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Citi ups Shanghai Pechem (00338) to HK$5.27
 Citi Research lifted its target price for
Sinopec Shanghai Petrochemical (SPC)(00338) to HK$5.27 from HK$4.1, and upgraded its 
rating to "buy" from "sell".
  The research house said the upgrade reflects softer-than-expected decline in chemical
spreads in 2018. While Citi still forecast a moderate decline in ethylene/PE spread on US
start-ups in 2018, the fall will unlikely be as severe as earlier expected due to the
China's import ban on recycled plastics and solid global demand.
  Citi believes SPC's 24% & 16% underperformance in 2017 versus HSI & HSCEI mostly prices
in the spread-related concerns; current valuation is attractive at 1.3x P/B versus 16% ROE
and dividend yield of 5.1% in 2018.
  It raised its EPS in 2017-19 by 15%/15%/13% factoring in the estimated inventory gain in
4Q 2017 and higher chemical margins in 2017-19.

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