JPMorgan released a research report stating that Sinopec SEG (02386) will be re-included as a constituent stock of the Hang Seng Composite Index at the beginning of next month, indicating that it has met the preconditions for inclusion in the "Hong Kong Stock Connect". Therefore, it holds a more positive view on the midterm prospects and reiterates its "shareholding" rating, raising the target price from HKD 5.6 to HKD 6.6.
The report states that the company's new contract signings and backlog orders in the first half of the year have reached a new high of CNY 50 billion and CNY 157.8 billion respectively. The management emphasized a highly constructive view on the medium-term growth prospects of the market. However, due to the fact that the new contract signings will be more focused on overseas projects, the outlook for gross margin is relatively cautious.
