GUOTAI JUNAN SECURITIES (HONG KONG) LIMITED http://www.gtja.com.hk liuyv@ms.gtjas.com 0755-82485666-3207 June28,2002 0338.hk June28 HK$1.16 H 2702.8 PE(2001EPS) 76.3 PE(2002EPS) 23.5 52 / HK$ 1.28/0.5 ( ) 7200 A 720 H 2330 SinoPec group 56% 2002 50% 2002 2001-2002 5-6 2002 2002 25 2002 BP-90 2002 3.7-4 2003 2004 11 Rmb million 1999A 2000A 2001A 2002F 2003F 2004F 605,726 856,510 116,049 377,341 747,483 770,750 EPS (Rmb) 0.084 0.119 0.016 0.052 0.104 0.107 PER (x) 14.6 10.3 76.3 23.5 11.8 11.5 EV/EBITDA (x) 4.2 3.5 5.7 4.3 3.7 3.5 NBV/shr (Rmb) 1.76 1.88 1.83 1.85 1.90 2.00 Price/book (x) 0.7 0.6 0.6 0.6 0.6 0.6 ROE (%) 4.8% 6.3% 0.9% 2.8% 5.5% 5.3% ROCE(%) 7.0% 7.7% 2.4% 4.1% 5.9% 5.9%
, 1999 2001 1999 2000 2001 17,640 20,730 17.5% 24,270 17.1% 6,770 7,870 16.3% 8,860 12.6% 9,960 12,050 21% 14,210 17.9% 1,360 1,520 11.8% 1,690 11.2% N/a 10,980 N/a 12,600 14.8% 2000 2001 100% 1000 2001 1260 2000 14.8% 2001 481 GDP8% 2010 2000 2005 900 1 50% 700 50% 1 2002 3 2
50% 1997 1998 1999 2000 14.85 16.41 17.64 20.74 8.38 9.38 9.22 10.37 56% 57% 52% 50% 5.82 6.12 6.77 7.87 1.64 1.52 1.28 1.73 28% 25% 19% 22% 6.78 7.48 9.96 12.05 1.13 1.6 2.82 4.22 17% 21% 28% 35% 1.04 1.03 1.29 1.52 0.42 0.44 0.61 0.68 40% 43% 47% 45% 2001 LDPE 76.6% 3,117 HDPE 62.8% 2,747 PP 39.4% 5,303 PS 64.6% 2,378 17.8% 321 SBS 41.9% 289 47.8% 429 51.1% 282 66.4% 2,405 3
2005 90 BP 90 45 2005 50% (30%) 50 (20%) 25 26-60 (50%) 60 40 2005 (50%) 30 30 60 60 (25%) (50%) 25% 45 30 2005 60-60 27 2006 50% 60 50 (50%) (50%) 80 24 56 32 32 2005 (50%) 60 - (50%) 30 54 2005 65 2002 20 PP PP 16 36 10 45 72 2002 5 2004 48 60 2002 5 4
40 15 2001 63 100% 40 70 85 100 / 850,000 710,000 450,000 650,000 450,000 480,000, (2001 ) (2002 ) 2001 (2000 ) / (2001 ) (2002 ) (2001 ) (2001 ) 630,000 770,000 392,400 486,000 390,006 740,000 555,000 500,000 China OGP 2001 481, 386.hk 215 63 30% 2002 2002 6 71 2001 2002 2002 2003 2005 BP 90 LDPE HDPE PP 90 78-80 BP-90 20% 95.5 78.6 52 24 28 35 HDPE / / 5
45 30 BP-90 / 2000 2001-2005 LDPE 18 20 38 15.8 15.8 14 14 10 10 HDPE 24 20 24 16 16 14 14 14 14 25 25 35 BP- 25 25 LL/HDPE BP- 50 PP 35.5 8 43.5 17.8 20 37.8 BP- 25 16 20 36 2001 2 PE 510,000 540,000 3 1,801,950 PP 400,000 360,000 1,650,000 2 1999 2000 ) 3 LDPE 38 HDPE 16 6
17 2000 77% 15.58 14 1 12.94 22.2 1 8.18 18.2 LDPE PP 2 6.07 34.7 2 9.07 48.1 EG 2 6.70 23.5 PVA 2 14.43 34.5 4 6.27 28 PTA 5 3.42 25 BP- 90 BP- 90 20% 2005 BP-90 / 900,000 (PE) 450,000 600,000 (PP) 250,000 260,000 (PS) 300,000 500,000 500,000 90,000 : China OGP 7
100 2002 65 2000 6 2002 5 40 70 85 PP 12 4.9 9.5 17 25 PE 20 PP 70 29.8% 31% 750 / 633 / 590 / 15% 1 2005 BP 90, 175 100 281 153 75 / 100% 50 / 4%-9% 20-25 14%-33% 8
( 2002 3 1 ) : 1. 281.10 2. 225.00 3. 190.50 4. 189.00 5. Equistar 175.00 6. 168.50 7. 160.00 8. 155.60 9. 154.00 10. ( ) 153.00 ( 2002 3 1 ) : 1. 16 1313.00 1071.27 2. 14 1141.40 787.67 3. Equistar 7 526.50 526.50 4. 7 667.60 478.30 5. 4 565.00 395.00 6. BP 5 462.10 390.60 7. 3 349.30 349.30 8. 8 301.00 301.00 9. 2 353.60 296.45 10. 6 439.70 294.34 2002 2002 2001 2001-2002.5 / 7,000 6,500 6,000 5,500 5,000 4,500 4,000 Jan-01 Mar-01 May-01 Jul-01 HDPE Sep-01 Nov-01 Jan-02 Mar-02 May-02 9 2001 2002 1 2 1998 1998 2002 3 5 2002 2 2001 2001
2001 5 2003-2004 2001 1 2002 5 PP HDPE LDPE 7,500 7,000 6,500 / LDPE 6,000 / 5,500 PP 6,000 5,000 5,500 5,000 4,500 Jan-01 Mar-01 May-01 Jul-01 Sep-01 Nov-01 Jan-02 Mar-02 May-02 4,500 4,000 Jan-01 Mar-01 May-01 Jul-01 Sep-01 Nov-01 Jan-02 Mar-02 May-02 2001-2002.6 2002 2 7000 / 3 6 2002 9000 / / 10000 9500 9000 8500 8000 7500 7000 6500 1.56x38 / 14000 13000 12000 11000 10000 3.33x6.5 01-1-9 01-3-9 01-5-9 01-7-9 01-9-9 01-11-9 02-1-9 02-3-9 02-5-9 01-1-18 01-3-18 01-5-18 01-7-18 01-9-18 01-11-18 02-1-18 02-3-18 02-5-18 10
1 2002 1 2 2 1 25.3% 18.6% PP 13% LDPE 1.4% 2002 2 2001 2002 2 2001 2001 PP 2001 2001-2002 / LDPE PP US$/b 2001 1H 2128 9117 6559 5683 26.52 2001 2H 2022 8083 5845 4874 23.10 2001 2075 8600 6202 5278 24.81 2002 1 1612 7166 5199 4624 21.10 2002 2 2020 8500 5272 5223 25.90 2002 1762 7944 5228 4864 23.50 02 2 1 % 25.3% 18.6% 1.4% 13.0% 22.7% 1998-20022001 / LDPE- 7000 5840 1998-2002 5 LDPE 6000 5232 5252 spread 5000 4087 1998-2000 4000 3901 3228 2001 2002 1-6 3000 2000 2002 LDPE 1000 2001 79% 0 1998 1999 2000 2001 2002(1-6) 2001(1-6) 1998 2002 11
2001 2002 1-6 / 1 2 Spread 2002 1-6 1762 1352 3 410 2001 2075 1654 421 2001 1-6 2128 1729 399 1. 2. 3. Brent 23 1352 / 2002 5 600 550 500 450 / 400 350 300 250 200 Jan-02 Feb-02 Mar-02 Apr-02 Bloomber May-02 Jun-02 12
13 Bloomberg 2002 6 26 5 2.6%, 4 0.5 5 HDPE 400 450 500 550 600 650 Jan- 02 Feb- 02 Mar- 02 Apr- 02 May- 02 Jun- 02 / LDPE 450 500 550 600 650 700 Jan- 02 Feb- 02 Mar- 02 Apr- 02 May- 02 Jun- 02 / 200 250 300 350 400 450 500 550 Jan-02 Feb-02 Mar-02 Apr-02 May-02 Jun-02 / PP 400 450 500 550 600 650 700 750 Jan-02 Feb-02 Mar-02 Apr-02 May-02 Jun-02 / 0 1000 2000 3000 4000 5000 6000 LDPE HDPE PP Phenol Aceton Jan-02 Feb-02 Mar-02 Apr-02 May-02
2002 2002 4 5 6 2001 2001 27-28 / 2002 4 2002 20 4 4 4 5-6 5 1.2 0.016 2002 6 2002 2002 2003 50% WTO 2003 2003-2004 2000 14
Rmb'000 1999A 2000A 2001A 2002F 2003F 2004F 14,036,587 21,277,268 20,197,396 21,409,240 24,620,626 25,851,657 (12,532,636) (19,039,986) (18,803,044) (19,418,180) (22,158,563) (23,318,195) 1,503,951 1,688,569 814,722 1,348,782 1,723,444 1,757,913 (275,003) (360,870) (363,218) (545,011) (565,449) (574,873) (1,451,138) (1,514,710) (1,359,642) (1,755,612) (1,889,846) (2,022,907) EBITDA 2,680,086 2,842,409 1,811,146 2,559,383 3,047,841 3,205,947 EBIT 1,228,948 1,327,699 451,504 803,771 1,157,995 1,183,040 (368,287) (272,186) (227,758) (360,258) (247,016) (244,688) 720,843 1,080,645 145,797 477,569 913,030 940,402 (99,185) (200,837) (1,156) (71,635) (136,954) (141,060) 605,726 856,510 116,049 377,341 747,483 770,750 EPS 0.084 0.119 0.016 0.052 0.104 0.107 15
1999A 2000A 2001A 2002F 2003F 2004F Gross margin (%) 10.7% 7.9% 4.0% 6.3% 7.0% 6.8% Net profit margin (%) 4.3% 4.0% 0.6% 1.8% 3.0% 3.0% EBIT margin(%) 8.8% 6.2% 2.2% 3.8% 4.7% 4.6% EBITDA margin(%) 19.1% 13.4% 9.0% 12.0% 12.4% 12.4% ROE (%) 4.8% 6.3% 0.9% 2.8% 5.5% 5.3% ROA (%) 2.8% 3.9% 0.5% 1.5% 3.0% 3.0% ROCE(%) 7.0% 7.7% 2.4% 4.1% 5.9% 5.9% EPS (Rmb) 0.084 0.119 0.016 0.052 0.104 0.107 EPS growth(%) N/a 41.4% -86.5% 225.2% 98.1% 3.1% PER (x) 14.6 10.3 76.3 23.5 11.8 11.5 EV/Sales (x) 0.8 0.5 0.5 0.5 0.5 0.4 EV/EBITDA (x) 4.2 3.5 5.7 4.3 3.7 3.5 EV/EBIT(x) 9.2 7.5 23.1 13.8 9.6 9.4 Book Value/shr (Rmb) 1.76 1.88 1.83 1.85 1.90 2.00 Price/book (x) 0.7 0.6 0.6 0.6 0.6 0.6 Net cash flow/shr(rmb) 0.35 0.22 0.20 0.20 0.22 0.22 Net operating cash flow/shr(rmb) 0.34 0.34 0.33 0.33 0.46 0.41 Price/CFPS 3.3 5.2 5.8 5.7 5.2 5.3 Net gearing 36.8% 25.6% 46.4% 46.0% 41.5% 39.0% Total liabilities/toal assets 41.2% 36.5% 44.6% 44.6% 43.5% 42.5% Current ratio (x) 1.1 1.2 0.9 0.9 1.0 1.0 Interest cover (x) 3.3 4.9 2.0 2.2 4.7 4.8 16
Rmb 000 1999A 2000A 2001A 2002F 2003F 2004F 12,150,339 11,726,871 12,588,816 13,162,966 13,245,643 13,534,676 1,609,158 1,720,987 4,001,169 3,318,968 2,853,376 2,889,348 0 126,410 178,990 184,360 189,890 195,587 863,052 966,670 1,305,175 1,135,923 1,220,549 1,281,576 89,655 76,207 62,759 49,311 35,863 22,415 64,220 13,479 953 1,001 1,051 1,051 14,776,424 14,630,624 18,137,862 17,852,529 17,546,372 17,924,654 2,549,931 1,612,197 1,446,678 1,456,805 1,591,559 1,587,580 2,273,319 3,406,681 2,789,316 2,956,675 3,400,176 3,570,185 1,056,320 955,602 863,276 915,073 1,052,333 1,104,950 426,000 28,000 40,815 34,408 37,611 36,009 / 346,932 157,074 54,320 54,320 54,320 54,320 518,278 911,132 1,115,186 1,182,097 1,359,412 1,427,382 7,170,780 7,070,686 6,309,591 6,599,377 7,495,412 7,780,427 407,591 1,092,494 1,730,928 1,834,784 2,110,001 2,215,501 4,743,030 3,200,245 4,106,041 4,106,041 4,311,343 4,397,570 / 152,664 838,262 591,412 607,611 599,512 603,562 769,681 820,535 922,630 807,763 807,763 807,763 19,742 356 281 281 281 281 6,452,708 5,951,892 7,351,292 7,356,480 7,828,900 8,024,676 2,463,837 1,863,776 3,463,747 3,463,747 2,963,747 2,815,560 118,577 103,755 88,933 88,933 88,933 88,933 2,582,414 1,967,531 3,552,680 3,552,680 3,052,680 2,904,493 266,958 280,253 357,798 183,695 470,296 357,798 12,645,124 13,501,634 13,185,683 13,359,051 13,689,910 14,418,114 7,200,000 7,200,000 7,200,000 7,200,000 7,200,000 7,200,000 5,445,124 6,301,634 5,985,683 6,159,051 6,489,910 7,218,114 12,645,124 13,501,634 13,185,683 13,359,051 13,689,910 14,418,114 17
A B (02-5-24) A 2001PE 2002 PE 43.91 31.96 78.16 74.91 40.36 25.76 61.04 53.43 20.61 10.19 8.57 31.20 13.02 15.68 43.22 21.15 24.32 20.81 Bloomberg, (02-5-24) 2001 2002 2001 2002 18
B 2001PE 2002 PE BASF AG 18.22 25.48 BAYER AG 24.56 24.17 DU PONT (EI) 38.78 26.65 DOW CHEMICAL 61.75 33.79 PPG INDUSTRIES INC 22.83 21.17 ROHM AND HAAS CO 35.81 22.99 MITSUI CHEMICALS 67.63 39.75 Hitachi Chemical 101.2 43.9 Misubishi Chemical LOSS 131.3 NIPPON SEIRO 20.19 24.16 LG PETROCHEMICAL 11.97 12.62 LG CHEMICAL LTD 20.57 10.29 FORMOSA PLASTIC 27.78 18.98 NAN YA PLASTIC 24.07 11.82 TAIWAN POLYPROPY 18.19 14.85 GRAND PACIFIC PETROCHEM N/A 5.57 76.3 23.5 Bloomberg, EBIT 2000 2001 1998 1999 2000 2001 19.2% 19.2% 16.1% 16.0% 31.2% 30.6% 28.1% 28.1% 15.6% 13.2% 11.2% 10.5% 26.0% 30.0% 37.3% 40.7% 8.0% 7.0% 7.3% 4.7% 19
EBIT EBIT 1998 1999 2000 2001 0.6% 7.8% 13.1% 1.8% 32.7% 57.1% 42.0% 43.9% 14.2% 8.7% 13.7% 12.9% 11.9% 24.7% 25.4% 25.5% 40.5% 1.7% 5.8% 15.8% EBIT margin 1998 1999 2000 2001 0.2% 3.1% 5.8% 0.2% 6.1% 14.5% 10.6% 3.1% 5.3% 5.1% 8.7% 2.4% 2.7% 6.4% 4.8% 1.2% 29.2% 1.9% 5.7% 6.6% 2000 20-F PP pellets LDPE pellets % 6.94 3.18 1.30 1.11 0.88 0.12 1.94 16.10 8.48 5.64 6.11 1.89 1.46 4.53 28.11 2.02 2.89 EO 1.54 1.09 0.20 20
2000 20-F 3.47 11.21 10.07 18.56 2.03 1.08 5.56 37.30 7.28 100 2000 20-F 21
1.58 5000-6000 22% 1999 45% 46% 2000 32% 2001 13% 9% 6% 27% 3% 19% 66% 12% / 1356 1722 1573 1697 2001 22
1999 2000 2001 14,036,587 6,454,683 21,277,268 7,824,547 20,197,396 5,954,526 1,503,951 1,184,091 1,688,569 1,160,454 814,722 294,335 10.7% 18.3% 8.1% 14.8% 4.2% 4.9% 275,003 578,544 360,870 530,743 363,218 560,940 EBIT 1,089,130 615,463 1,417,322 606,681 394,185-366,900 EBITDA 2,540,268 1,267,931 2,932,032 1,114,963 1,753,827 158,510 EBIT margin 7.76% 9.54% 6.66% 7.75% 1.95% -6.16% EBITDA margin 18.1% 19.6% 13.8% 14.2% 8.7% 2.7% 605,726 346,421 856,510 347,759 116,049 (283,355) 4.3% 5.4% 4.03% 4.44% 0.57% -4.76% EPS 0.084 0.103 0.119 0.103 0.016 (0.084) 1999 2000 2001 2000 2001 6.8% 9.4% 2-3 3 2000 2001 21,701,310 9,159,923 24,447,453 10,943,663 13,501,634 5,730,372 13,185,683 5,312,053 36.5% 37.4% 44.6% 51.5% 16.39 23.92 16.44 28.41 65.31 55.95 54.15 47.58 0.34 0.27 0.33 0.29 net cash/shr 0.22 (0.29) 0.20 (0.75) 23
2001 2000 24
( ) ( ) 25