Zheng Quan Zhi Xing·2025-08-22 11:10Core Viewpoint - The report indicates that China Petroleum & Chemical Corporation (Sinopec) is facing significant pressure on its performance due to declining oil prices, leading to a recommendation of a "buy" rating for the company [1]. Financial Performance - In the first half of 2025, Sinopec achieved revenue of 1,409.05 billion, a year-on-year decrease of 10.6%, and a net profit attributable to shareholders of 21.48 billion, down 39.8%, primarily due to lower oil prices, reduced inventory profits, and declining sales and price spreads of gasoline and diesel [2]. - The upstream segment's operating income was 23.6 billion, a decrease of 5.5 billion year-on-year, with crude oil production down 0.3% and natural gas production up 5.1% [3]. Downstream Business - The downstream business faced short-term pressure from falling oil prices, resulting in reduced inventory profits. Crude oil processing volume decreased by 5% year-on-year, with gasoline and diesel sales down 4% and 16.8%, respectively [4]. - The marketing segment's sales of refined oil products showed significant declines, with gasoline, diesel, and kerosene sales down 4.9%, 6.8%, and 8.4%, respectively, leading to a marketing segment income of 8 billion, down 67 billion year-on-year [5]. Capital Expenditure and Future Outlook - Sinopec plans to reduce its annual capital expenditure by approximately 5%, which may benefit long-term profitability and cash flow. In the first half of 2025, capital expenditure was 43.8 billion, a decrease of 14% year-on-year [6]. - The profit forecast for 2025-2027 has been adjusted due to downward pressure from oil prices, with expected net profits of 43.5 billion, 53.6 billion, and 64.1 billion for the respective years [6]. Analyst Ratings - Over the past 90 days, five institutions have provided ratings for Sinopec, with four recommending a "buy" and one recommending "hold." The average target price from institutions is 6.72 [8].