Sinopec Shanghai Petrochemical Co Ltd (SPTJF)

Price$0.1500Cached quoteAs of 2026-09-05 12:16 UTC

AI: Fair-priced

Price checkThe shares look cheap on book value, but weak cash conversion makes the discount less compelling.

The latest OTC trade is several days old, which matters because this line is thinly traded; the Hong Kong H-share provides a useful cross-check. Stockopedia recently placed the H-share near 0.46 times book value, a large apparent discount. Yet first-half 2026 profit of about RMB300 million annualizes to only a low-single-digit return on roughly RMB23.4 billion of parent equity. A low-return, capital-heavy refiner can rationally trade below book, so the discount alone does not support an undervalued verdict. StockAnalysis.com+2Stockopedia+2

Big pictureEarnings have recovered, but a long history of boom-and-bust profits still dominates the valuation.

The supplied SEC history shows the cycle clearly: net income fell from RMB6.15 billion in 2017 to a RMB2.84 billion loss in 2022, while operating cash flow swung from RMB7.06 billion to negative RMB7.46 billion. The pattern persisted: 2025 produced a RMB1.43 billion loss under Chinese standards, while first-half 2026 returned to roughly RMB300 million profit on slightly lower revenue. That rebound is meaningful, but one profitable half does not yet prove durable mid-cycle earnings. hkexnews.hk+1

Business strengthThe balance sheet still provides protection, though rising debt and negative first-half cash flow reduce that cushion.

At June 2026, cash and cash equivalents were about RMB7.09 billion against RMB3.88 billion of borrowings, and parent equity was about RMB23.4 billion, so leverage is not the main immediate risk. The problem is cash durability: operating activities used about RMB0.84 billion in the half, while purchases of property and long-lived assets consumed about RMB1.54 billion. That implies roughly RMB2.4 billion of negative free cash flow—cash left after running and investing in the business—before financing. stock.stockstar.com+1

What could change the storySustained cash profits would unlock the book-value discount; another heavy investment cycle could erase it.

Management estimated about RMB6 billion of 2026 capital spending, large beside current earnings. In 2025 it repurchased 77.24 million H shares for HK$91.3 million, modestly reducing share count, but suspended the final dividend after the loss; no repurchase cash appeared in first-half 2026. The bull case needs two or more reporting periods of positive post-investment cash flow and return on equity—profit earned on shareholder capital—above roughly 5%. The bear case is continued spending funded by shrinking cash or higher debt while profits stay thin. hkexnews.hk+2hkexnews.hk+2

AI: News

Profit turnaround confirmedFirst-half profit returned despite slightly lower revenue, but operating cash flow remained negative.

On August 19, the company reported roughly RMB300 million of first-half net profit versus a RMB462 million loss a year earlier, while revenue slipped about 1%. The earnings reversal supports the recovery case, but operating activities still used roughly RMB0.84 billion of cash. That gap matters because accounting profit without matching cash is less durable, especially with heavy investment needs. The result was positive fundamentally, though it did not remove the cash-conversion concern. MarketScreener+1

Profit warning reactionA forecast return to profit failed to lift sentiment, showing investors were already demanding stronger evidence.

On July 14 the company guided to RMB234 million-RMB351 million of first-half net profit, versus a prior-year loss. The next day its Hong Kong shares were reported about 4% lower. Timing alone cannot prove the warning caused the decline; the reaction may instead reflect expectations already embedded in the price, concerns about cash flow, or broader trading conditions. The later result landed near the middle of the guided range, confirming the turnaround but not a large earnings surprise. MarketScreener+2MarketScreener España+2

Carbon-fiber hype cooledA sharp rally around advanced carbon fiber faded after the company said near-term earnings impact was small.

Across June 2-4, the A-shares’ cumulative closing-price deviation exceeded 20%, triggering an abnormal-volatility announcement. The company specifically addressed attention around its T1000-grade 12K carbon fiber and said that batch had generated no sales yet; expected future sales and profit contribution were low relative to the group. That clarification directly weakened a speculative growth narrative, although it did not rule out longer-term value if high-performance materials scale later. Cninfo

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Financial statements

	2025	2024	2023	2022	2021	2020	2019	2018	2017	2016	2015
Revenue	¥75.56B	¥87.13B	¥93.01B	¥82.44B	¥89.20B	¥74.62B	¥100.27B	¥107.69B	¥91.96B	¥77.84B	¥80.75B
Gross profit	¥11.98B	¥15.09B	¥13.86B	−¥3.61B	¥1.59B	−¥340.2M	¥1.59B	¥5.77B	¥6.82B	¥7.20B	¥4.28B
Gross margin	15.85%	17.32%	14.90%	−4.38%	1.78%	−0.46%	1.58%	5.36%	7.42%	9.26%	5.30%
Research & development	¥214.8M	¥174.0M	¥187.0M	¥130.5M	—	—	—	—	—	—	—
Operating expenses	¥13.40B	¥14.72B	¥15.15B	¥232.0M	¥158.5M	¥126.0M	¥267.2M	¥189.4M	¥418.2M	¥426.9M	¥371.2M
Operating income	−¥1.42B	¥363.4M	−¥1.29B	−¥3.84B	¥1.43B	−¥466.2M	¥1.32B	¥5.59B	¥6.40B	¥6.78B	¥3.91B
Operating margin	−1.88%	0.42%	−1.39%	−4.66%	1.61%	−0.62%	1.32%	5.19%	6.96%	8.71%	4.84%
EBITDA	¥361.3M	¥2.37B	¥167.7M	−¥2.03B	¥3.40B	¥1.36B	¥3.16B	¥7.39B	¥8.24B	¥8.66B	¥5.95B
EBITDA margin	0.48%	2.72%	0.18%	−2.46%	3.81%	1.82%	3.15%	6.86%	8.96%	11.13%	7.37%
Net income	−¥1.43B	¥316.5M	−¥1.41B	−¥2.84B	¥2.08B	¥656.4M	¥2.23B	¥5.34B	¥6.15B	¥5.98B	¥3.31B
Net profit margin	−1.90%	0.36%	−1.51%	−3.45%	2.33%	0.88%	2.22%	4.96%	6.69%	7.68%	4.10%
Basic EPSper basic share	-CN¥0.14	CN¥0.03	-CN¥0.13	-CN¥0.26	CN¥0.19	CN¥0.06	CN¥0.21	CN¥0.49	CN¥0.57	CN¥0.55	CN¥0.30
Diluted EPSper diluted share	-CN¥0.14	CN¥0.03	-CN¥0.13	-CN¥0.26	CN¥0.19	CN¥0.06	CN¥0.21	CN¥0.49	CN¥0.57	CN¥0.55	CN¥0.30