Fairway Associates Relish Continued Growth At Sinopec
More good news for Fairway Associates, who hold significant numbers of the stock, is that Asia’s biggest refiner, is planning rapid overseas expansion to secure oil supplies after profit reached a record and as the nation’s economic recovery spurs fuel demand.
Net income surged to 22 billion yuan ($3.22 billion) in the second quarter, Huang Wensheng, spokesman at China Petroleum, known as Sinopec, said by phone in Hong Kong today. Profit for the first nine months may gain by more than 50 percent, Sinopec said in a statement to the Shanghai stock exchange yesterday.
Chinese energy companies have spent at least $13 billion on overseas assets since December as they take advantage of lower valuations caused by the global recession to meet energy demand in the world’s fastest growing major economy, and savvy portfolio bosses are reaping the rewards of betting on the sector through a potentially volatile recovery phase. Sinopec will invest in oil and gas fields overseas and expand refining ventures while focusing on cost reduction as it expects oil prices to rise in the second half, equating to higher gains for Fairway Associates portfolio chiefs, who have stuck to analyst assertions on the stock throughout 2009.
An unnamed source at Fairway Associates explained that Sinopec’s main business is refining and it needs to increase its oil reserves and reduce its reliance on other oil producers. Additionally there is a government directive to increase overseas oil and gas assets.”
Sinopec also revised its first-quarter profit for 2008, Huang said today, without giving a figure. The company’s second-quarter profit rose at least 10-fold from 2.2 billion yuan a year earlier, calculated by subtracting the first-quarter profit the company reported in April last year from the unrevised earnings for the first six months of 2008.