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China Petroleum & Chemical (Sinopec), the nation’s second-largest oil and gas firm, says it expects its second-quarter net profit to rise more than 10 times from that in the first quarter.
“The company anticipates its [unaudited] net profit for the second quarter to rise over 1,000 per cent from that in the first quarter,” it said in a statement to Shanghai’s stock exchange without giving any reasons for the jump.
Sinopec normally unveils its first-half results in late August.
It posted an 84.6 per cent year-on-year fall in net profit to 2.17 billion yuan (HK$2.7 billion) for the three months to March 31.  
The fall was mainly due to a 51.6 per cent year-on-year fall in its crude oil selling price that saw its oil and gas production operation sink into an operating loss.  
Accounting write-downs on its high-cost crude oil and refined oil products inventories also led to a big oil refining operating loss and a 40 per cent fall in fuel marketing and distribution profit.
Sinopec’s profit alert means it expects a second quarter net profit of at least 23.87 billion yuan, compared with 18.42 billion yuan in the second quarter last year.
Citi analysts said Sinopec’s bottom-line benefited from a gain in value of its crude oil and refined products inventory that is estimated to turn from a write-down of 6 fen per share in the first quarter to a write-back of 3 fen per share in the second.
Excluding the inventory value changes in both quarters, they estimated its profit to have risen to 11 fen per share in the second quarter from 8 fen in the first, on the back of higher crude oil prices, higher profit margins on oil refining and chemicals production.
For the whole of this year, analysts polled by Thomson Reuters tipped a 22.6 per cent net profit fall to 36.7 billion yuan.
Its Hong Kong-traded shares have fallen 9.8 per cent since June 24 and last traded at HK$6.16, the lowest since March 31, before trading was halted on Wednesday afternoon pending the alert. Trading resumes on Thursday.  


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Workers disassemble facilities at the Fuling work zone in a branch company of Sinopec. Citi analysts predicted strong growth in oil refining and chemicals earnings. Photo: Xinhua

Citi analysts predicted strong growth in oil refining and chemicals earnings. Photo: Xinhua

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