Core Viewpoint - China Petroleum & Chemical Corporation (Sinopec) faced pressure on its performance due to fluctuating oil prices, reporting a decline in both revenue and net profit for 2024 [1][2]. Financial Performance - In 2024, the company achieved operating revenue of 3,074.6 billion yuan, a decrease of 4% year-on-year, and a net profit attributable to shareholders of 50.3 billion yuan, down 17% year-on-year [1]. - For Q4 2024, operating revenue was 708.02 billion yuan, a decline of 4.6% year-on-year and 10.4% quarter-on-quarter, with a net profit of 6.07 billion yuan, down 19.1% year-on-year and 29% quarter-on-quarter [1]. - The upstream segment saw an increase in profit, with exploration and development profits reaching 49.1 billion yuan, an increase of 29% year-on-year [1]. Price and Volume Metrics - The average oil price in 2024 was $72.5 per barrel, a decrease of 1.7% year-on-year, while the gas price increased from 1.78 yuan per cubic meter to 1.80 yuan, up 1.5% year-on-year [1]. - The total oil and gas equivalent production was 515 million barrels, an increase of 2.2% year-on-year, exceeding the 2024 target of 1% growth [1]. Downstream Performance - The refining segment reported an operating profit of 6.3 billion yuan, down 67% year-on-year, primarily due to falling refined oil prices and reduced diesel sales [2]. - The chemical segment experienced an operating loss of 14 billion yuan, worsening by 38% year-on-year [2]. - The marketing and distribution segment's profit decreased by 31% year-on-year to 17.7 billion yuan, attributed to weak diesel consumption and the rise of electric vehicles [2]. Shareholder Returns - The company declared a total cash dividend of 36.9 billion yuan for 2024, with a payout ratio of approximately 73%, resulting in a dividend per share of 0.286 yuan [2]. - The A-share dividend yield was 5.3%, while the H-share pre-tax dividend yield was 8.1%, translating to a post-tax yield of 6.4% [2]. Profit Forecast and Investment Rating - The net profit forecasts for 2025 and 2026 have been adjusted to 54.6 billion yuan and 60.3 billion yuan, respectively, with a new estimate for 2027 at 65.5 billion yuan [3]. - The corresponding price-to-earnings ratios for A-shares are projected at 12.8, 11.6, and 10.7 times for 2025, 2026, and 2027, respectively, while H-shares are projected at 9.1, 8.2, and 7.6 times [3]. - The company maintains a "buy" rating, anticipating a recovery in downstream refining profitability and leveraging its integrated refining and chemical industry advantages [3].

Investment Rating - The report maintains a "Buy" rating for both A and H shares of Sinopec [1] Core Views - The company's performance is under pressure due to fluctuating oil prices, but it continues to provide high dividends to shareholders [1] - The report adjusts the forecast for net profit for 2025 and 2026 to 546 billion and 603 billion RMB respectively, with a new estimate for 2027 at 655 billion RMB [7] - The report highlights the integrated advantages of Sinopec's refining and chemical sectors, expecting profitability to improve as oil prices stabilize [7] Financial Performance Summary - Total revenue for 2023 is projected at 3,212.215 billion RMB, with a year-on-year decrease of 3.19% [1] - Net profit attributable to shareholders for 2023 is estimated at 60.463 billion RMB, reflecting a year-on-year decline of 9.87% [1] - The latest diluted EPS is forecasted at 0.50 RMB for 2023, decreasing to 0.41 RMB in 2024, before gradually increasing to 0.54 RMB by 2027 [1] - The P/E ratio for A shares is projected to be 11.57 for 2023, increasing to 13.91 in 2024, and then decreasing to 10.69 by 2027 [1] Segment Performance Summary - Upstream exploration and development profits increased by 29% year-on-year to 49.1 billion RMB in 2024, driven by stable oil and gas prices [7] - The refining segment reported a significant profit decline of 67% year-on-year to 6.3 billion RMB in 2024, primarily due to falling product prices and reduced diesel sales [7] - The marketing and distribution segment's profit decreased by 31% year-on-year to 17.7 billion RMB in 2024, attributed to weak diesel consumption and the rise of electric vehicles [7] Dividend Policy - The company plans to distribute a total cash dividend of 369 billion RMB for 2024, with a payout ratio of approximately 73% [7] - The projected dividend per share is 0.286 RMB, resulting in a dividend yield of 5.3% for A shares and 6.4% for H shares after tax [7]