China' Sinopec First-Quarter Profit Beats Forecast, Outlook Is Rosy

Top Asian oil refiner Sinopec beat forecasts with a more than two-fold jump in quarterly earnings as falling oil prices helped its refining arm turn around, and it flagged a 50% surge in first-half profit.

Now with oil prices likely to hold steady or even soften this year, investors foresee double-digit net profit growth for Sinopec in 2007. But its fortunes also hinge on whether Beijing allows it to charge more for refined products.

State-run Sinopec said this month it expected net profit to rise more than half in the first quarter -- but based on Chinese accounting standards -- after its refining arm returned to profits in the fourth quarter of 2006.

Global crude oil prices plunged to a 19-month low of $51 a barrel in January before rebounding to around $65 a barrel at the end of March.

Sinopec, which vies with PetroChina and CNOOC to supply the world's second largest oil market, said its net profit was 19.4 billion yuan ($2.5 billion) in the first three months versus a revised 9.55 billion yuan a year earlier. The result beat a forecast for 18 billion yuan, according to three analysts polled by Reuters.

A top economic planning official said last month China would adopt a cautious approach in reforming energy prices, to better suit international levels.

Sinopec, also China's second-largest oil and gas producer, pumped 2.3% more crude and 15.6% more natural gas in 2006. It processed 146.32 million tons of crude last year, up 4.6% from a year earlier.

Shares in Sinopec fell 8% in the January to March period, outperforming PetroChina's 16% fall but lagging CNOOC's 7% drop.

Sinopec trades at 9.5 times forecast earnings, cheaper than Exxon Mobil's 12.2 and BP's 11.