--- title: "A Look At SINOPEC Engineering (Group) (SEHK:2386) Valuation After Major 2025 Contract Wins And Backlog Growth" type: "News" locale: "en" url: "https://longbridge.com/en/news/277486373.md" description: "SINOPEC Engineering (Group) (SEHK:2386) has gained attention after securing CN¥101.248b in new contracts for 2025 and an 18.1% increase in backlog to CN¥203.850b. The stock has shown a 1-month return of 6.72% and a 1-year total shareholder return of 43.34%. Currently trading at a P/E of 12.1x, it is slightly above the industry average, raising questions about its valuation. A DCF analysis suggests a fair value of HK$4.76 per share, indicating potential overvaluation at the current price of HK$7.94. Investors are advised to consider both growth prospects and risks." datetime: "2026-03-02T14:51:06.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/277486373.md) - [en](https://longbridge.com/en/news/277486373.md) - [zh-HK](https://longbridge.com/zh-HK/news/277486373.md) --- # A Look At SINOPEC Engineering (Group) (SEHK:2386) Valuation After Major 2025 Contract Wins And Backlog Growth SINOPEC Engineering (Group) (SEHK:2386) drew investor attention after reporting 2025 new contracts of CN¥101.248b and an 18.1% jump in backlog to CN¥203.850b, supported by recent coal conversion and Algerian refinery projects. See our latest analysis for SINOPEC Engineering (Group). The 1-month share price return of 6.72% and 7-day gain of 3.12% at a current share price of HK$7.94 suggest building momentum. The 1-year total shareholder return of 43.34% and 5-year total shareholder return of 184.04% indicate a strong longer term record as these new contracts come through. If these engineering contract wins have caught your attention, it could be a good moment to broaden your search and look at 23 power grid technology and infrastructure stocks as another infrastructure themed opportunity set. With the share price up over the past year and the stock trading slightly above the latest analyst target, the key question now is whether SINOPEC Engineering is still undervalued or whether the market has already fully reflected its future growth in the current price. ## Price-to-Earnings of 12.1x: Is it justified? On the numbers, SINOPEC Engineering is trading on a P/E of 12.1x, which sits slightly below the Hong Kong market at 12.6x but above its Construction peers at 11x and the peer average of 9.8x. The P/E multiple compares the current share price to earnings per share. It is essentially a shorthand for what investors are willing to pay for each unit of profit. For an EPC and construction type business where growth expectations are moderate, this is often a key reference point when weighing up whether the share price is stretching ahead of fundamentals. Here, the picture is mixed. The current 12.1x P/E is higher than both the Construction industry average of 11x and the peer average of 9.8x. It is also above the estimated fair P/E of 11.1x that our fair ratio work suggests the market could gravitate toward over time. That premium sits against forecasts for earnings growth of 8.23% per year, which are positive but slower than the wider Hong Kong market forecast of 12.4% and below the 20% threshold often viewed as high growth. Against its own history and sector, the recent earnings growth of 8.1% over the past year, ahead of its 5 year average of 1.3% and stronger than the Construction industry result of a 2.2% decline, may help explain why the market is prepared to pay a slightly higher multiple today. However, with forecast return on equity expected to remain in single digits at 9.1% in three years, and the current ROE at 7.9%, the valuation premium suggests investors are comfortable with modest profitability levels relative to the price. Explore the SWS fair ratio for SINOPEC Engineering (Group) **Result: Price-to-Earnings of 12.1x (OVERVALUED)** However, you also have to weigh contract concentration in large projects and the single digit forecast ROE; either factor could cap how much investors are willing to pay. Find out about the key risks to this SINOPEC Engineering (Group) narrative. ## Another View: DCF Points to a Different Story While the 12.1x P/E suggests only a modest premium, our DCF model is far less forgiving, with an estimated future cash flow value of HK$4.76 per share compared with the current HK$7.94 price. That gap raises a key question: are you paying for earnings that the cash flows do not fully support? Look into how the SWS DCF model arrives at its fair value. 2386 Discounted Cash Flow as at Mar 2026 Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out SINOPEC Engineering (Group) for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 230 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity. ## Next Steps Mixed signals on valuation and cash flows can feel unclear, so do not wait on others to decide for you; weigh both sides with 3 key rewards and 1 important warning sign. ## Looking for more investment ideas? If this has sharpened your thinking about valuation and risk, do not stop here. Widen your watchlist with focused stock ideas that fit different roles in your portfolio. - Lock in a shortlist of companies with pricing that still looks appealing by scanning our 230 high quality undervalued stocks and seeing which names stand out to you. - Strengthen the core of your holdings by reviewing our solid balance sheet and fundamentals stocks screener (374 results), focused on businesses with financial structures that may better handle tough conditions. - Get ahead of the crowd by browsing the screener containing 570 high quality undiscovered gems, where you can spot quality names that are not yet widely followed. _This article by Simply Wall St is general in nature. **We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice.** It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned._ ### **New:** Manage All Your Stock Portfolios in One Place We've created the **ultimate portfolio companion** for stock investors, **and it's free.** • Connect an unlimited number of Portfolios and see your total in one currency • Be alerted to new Warning Signs or Risks via email or mobile • Track the Fair Value of your stocks Try a Demo Portfolio for Free ### Related Stocks - [40221.HK](https://longbridge.com/en/quote/40221.HK.md) - [40521.HK](https://longbridge.com/en/quote/40521.HK.md) - [02386.HK](https://longbridge.com/en/quote/02386.HK.md) - [40522.HK](https://longbridge.com/en/quote/40522.HK.md) ## Related News & Research - [Sinopec Engineering Group (SEHK:2386) Margin Compression Challenges Bullish Earnings Growth Narrative](https://longbridge.com/en/news/279453544.md) - [SINOPEC Engineering lifts 2025 backlog on new China and Algeria contracts](https://longbridge.com/en/news/276951715.md) - [Kurita Opens New Engineering Center in Arizona to Enhance Lifecycle Support](https://longbridge.com/en/news/287110207.md) - [‘Chicken wine’ ad banned for implying alcohol is therapeutic](https://longbridge.com/en/news/287029011.md) - [Assessing BioMarin Pharmaceutical (BMRN) Valuation After Prolonged Share Price Weakness](https://longbridge.com/en/news/286895616.md)