Guoxin Securities·2025-12-31 07:57Investment Rating - The investment rating for China Petroleum (601857.SH) is "Outperform the Market" (maintained) [2][3][10] Core Views - The group has demonstrated confidence by increasing its stake, with plans to invest between RMB 2.8 billion and RMB 5.6 billion in A-shares and H-shares. As of December 29, 2025, the group has cumulatively increased its holdings by 30 million A-shares and 11.896 million H-shares [4][5][7] - The company has a sulfur production capacity exceeding 3.5 million tons per year, and rising sulfur prices are expected to enhance performance. The average price of solid and liquid sulfur has increased by over 150% year-on-year, reaching RMB 3,750/ton and RMB 3,800/ton respectively [5][8] - The closure of overseas refineries, combined with domestic capacity control, positions the company as a leader in refining, ethylene, and aromatics, likely benefiting from the current market dynamics [6][9] Summary by Sections Stake Increase - China Petroleum Group announced plans to increase its stake in the company, with a total investment of RMB 2.8 billion to RMB 5.6 billion in A-shares and H-shares. As of December 29, 2025, the group has increased its holdings by 30 million A-shares and 11.896 million H-shares [4][5][7] Sulfur Production and Pricing - The company has a sulfur production capacity of over 3.5 million tons per year. Due to supply constraints from Russian refineries and strong demand from the phosphate fertilizer and acid production sectors, sulfur prices are expected to rise, significantly boosting profits. Current average prices for solid and liquid sulfur are RMB 3,750/ton and RMB 3,800/ton, with year-on-year increases exceeding 150% [5][8] Refining and Petrochemical Market - The national refining capacity has surpassed 1 billion tons per year, but the utilization rate has dropped to around 70%, indicating structural overcapacity of over 300 million tons. The company is expected to benefit from the strict control of new refining projects and the adjustment of production schedules for ethylene and paraxylene, as outlined in the "Petrochemical Industry Stabilization Growth Work Plan (2025-2026)" [6][9] Profit Forecast - The profit forecast for the company remains unchanged, with expected net profits for 2025-2027 at RMB 167.4 billion, RMB 170.9 billion, and RMB 174 billion respectively. The diluted EPS is projected to be RMB 0.91, RMB 0.93, and RMB 0.95 for the same period, with current A-share PE ratios of 11.2, 11.0, and 10.8 times [10]