Sinopec Kantons Holdings Limited (“Sinopec Kantons” or the “Company”; stock code: 0934) announced the audited annual results of the Company and its subsidiaries (collectively known as the “Group”) for the twelve months ended 31December 2023 (the “Reporting Period”).

In 2023, the Group adhered to the established development strategy and intensified efforts to explore development opportunities. It successfully expanded the core businesses of naphtha uploading and vessels chartering and logistics to drive the sustainable development. Meanwhile, it enhanced risk control and reinforced delicacy management to rein in costs. Significant achievements were made in this regard.

Revenue for the Reporting Period slightly decreased by 1% year-on-year to approximately HK$610 million. Benefiting from remarkable improvement in the results of its joint ventures and associates, profit attributable to equity holders of the Company surged nearly twofold to approximately HK$1.299 billion. Taking into account the Group’s cash flow and future development needs, the Board recommended the payment of a final cash dividend for 2023 of HK15 cents per share. Together with the interim cash dividend of HK10 cents per share, the total cash dividend for the year amounts to HK25 cents per share, up 25% from a year ago.

Summary of Financial Data:

The significant profit growth for the Reporting Period is mainly attributable to the following reasons: Fujairah Oil Terminal FZC in the Middle East (“FOT”) and Vesta Terminal B.V. in Europe (“Vesta”), the Company’s joint ventures, captured the favorable conditions of global oil storage industry to boost its profitability, leading to a remarkable growth in their investment return. Meanwhile, the Group’s finance income soared from a year ago on strengthened cash management.

Expansion of naphtha operation to create new profit growth driver: During the Reporting Period, Huade Petrochemical Co., Ltd. (“Huade Petrochemical”) in Huizhou Daya Bay, a wholly-owned subsidiary of the Company, posted the segment results of approximately HK$215 million, down approximately 56.5% year-on-year. The decrease was mainly attributable to a higher comparison base of 2022 resulting from the one-off gain generated from the exchange of submarine pipelines by Huade Petrochemical. In the Reporting Period, Huade Petrochemical stabilized the existing operations and vigorously pushed for market development. While fully utilizing the surplus capacity of existing terminal to provide customers with naphtha uploading services, it drove the upgrading and transformation of jetty facilities, whereby laying a solid foundation for bolstering its revenue in the future.

Continual optimization of cost management to stabilize operating results: The Six Domestic Terminal Companies under the Company beefed up safety management and actively coordinated the operation of terminals, storage area and refinery production to persistently enhance the efficiency of crude oil uploading services. Besides, they continued to optimize the management of various costs to stabilize their operating results. During the Reporting Period, the Six Domestic Terminal Companies handled an aggregate terminal throughput of approximately 209 million tonnes, down nearly 0.5% year-on-year. They generated an investment return of approximately HK$780 million for the Company, down nearly 2.1% from a year ago.

Capturing favorable market conditions to enhance profitability: FOT and Vesta captured the favorable market conditions to boost the tank occupancy rates and rental levels, resulting in remarkable improvement of their operating results. They generated investment returns of approximately HK$105 million and HK$12.08 million respectively for the Company in 2023. As the operating environment for Vesta Terminal Tallinn (“VTT”), a company under Vesta in Estonia, continued to deteriorate due to geopolitical conflicts, Vesta disposed of its entire interests in VTT at the end of last year. Meanwhile, FOT is constructing a pipeline network connecting the storage area to the very large crude carrier (“VLCC”) terminal at the port. The network is scheduled to commence operation in the first half of 2024 and is poised to become a driver for FOT’s future revenue and profit growth. As for Vesta, it will actively promote green energy transition and continuously improve its operating results.

Driving new business expansion to ramp up LNG handling capacity: In 2023, the Group announced further capital injection into China Energy Shipping Investment Co., Ltd. (“CESI”) for design, construction, procurement and operation of three liquefied natural gas (“LNG”) vessels, which will be leased to China Petroleum & Chemical Corporation (“Sinopec Corp.”) on a long-term basis to meet its LNG transportation needs. During the Reporting Period, the eight LNG vessels under the Group completed a total of 96 voyages, generating an investment return of approximately HK$79.02 million for the Company, down approximately 31.9% year-on-year mainly due to the equipment failure of one LNG vessel at the end of the year and hence resulting in additional tugboat leasing costs, related off-hire losses and incident investigation fees.

Future outlook: Looking ahead to 2024, the global economy is expected to remain sluggish. The monetary tightening cycles will sustain in conjunction with escalating risks from geopolitical tensions and election turmoil, resulting in increasing uncertainty in the market. Meanwhile, domestic economy is expected to stay on the road to recovery. As the market demand remains weak, some underlying difficulties and challenges have to be overcome to keep the economy on the uptrend. The Board will earnestly implement the high-quality development principle, carry out meticulous evaluation and conduct scientific planning. Enhanced efforts will be made to control various risks, expand core businesses and explore business transformation, thereby achieving the Group’s annual production and operational targets and continuing to create value for the shareholders.

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About Sinopec Kantons

Sinopec Kantons is the sole red-chip listed subsidiary of China Petroleum & Chemical Corporation (“Sinopec”, stock code: 0386). It is principally engaged in crude oil loading and unloading, the operation of storage and transportation facilities and LNG shipping. The Company is committed to becoming “A World-class International Petrochemical Storage & Logistics Company”. Currently, Sinopec Kantons holds seven wholly-owned or jointly-held domestic terminal companies. They include Huade Petrochemical (a wholly-owned subsidiary), Caofeidian Shihua (a 90%-owned joint venture) and five 50%-owned joint ventures or associate (Zhan Jiang Port Petrochemical, Qingdao Shihua, Ningbo Shihua, Rizhao Shihua and Tianjin Port Shihua). The Company is also engaged in overseas petrochemical storage business, namely Vesta in Europe and FOT in the Middle East. It operates eight LNG vessels through two LNG shipping operating entities it owns.

Disclaimer

This press release includes “forward-looking statements”. All statements, other than statements of historical facts that address activities, events or developments that the Group expects or anticipates will or may occur in the future (including but not limited to projections, targets, other estimates and business plans) are forward-looking statements. The Group’s actual results or developments may differ materially from those indicated by these forward-looking statements as a result of various factors and uncertainties, including but not limited to the price fluctuation, possible changes in actual demand, foreign exchange rate, market shares, competition, environmental risks, possible changes to laws, finance and regulations, conditions of the global economy and financial markets, political risks, possible delay of projects, government approval of projects, cost estimates and other factors beyond the Group’s control. In addition, the Group makes the forward-looking statements referred to herein as of today and undertakes no obligation to update these statements.