Morningstar: Raises China Petroleum & Chemical Corporation's fair value estimate to HK$5.7

SadMoneyMeow · 2026-03-24T18:15:50+00:00

Morningstar research shows that the fair value of China Petroleum & Chemical Corporation's H shares has been raised from HK$5.5 to HK$5.7, while A shares remain at RMB 5 yuan. Affected by falling oil prices and weak demand, Sinopec's 2025 net profit is expected to decline 34%. Despite Middle East conflicts driving oil prices higher, refining margins face pressure.

SadMoneyMeow

2026-03-24 18:15:50

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Morningstar releases a research report stating that after evaluating energy prices and profit forecasts, due to the appreciation of the RMB, the fair value estimate for China Petroleum & Chemical Corporation (00386) H-shares (without moat) has been raised by 3.6%, from HKD 5.5 to HKD 5.7. The valuation for A-shares remains unchanged at RMB 5.

The report states that, affected by falling oil prices, weak downstream demand, and impairment losses, Sinopec’s net profit in 2025 is expected to decline by 34% to RMB 32.5 billion. A dividend of RMB 0.2 per share implies a payout ratio of about 75%. Sinopec’s 2026 performance guidance indicates oil and gas production will grow by 0.2%, refinery throughput will remain flat, domestic refined oil sales will decrease by 4.3%, and ethylene production will increase by 3.4%, reflecting the impacts of aging oil fields and the transition to electric vehicles.

Due to the Middle East conflict, Brent crude oil prices have surpassed $100 per barrel. The bank expects Sinopec’s first-quarter performance to benefit from improved upstream profits and inventory growth. However, if supply disruptions persist, the bank believes refining margins will face downside risks. Sinopec also faces pressures from rising freight costs, regulation of refined oil prices, and potential export restrictions, although management has stated that current crude oil and refined oil inventories are sufficient to support normal operations.

(Responsible Editor: Wang Zhiqiang HF013)

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