(Yicai) Aug. 26 -- China Petroleum & Chemical Corporation, also known as Sinopec, plans to repurchase as much as CNY1.5 billion (USD210.7 million) worth of shares listed in Shanghai, in a move designed to shore up the company’s share price, even though the Chinese state-owned oil major’s stock price is close to a 16-year high.

Sinopec intends to buy back between CNY800 million (USD112.4 million) and CNY1.5 billion of its Shanghai-listed shares over the next three months through a call auction, the Beijing-based firm said on Aug. 23. The maximum price it will pay is CNY9.81 (USD1.40) per share. All repurchased shares will subsequently be written off.

This would amount to between 81.5 million and 152.9 million shares which is equivalent to between 0.07 percent and 0.13 percent of Sinopec’s total share capital, it added.

Sinopec’s stock price has gained 39 percent in value so far this year since sinking to a low in January and is now around the highest it has been since January 2009. In Hong Kong, the stock has gained 51 percent in value during the same period.

The strong performance, against the backdrop of a sluggish stock market, is largely due to its previously low valuation, rising global energy prices and its recent popularity among institutional investors who seek safety in a turbulent market.

However, the company still wants to buy back shares, as it believes the price is still below its real value.

Sinopec has taken into consideration many factors including the company’s financial situation, future development as well its reasonable valuation, it said.

Sinopec’s net profit climbed 1.6 percent in the six months ended June 30 from a year earlier to CNY35.7 billion (USD4.6 billion), while revenue dipped 1.1 percent to CNY1.5 trillion (USD202.1 billion), according to the firm’s latest semi-annual report also released yesterday.

Sinopec is issuing CNY17.8 billion (USD2.5 billion) of cash dividends for the period, which works out at CNY0.14 (USD0.02) gross per share.

Sinopec’s oil and gas equivalent output climbed 3.1 percent in the first half from a year ago to 257.7 million barrels, according to the report. 

Domestic output of oil and gas equipment hit new records for the period. Domestic output of crude oil edged up 1.5 percent to 126.5 million barrels and that of natural gas jumped 6 percent to 700.6 billion cubic feet.

In the second half, Sinopec plans to produce 139 million barrels of crude oil, 679.5 billion cubic feet of natural gas and 6.85 million tons of ethylene, as well as process 126 million tons of crude oil, the report said.

Sinopec’s stock [SHA:600028] closed up 1.03 percent at CNY6.89 (USD0.96) in Shanghai today and its Hong Kong-traded shares [HKG:0386] advanced 1.1 percent to close at HKD5.16 (USD0.66).

Editor: Kim Taylor