Sinopec Shanghai Petrochemical Company Limited: history, ownership, mission, how it works & makes money

A Brief History of Sinopec Shanghai Petrochemical Company Limited

Sinopec Shanghai Petrochemical Company Limited (SSP) was founded in 1973 as a state-owned enterprise and is a subsidiary of Sinopec Limited, one of the largest oil and gas companies in the world. The company is based in Shanghai and engages in the refining and producing of petrochemical products.

In 1993, Sinopec Shanghai Petrochemical Company Limited was officially listed on the Shanghai Stock Exchange, with an initial public offering (IPO) of approximately ¥1.7 billion. This move marked significant growth and opened new capital channels for the company.

By 2001, Sinopec became the largest integrated petrochemical company in China, producing a range of products including ethylene, gasoline, diesel, and various chemical components. In the same year, the company reported a total revenue of approximately ¥77.8 billion.

Notably, in 2010, Sinopec Shanghai Petrochemical completed a major expansion project, increasing its ethylene production capacity to 1 million tons per year. This expansion was part of a strategy to enhance production efficiency and meet growing domestic and international demand.

As of 2021, Sinopec Shanghai Petrochemical recorded revenue of approximately ¥133.3 billion, with a net profit of ¥5.3 billion. The company produced around 1.15 million tons of ethylene and 8.8 million tons of refined oil products.

In 2023, the company continued its focus on sustainable practices, particularly in reducing carbon emissions and enhancing environmental safety. SSP has invested heavily in R&D, allocating around 5% of its annual revenue towards innovative technologies in petrochemical production.

The global and domestic market trends have significantly influenced Sinopec Shanghai Petrochemical’s operational strategies. Fluctuations in crude oil prices have impacted profitability, with average Brent crude prices reaching approximately $68.5 per barrel in early 2023.

As part of its future strategy, Sinopec Shanghai Petrochemical aims to increase its renewable energy investments, targeting 10% of its total investments by 2025. This strategic shift reflects the company's commitment to adapting to the energy transition and aligning with global sustainability goals.

A Who Owns Sinopec Shanghai Petrochemical Company Limited

Sinopec Shanghai Petrochemical Company Limited, a major player in the petrochemical industry, is primarily owned by China Petroleum & Chemical Corporation (Sinopec Corp), which holds a significant stake in the company. As of the last available data in 2023, Sinopec Corp owns approximately 67.66% of the total issued shares of Sinopec Shanghai Petrochemical.

The ownership structure is further detailed as follows:

As a publicly traded company listed on the Shanghai Stock Exchange, shares of Sinopec Shanghai Petrochemical are available to institutional and retail investors. The company has a market capitalization of approximately ¥70.45 billion (around $10.5 billion) as of October 2023.

The company primarily engages in the refining and production of petrochemical products, which contributes substantially to its revenue and assets. For the fiscal year 2022, Sinopec Shanghai Petrochemical reported total revenue of ¥102.18 billion (approximately $15.2 billion), showing a year-over-year increase of 8.5%.

In terms of financial performance, the company recorded a net profit of ¥5.6 billion (around $840 million) for the same fiscal year, representing a margin of approximately 5.5%. The earnings per share (EPS) stood at ¥0.73, indicating strong profitability relative to its share price.

Moreover, Sinopec Shanghai Petrochemical maintains a robust asset base, with total assets valued at around ¥143 billion (approximately $21.5 billion) as of 2022. This establishes a competitive position within the industry, underscored by a current ratio of 1.5, indicating good short-term financial health.

Institutional investors also play a critical role in the ownership landscape. Key institutional stakeholders include various investment firms and mutual funds, holding a combined percentage of approximately 15% of the public float. These firms include:

• China Life Insurance Company
• National Social Security Fund
• BlackRock Fund Advisors
• HSBC Global Asset Management

Understanding the ownership dynamics of Sinopec Shanghai Petrochemical Company Limited reveals its strong backing from Sinopec Corp, which enhances operational stability and strategic direction in the highly competitive petrochemical sector.

Sinopec Shanghai Petrochemical Company Limited Mission Statement

Sinopec Shanghai Petrochemical Company Limited (SSPC) operates with a mission statement focused on providing quality petrochemical products while adhering to sustainable development principles. The company emphasizes its commitment to innovation, environmental protection, and customer satisfaction.

According to the latest available data, SSPC aims to increase its production capacity while reducing its environmental footprint. For 2022, Sinopec Shanghai Petrochemical reported a total revenue of approximately RMB 85.49 billion, demonstrating a growth from previous years.

The company has outlined its strategic goals, which include:

• Enhancing product quality through technological innovation.
• Expanding market share in both domestic and international markets.
• Actively participating in sustainable development initiatives.
• Improving operational efficiency and safety standards across all facilities.

In alignment with its mission, SSPC has invested in green technologies, with a reported investment of RMB 1.5 billion in environmental protection initiatives in 2022. This includes upgrading facilities to minimize carbon emissions and increasing energy efficiency.

The company's ongoing commitment to corporate social responsibility underlines its mission. In 2023, Sinopec Shanghai Petrochemical aims to engage in more community development projects, allocating approximately RMB 200 million for social initiatives.

Additionally, Sinopec Shanghai Petrochemical is focused on enhancing customer experience by implementing advanced digital solutions to streamline operations and improve service delivery. The digital transformation plan includes a budget allocation of RMB 500 million over the next three years.

How Sinopec Shanghai Petrochemical Company Limited Works

Sinopec Shanghai Petrochemical Company Limited (SSPC) operates as a subsidiary of China Petroleum & Chemical Corporation (Sinopec). The company is primarily involved in the production and distribution of petrochemical products, including fuels, chemicals, and synthetic fibers.

As of 2022, Sinopec Shanghai Petrochemical reported revenue of approximately RMB 102.7 billion, representing a growth of 15.3% compared to the previous year. The company’s net profit attributable to shareholders for the same year was around RMB 6.5 billion, up from RMB 5.9 billion in 2021.

SSPC's operations can be categorized into several key segments, including:

• Refining
• Petrochemicals
• Chemical Fiber

The refining segment accounts for the largest share of SSPC's revenue, driven by the production of gasoline, diesel, and other fuel products. In 2022, the refining volume was approximately 14 million tons, with an average refining margin of RMB 368 per ton.

In the petrochemical segment, SSPC produced around 3.3 million tons of petrochemical products, including ethylene, propylene, and polyethylene. The company's production of ethylene reached 1.4 million tons, with an operating rate of 93%.

SSPC's chemical fiber segment produced approximately 800,000 tons of polyester fiber. The segment has benefitted from increasing demand in the textile industry, leading to a revenue increase of 20% year-over-year.

SSPC has implemented advanced technologies in its operations, focusing on energy efficiency and reducing environmental impact. The company has invested in renewable energy initiatives and aims to achieve a carbon neutrality target by 2050.

In 2022, volatility in crude oil prices affected the company's operational costs, with average crude oil prices fluctuating between USD 70 and USD 90 per barrel. The company has also faced increased competition from both domestic and international players, prompting a focus on cost management and operational efficiencies.

Market trends indicate a growing demand for petrochemical products, driven by sectors such as automotive, construction, and consumer goods. The global petrochemical market is projected to grow at a CAGR of 5.5% from 2022 to 2030, which aligns with Sinopec's strategic initiatives to expand its production capacity.

Overall, Sinopec Shanghai Petrochemical Company Limited operates within a dynamic environment marked by fluctuations in commodity prices, evolving market demands, and regulatory considerations. The company's robust operational framework and strategic investments position it well to navigate challenges and capitalize on growth opportunities in the petrochemical industry.

How Sinopec Shanghai Petrochemical Company Limited Makes Money

Sinopec Shanghai Petrochemical Company Limited (SSP) operates primarily in the petrochemical industry, generating revenue through the production and sale of a diverse range of petrochemical products. The company's revenue streams can be broken down into several key segments: refining, petrochemicals, and other operations.

Revenue Overview

For the year 2022, Sinopec Shanghai Petrochemical reported total revenues of approximately RMB 132.04 billion, reflecting a year-on-year increase of 7.8% from 2021. The net profit attributable to shareholders was reported at RMB 5.46 billion.

Segmentation of Revenue

SSP's revenue is mainly derived from the following segments:

• Refining Operations
• Petrochemical Products
• Other Operations (includes trading and logistics)

Refining Operations

The refining segment is a significant revenue contributor. As of 2022, refining accounted for approximately 63% of total revenue. The company's crude oil processing capacity reached approximately 12 million tons annually.

Petrochemical Products

Petrochemical products constitute the second major revenue source. This includes the production of synthetic resins, polyethylene, and other derivatives. In 2022, revenue from petrochemical operations was around RMB 40 billion, representing a growth of 10% from the previous year.

Other Operations

This segment includes trading and logistics services, contributing approximately 10% to total revenue. Revenue from other operations stood at about RMB 13.2 billion in 2022, growing 5% from 2021.

Cost Structure

In 2022, Sinopec Shanghai Petrochemical reported a gross profit margin of 8.5%, indicating a recovery from the previous year due to favorable crude oil prices and operational efficiencies. The operating expenses were approximately RMB 8 billion.

Market Conditions

The performance of SSP is heavily influenced by global oil prices. In 2022, average crude oil prices were approximately USD 85 per barrel, compared to USD 70 in 2021. This increase in oil prices contributed to a higher revenue generation capacity for refining operations.

Table: Revenue Breakdown by Segment (2022)

Future Outlook

Looking forward, Sinopec Shanghai Petrochemical is expected to enhance its revenue streams through technological advancements and expansion in petrochemical production capabilities. The company aims to increase its refining throughput by 5% annually, with a focus on optimizing product mix to meet market demands.