Significant Growth in Total New Contract Value amid Improving Operating Environment
HONG KONG, Aug. 21, 2017 /PRNewswire/ -- SINOPEC Engineering (Group) Co., Ltd. ("SEG" or the "Company", together with its subsidiaries collectively known as the "Group") (stock code: 2386) today announces its interim results for the six months ended 30 June 2017 (the "Reporting Period"). The Company also announces the initial terms of proposed H shares appreciation rights scheme and the proposal to acquire 100% equity interests in Sinopec Energy-Saving Technology Service Co., Ltd.
Managed to achieve existingoperating results amidchallenging market environment: Dragged by a prolonged period of low international crude oil price and lower investments in oil refining and chemical industry over the past two years, the Company continued to face headwind for its operations in the first half of 2017. During the Reporting Period, the Company realised revenue of RMB13.764 billion. Net profit amounted to RMB835 million and basic earnings per share were RMB0.19. The Board decided to distribute an interimdividend of RMB0.056 per share, maintaining a stable dividend payout ratio.
Significant growth in total new contract value amid an uptick in the market: In the first half of 2017, the seven major petrochemical production bases in China commenced construction one after another. As Sinopec Group planned to develop four world-class oil refining and petrochemical production bases in Maozhan, Zhenhai, Shanghai and Nanjing, domestic market environment started to pick up gradually. The total value of new contracts entered into by the Company reached RMB17.769 billion, representing an increase of 111.6% year-on-year. Of which, the value of newly-signed domestic contracts amounted to RMB16.486 billion, up 102.6% year-on-year. As at the end of the Reporting Period, the Company's backlog value was RMB92.178 billion, representing an increase of 4.5% from the beginning of this financial year.
The Board has endorsed the initial terms of proposed H shares appreciation rights scheme to drive corporate reform and development in a steady manner: In order to better inspire and mobilise the management's operational talents and decision making capabilities, to enhance the motivation and creativity of the core management team and to improve the Company's overall performance, the Board has considered and approved the initial terms of proposed H shares appreciation rights scheme (the "Scheme"), which are subject to the approval of the State-owned Assets Supervision and Administration Commission and shareholders at the general meeting respectively. The Company will take the opportunities brought about by the implementation of the Scheme to vigorously expand domestic and overseas markets. Meanwhile, it will continue to carry out measures to lower costs enhance its efficiency and optimise internal resource allocation for a better and faster development of the Company.
Acquires 100% equity interests in Sinopec Energy-Saving Company and develop it into a new driver for profit growth: The Board has approved the Company's proposal to acquire 100% equity interests in Sinopec Energy-Saving Technology Service Co., Ltd. ("Sinopec Energy-Saving Company") from Sinopec Consulting Co., Ltd. by way of equity transfer. The consideration of RMB90 million was determined after arm's length negotiation by both parties. Sinopec Energy-Saving Company is one of the fourth batch of energy-saving service companies filed with the National Development and Reform Commission and the Ministry of Finance. It has been dedicated to the implementation and promotion of energy performance contracting services ("EPC"). The energy-saving and environmental protection industry has emerged to be a pillar industry in China. The Company will seize the opportunity to drive the development of new businesses such as EPC services, thereby strengthening its energy-saving engineering segment and making it a new driver for profit growth.
Chairman ofSEG, Mr.LING Yiqun said, "In the face of severe market environment in the first half of 2017, the Company achieved hard-won operation performance by stepping up marketing efforts, strengthening its project management and improving the level of detailed management. During the first half, the robust amount of ongoing projects have been implemented steadily, and the safety, quality and progress of such projects have been under full control. The total value of new contracts recorded significant growth, reaching half of its annual target. We are optimistic in achieving our new contracts annual target. In the 2017 ENR rankings, the Company ranked 53th in the "Top 250 International Contractors" list, up 22 places over the previous year and also ranked 53th in the "Global 250 Contractors" list, indicating that the Company's overall strength and international competitiveness is enhancing. In the second half 2017, the Company will keep working on the overall solutions involving natural gas, new coal chemicals, environmental protection, energy saving and relevant industries on the basis of consolidating its conventionally advantaged businesses such as oil refining and petrochemical industries for the purpose of creating innovation system focusing on technology innovation by further deepening the reorganisation of specialised engineering, regulating internal transactions and optimising allocation of resources. The Company will actively take the good opportunities brought by domestic market and further increase the value of new contracts; in addition, the Company will make good use of the favourable policies associated with the "Belt and Road" strategic development, further consolidate the existing market, actively expand the markets in the countries alongside the "Belt and Road" and keep improving the Company's overall profitability and risk resistance ability in relation to overseas businesses.
Business Review and Operating Highlights
Achieve Solid Results in Market Development
During the Reporting Period, under the circumstance where domestic market environment was improved, the Company exploited its overall advantages in its industry, business and technical chains, and increased market development efforts. During the Reporting Period, the value of new contracts entered into by the Company was RMB17.769 billion, and approximately 46.8% of the annual target of new contracts was completed, among which, the value of newly signed domestic contracts amounted to RMB16.486 billion, and the value of newly signed overseas contracts amounted to approximately RMB1.283 billion.
In the PRC, during the Reporting Period, the Company entered into new contracts for a number of large projects, such as Sinochem Quanzhou Ethylene Project with a contract value of approximately RMB4.259 billion; Dalian Hengli Project with a contract value of approximately RMB2.201 billion; Zhenhai Bubbling Bed Residuum Hydrotreating Project with a contract value of approximately RMB1.376 billion; Jinan Catalytic Cracking Project with a contract value of approximately RMB680 million. Overseas, during the Reporting Period, the Company entered into new contracts for a number of large projects, such as AGPP-P3 Project, the Company has an equity interest of approximately 119 million euros in the contract; the 3rd Saudi Kayan Spare Desalted Water Station System Project with a total contract value of approximately USD 12.8 million, etc. In addition to the above projects, the Company has also kept track of some oil refining, petrochemical engineering, new coal chemical, environmental protection and energy saving projects, which are expected to be signed in the future.
Successful implementation of major projects
- Eastern China 's largest coal - based methanol to olefins project: In January 2017, the Company received a notice from the owner for resumption of work. As at the end of the Reporting Period, about three tenths of the overall construction work of this project was completed and the construction has been fully resumed.
- Large-scale LNG storage and receiving station projects using the Company's patented design and construction technologies: Tianjin LNG Project was almost completed and was in the preparation stage of intermediate handover.
- Building a world-class portside petrochemical base: The design work of the Sinochem Quanzhou 1 million tons / year ethylene and oil refining expansion project has commenced.
- Large crude oil commercial reserve base project：About three tenths of the overall construction work of the Dongjiakou crude oil commercial reservation base project was completed, and the on-site work has commenced.
- The Company's largest project by contract value in the Middle East: As at the end of the Reporting Period, approximately one fourths of the Kuwait Oil Refining Project the project was completed, in which, over 80% of the design work was completed, equipment procurement was almost done and foundation of civil engineering on site was basically completed.
- The Company's largest project in the southeast Asian region: Over eight tenths of the overall progress of the Malaysia RAPID Oil Refining Project was completed, in which, the design work was completed, over nine tenths of the overall procurement work was completed, and about six tenths of the construction was completed.
- The Company's large-scale oil refining projects in Central Asia: The scope of work under the contract for the FCC Project of Kazakhstan Atyrau Refinery mainly covers the EPCC of 13 processing units including 2.43 Mtpa FCC units and 47 utilities units. As at the end of the Reporting Period, the design work of the project was completed, and approximately nine tenths of the overall progress was completed.
Wide cooperation, pursue win-win situation
On the basis of cooperating and developing alkylation, fluidised bed MTG, flexible coking market with EXXON MOBIL, the Company has been officially enlisted on the strategic EPC contractors list of EXXON MOBIL by successfully passing its interior qualification preview within the Reporting Period. By referring to cooperation mode of EXXON MOBIL, the Company cooperates with SHELL to develop the markets of residual-oil gasification, environmental protection and emission reduction, etc. and was invited to participate in qualification preview of foreign project. During the Reporting Period, the Company developed wide cooperation and communication in coal chemical industry, energy saving and environmental protection industries, etc. so as to improve technical chain of the Company and improve influence of overall solution. Among them, the Company communicated and discussed cooperation with Uhde in regard to lignite gasification technology, communicated with Tsinghua University in regard to FMTA, synthesis gas to aromatics, etc. and discussed construction of demonstration device with potential employer; the Company studied investment plan with SHELL in regard to million ton level CO2 catching device; furthermore, the Company actively communicated with R&D agency and engineering company in China and foreign countries, etc. in regard to energy saving and environmental protection technologies, etc.
Continuous promotion of innovation and technology advancement
All engineering technology R&D has been steadily promoted.
- Conventional fining technologies such as technology development of complete set of STRONG bubbling bed residuum hydrotreating unit and 50 Ktpa industrial demonstration testing project, technology development and application of complete hydroisomerisation dewaxing high-class base oil unit, long-term producing China V diesel industrial test with RS-2200 low-cost diesel hydrogenation catalyst, technology development of complete PAN matrix-carbon fibre unit, technology development of complete 100 Ktpa hydrogen peroxide processing propylene epoxide, etc. were developed and promoted steadily.
- New coal chemical industry technology developments such as development and industrial application of SE CWS gasification packaged technology, development of powdered coal hydrogenation oil production technology, complete technology of industrial demonstration device of 200 Ktpa syngas to ethylene glycol, etc. have great progress.
- Energy saving and environmental protection technologies such as comprehensive treatment and near-zero-emission technology of coal chemical sewage, safe and environmental friendly coking delaying airtight decoking, transportation and storage packaged technology, soil repair thermal desorption integrated technology, etc. were promising.
Technology licensing was conducted effectively. During the Reporting Period, the value of newly signed technology licensing contract amounted to RMB58.024 million.
Good momentum persisted in patent applications. During the Reporting Period, the Company completed 233 new patent applications (including 108 invention patents) and licensing of 198 patents (including 80 invention patents).
Achieving Numerous Fruitful Results in Technology Innovation. During the Reporting Period, the Company was awarded with 20 prizes for scientific and technological advancement above provincial/ministerial levels, including six first-class prizes, eight second-class prizes and six third-class prizes.
Environmental protection and energy saving business was promoted constantly
During the Reporting Period, the Company signed energy saving and environmental protection contracts with a value of RMB358 million, including Sinopec Cangzhou refining sewage standard improvement and reconstruction EPC Project, Sinopec Wuhan branch sewage standard improvement and reconstruction project, Qingjiang Sinopec catalytic unit and smoke desulfurisation and denitrification dedusting project, etc.
In the field of energy saving, the Company widely communicated with other organisations in regard to various types of low-temperature thermal power generation, moving equipment energy saving, power distribution energy saving and other technologies, enriched technical reservation, and improved energy saving ability; besides, the Company promoted progress of several contract energy management projects in Anqing, etc.
In the field of environmental protection, the Company promoted industrial implementation of some large soil repair project in China with its partner. The Company kept communicating in regard to soil repair technology and increasing the ability to respond to various kinds of polluted soil repair projects. The Company cooperated with SHELL in the research in relation to the investment and estimation in regard to million ton level CO2 catching device; the Company signed VOCs treatment and detection contracts with Sinopec Shanghai, Sinopec Jiujiang, etc., and prepared preliminary work of VOCs treatment of Sinopec Baling.
The Company's soil-pollution control center has recently officially opened. It is planned to be a major platform for the provision of integrated soil-pollution solutions incorporating "technology + engineering" services. Through 3-5 years of development, it will be developed into a leading soil-pollution control center in the market.
Market Outlook andBusiness Prospects
In the second half of 2017, it is predicted that affected by persistently low international crude oil price, slow growth of investment in global energy chemical industry, etc., production and operation situations in oil refining and chemical engineering company still face larger challenges. 2017 is the first year to accelerate implementation of "the 13th Five-Year Plan" and it will bring both opportunities and challenges. The Company will deal with this situation with appropriate attitude, take advantage of collectivisation, integration and large scale of itself to keep improving core competitiveness of the enterprise and promote it to develop sustainably and healthfully.
Regarding market development,the Company will focus on developing major market and major project, take advantage of one-stop integrated solution plan of the Company, high-end product and service to provide full life cycle services to clients, and create more value to clients, keep improving enterprise' competitiveness in high-end market. Meanwhile, the Company will actively explore and expand new markets, promote pilot project implementation with partners, develop contract energy management project provided that the risks are under control, and accelerate the development of new growth opportunities.
Regarding project management,the Company will strengthen early-warning mechanism management for domestic and international projects by issuing early-warning notice in time in regard to project progress, expense, etc. according to relevant systems and taking measures to solve it in time; keep deepening application of international business management platform, actively promote earned value of overseas project expense and analysis method of cost profit, ensure project cost and expense under control; thoroughly promote project risk management, manage and control risks in project approval, bidding and quotation, project execution, etc., and effectively control risks such as construction progress delaying and over-spending cost.
Regarding technology R&D,the Company will take opportunity of conventional technical advantages to strengthen technology propaganda and promotion in petrochemical industry field, actively respond to domestic and international market changes in the new normal, and establish energetic scientific management and operation mechanism according to the development dynamics of both domestic and overseas markets, especially the demand of target markets alongside the "Belt and Road"; it will keep seeking for technologies and actively seeking for technical cooperation in regard to energy conservation, environmental protection, strategic, prospective and advanced technologies, and take advantage of technology to expand market and create conditions, and provide technical support for the Company to expand market alongside the "Belt and Road".
Summary of Financial Data and Indicators Prepared in Accordance with
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About SINOPEC Engineering (Group) Co., Ltd.
SINOPEC Engineering (Group) Co., Ltd. is an international engineering corporation, with the leading edge in the PRC. The Company provides engineering services for a broad range of industries including oil refining, petrochemicals, new coal chemicals, inorganic chemicals, pharmaceutical chemicals, clean energy, storage and transportation engineering, environmental protection and energy saving engineering, with a complete service chain involving research, development and licensing, preliminary consultation, financing assistance, design, procurement, construction, large equipment lifting and transportation, and pre-commissioning/start-up services. With its industry experience of more than 60 years and continual innovation in technical expertise, the Company has achieved great success in the design and construction of large-scale and complex oil refining, petrochemical, new coal chemical, natural gas processing and storage and transportation engineering projects, and possesses strong competitiveness.
This press release includes "forward-looking statements". All statements, other than statements of historical facts that address activities, events or developments that the Company expects or anticipates will or may occur in the future (including but not limited to projections, targets, other estimates and business plans) are forward-looking statements. The Company's actual results or developments may differ materially from those indicated by these forward-looking statements as a result of various factors and uncertainties, including but not limited to the price fluctuation, possible changes in actual demand, foreign exchange rate, market shares, competition, environmental risks, possible changes to laws, finance and regulations, conditions of the global economy and financial markets, political risks, possible delay of projects, government approval of projects, cost estimates and other factors beyond the Company's control. In addition, the Company makes the forward-looking statements referred to herein as of today and undertakes no obligation to update these statements.
Investor and Media Enquiries:
SINOPEC Engineering (Group) Co., Ltd. - Office of the Board
Shan Kai / Liu Jingjing / Yang Yue
Tel: (86) 10 6499 8019 / (86) 10 6499 8020 / (86) 10 6499 8017
Fax: (86) 10 6499 8193
SOURCE China Petroleum & Chemical Corporation
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