Sinopec (386.HK) Remains Under Pressure Despite a Promising 3Q Result

Sinopec (386), an oil and gas company, announced that 3Q net income jumped to 46.2 billion yuan from 12.0 billion yuan in the prior-year period on revenue of 520.4 billion yuan, down 29% on year.

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Sinopec (386), an oil and gas company, announced that 3Q net income jumped to 46.2 billion yuan from 12.0 billion yuan in the prior-year period on revenue of 520.4 billion yuan, down 29% on year. Then, the stock bounces 1.3% after the 3Q result.

However, the stock dropped 35% YTD, while the Hang Seng Index was down around 10% YTD. It shows that the stock is at a very weak position. Besides, the WTI crude oil futures slumped 5.6% yesterday, reaching the 4-month low, on the soaring of coronavirus cases. The decline of oil prices would have a negative effect on the company as well.

From a technical point of view, the company is trading below the overlapping resistance level at HK$3.23 on a daily chart. Both 20-day and 50-day moving averages are still declining. As long as the resistance level at HK$3.23 is not broken, the stock could consider another down leg to the support levels at HK$2.95 and HK$2.70.

However, investors should be aware that the RSI is posting a bullish divergence signal. A break above HK$3.23 would trigger a rebound rebound to the next resistance levels at HK$3.43.


Source: GAIN Capital, TradingView

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