th, the price of gasoline and diesel increased by 1 1,000 yuan per ton. After the crude oil price reached the peak of 147 USD/barrel in July, it has been falling back to the current range of 60-70 USD/barrel, and China Petrochemical's refining business has been able to make normal profits.

2. China Petrochemical assumed the responsibility of the state in the first half of the year, but as a listed company, the interests of shareholders also need to be considered by China Petrochemical. Therefore, it is impossible for the state to let China Petrochemical sell oil at a loss, and then make financial subsidies to maintain a state of no loss and low profit. At present, NDRC's control of refined oil prices can be said to be the old road in the planned economy era, which distorts the relationship between supply and demand in the market. Therefore, when crude oil prices soar and domestic refined oil prices do not rise, Chinese people often see the phenomenon of oil shortage, which is easy to explain. Because the refining cost of oil refining enterprises is higher than their sales price, they stop production in the name of maintenance and put pressure on the government. Since NDRC raised the price of refined oil in 2006, there has never been an oil shortage? I believe that times are progressing. It is impossible for NDRC to control the price of refined oil for a long time, and the market price of refined oil will be marketized sooner or later, so that the monopoly position of China Petrochemical will generate huge monopoly profits.

3. The fee is changed to tax, and the introduction of fuel tax has been delayed for several years, which involves the interests of various departments and leads to dystocia. However, in 2008, the country put forward the slogan of energy conservation and emission reduction, and the fuel tax was not introduced. This slogan is basically empty shouting. The premise of introducing fuel tax is that domestic oil prices are in line with foreign oil prices. How can they be on the same line? This is a difficult problem in front of the decision-making department. At the beginning of 2007, when the crude oil was 50-60 dollars/barrel, the decision-making department hesitated and missed the best opportunity to connect with it. As a result, crude oil has been rising all the way up to 1.47 USD/barrel, and there is no environment for decision-making departments to connect with it. Due to the high oil price, the life pressure of ordinary people will increase sharply. At present, crude oil has fallen to 60-70 USD/barrel, and there are voices in China calling for this to be the last chance to introduce fuel tax! Once the decision-making department comes up with the fuel tax timetable, the refined oil price system will inevitably be loosened, and it may be adjusted according to the international crude oil price every month in the future, which is foreseeable. In this case, China Petrochemical won't have the dilemma of selling refined oil at a loss.

4. As one of the top 500 Chinese enterprises in 2007, China Petrochemical Corporation earned 1.2 trillion RMB. However, its net profit is only 54.9 billion yuan, less than 654.38+0345 billion yuan of China Petroleum, and less than half of it, while the operating income of China Petroleum is 654.38+0 trillion yuan. The reason for this situation is that China Petroleum focuses on its upstream business, that is, exploiting crude oil. In the era when NDRC controlled the price of refined oil, the profitability of China Petroleum was much stronger than that of China Petrochemical. However, China Petrochemical has such a large operating income base of 1.2 trillion. As long as the gross profit margin increases slightly, its operating profit will increase a lot, and the corresponding earnings per share will also increase, which will be transmitted to its share price.

5. Personally, it is estimated that China Petrochemical will earn 0.38 yuan per share in 2008, and the earnings per share in 2009 will be higher than that in 0.7 yuan. If NDRC rationalizes the pricing mechanism of refined oil products, China Petrochemical's earnings per share may be higher, and the annual earnings per share will increase geometrically. Accordingly, if the P/E ratio of 10 times is reasonable in the current environment, 3.8 yuan will be a strong support for China Petrochemical's share price in terms of its earnings per share in 2008, but 2008 is coming to an end and its performance will resume growth in 2009, so the possibility of falling to 3.8 yuan is extremely low. In terms of earnings per share in 2009, 7 yuan will be a weak support. If we look further, after 20 10, the A-share price of China Petrochemical will not be lower than that of 3.8 yuan in a weak market environment, but it will probably be higher than that of 7 yuan. Once the market is good, the market will give a higher price-earnings ratio and the stock price will rise. Therefore, I suggest that we can open positions on dips at present and hold strategic positions in 3.8 yuan -7 yuan region until after 20 10.

Written on165438+1October 6th.