Zacks Investment Research downgraded shares of China Petroleum & Chemical Corporation (Sinopec) (SNP) from NEUTRAL to UNDERPERFORM on January 22, 2013, with a target price of $108.00.
We are downgrading our recommendation on Sinopec to Underperform from Neutral. Profits in the third quarter of 2012 registered a decline of 7.5%, owing to sluggish domestic economic growth. Moreover, increases in the price of international crude oil amidst government caps on fuel prices, prevented the company from fully passing on the spiraling costs to consumers. The company's operating income for the fuels marketing segment also decreased. We believe that Sinopec's matured domestic oil fields and associated rising costs will continue to be an overhang on its operations as natural declines become pricier to counterbalance. In view of these factors, we do not see any positive catalyst in the near term.
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