Sinopec to Remodel Convenience Stores Unit - Analyst Blog

Chinese oil and gas company, China Petroleum and Chemical Corporation SNP or Sinopec announced plans to establish a company to hold its convenience store assets.

The move comes as a major step to drive non-fuel sales across its extensive network of service stations.

The top Asian refiner is likely to institute a retail company to hold 23,000 convenience stores and other related assets at its more than 30,000 service stations across China.

The incorporation of the retail company by Sinopec shows the latter's determination to make its non-fuel business a more focused and market-oriented operation. In 2013, Sinopec recorded sales of 13.3 billion yuan ($2.15 billion) and possessed 23,000 convenience stores.

China's impressive economic growth has significantly increased its demand for oil, natural gas and chemicals. This growth momentum presents attractive opportunities for industry players that can meet the country's fast-growing energy needs. Being one of the two integrated oil companies in China, Sinopec is well positioned to capitalize on these favorable trends.

The company's natural gas business looks promising at present, with considerable growth potential for the coming years. Sinopec concentrates on building production capacity, improving operational organization and increasing natural gas output.

In its refinery business, the company strove to boost the production of refined oil products at a high utilization rate. This was done to ensure a steady supply to the market and fulfill its social responsibilities.

Sinopec currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the oil and gas industry worth considering include Helmerich & Payne, Inc. HP, Warren Resources Inc. WRES and Patterson-UTI Energy Inc. PTEN. All of these sport a Zacks Rank #1 (Strong Buy).