China Petroleum & Chemical Corp. shares fell the most in 19 months in Hong Kong after saying it will sell a stake in its fuel-retailing business for 107 billion yuan ($17.5 billion), a price lower than analysts estimated.
The shares of Asia’s top refiner declined 5.5 percent to HK$7.35, the lowest since at least Feb. 5, 2013, as of the noon trading break in Hong Kong. The benchmark Hang Seng Index dropped 0.8 percent. Sinopec said the unit will sell a combined 29.99 percent stake to 25 investors including Fosun International Ltd., run by billionaire Guo Guangchang. China Life will buy 10 billion yuan of shares, while gas supplier ENN Energy Holdings Ltd. committed 4 billion yuan, Sinopec said in an exchange filing yesterday. A fund backed by Tencent Holdings Ltd., Asia’s biggest listed internet company, is investing 10 billion yuan, according to the filing.
The valuation at 14.3 times Sinopec’s 2013 price-to-earnings ratio is worse than the 18 times expected by analysts such as Thomas Wong at Credit Suisse Group AG. (CSGN). The investor mix is also heavily skewed toward financial investors, he was cited by Bloomberg as saying Monday.
The retail business is valued at about 7.2 times Sinopec’s estimated 2016 profit before interest, taxes, depreciation and amortization, said James Hubbard, head of Asia oil and gas research at Macquarie Group (MQG). That is below Macquarie’s valuation of 10 times profit.
