Investment Rating - The report maintains a "Recommended" rating for Sinopec (600028.SH) [6] Core Views - The refining performance has improved, with a more than 10% increase in non-net profit for Q3 2025 compared to the previous quarter. However, the overall revenue and net profit for the first three quarters of 2025 have decreased year-on-year by 10.7% and 32.2%, respectively [1] - The oil and gas exploration and development segment saw a year-on-year decline in profits due to falling oil and gas prices, despite a slight increase in production [2] - The refining segment experienced a significant profit improvement due to increased aviation fuel production and strategic adjustments in product structure [3] - The marketing and distribution segment faced a decline in refined oil sales, but profits remained relatively stable [4] - The chemical segment reported increased operating losses due to low margins and continued release of new domestic capacities [4] - The report suggests that the "de-involution" trend in the petrochemical industry may enhance profitability in refining and chemical operations, with expected net profits for 2025-2027 being 38.006 billion, 41.397 billion, and 46.040 billion yuan, respectively [4][5] Summary by Sections Financial Performance - For Q3 2025, Sinopec reported a revenue of 704.39 billion yuan, a year-on-year decrease of 10.9% but a quarter-on-quarter increase of 4.6%. The net profit was 8.5 billion yuan, down 0.5% year-on-year but up 3.4% quarter-on-quarter [1] - The non-net profit for Q3 2025 was 9.34 billion yuan, showing a year-on-year increase of 11.4% and a quarter-on-quarter increase of 16.8% [1] Exploration and Development - In Q3 2025, the oil and gas equivalent production was 131.67 million barrels, a year-on-year increase of 2.5% but a slight decrease of 0.1% from the previous quarter. Brent crude oil prices averaged $68.19 per barrel, down 13.5% year-on-year [2] Refining - The production of aviation fuel increased significantly, contributing to a substantial profit turnaround in the refining segment, which reported an EBIT of 3.72 billion yuan, a year-on-year improvement [3] Marketing and Distribution - Total refined oil sales in Q3 2025 were 59.26 million tons, down 5.4% year-on-year but up 4.8% quarter-on-quarter. The segment achieved an EBIT of 3.42 billion yuan, showing a slight year-on-year increase [4] Chemical - The chemical segment's total operating volume was 23.6 million tons, with a year-on-year increase of 6.7%. However, it reported an operating loss of 4.13 billion yuan due to low margins [4] Investment Forecast - The report forecasts a decline in revenue for 2025, with expected figures of 2,480.83 billion yuan, and a net profit of 38.006 billion yuan, with EPS projected at 0.31 yuan per share [5][10]

Core Insights - The company reported a revenue of 753.11 billion yuan for Q1 2025, a year-on-year decrease of 7.3%, while net profit attributable to shareholders increased by 2.3% to 46.81 billion yuan [1] - The oil and gas business contributed to a slight increase in operating profit, which reached 65.18 billion yuan, up 0.8% year-on-year [1] Group 1: Oil and Gas Performance - The company achieved an oil and gas equivalent production of 46.7 million barrels, a year-on-year increase of 0.7%, with crude oil production at 24 million barrels, up 0.3% [2] - Natural gas production reached 13.613 billion cubic feet, a year-on-year increase of 1.2%, while the average selling price of natural gas decreased by 3.9% to 9.01 USD per thousand cubic feet [2] - The unit operating cost for oil and gas was 9.76 USD per barrel, down 6.0% year-on-year, indicating effective cost reduction [2] Group 2: Refining and Chemical Business - The company processed 33.7 million barrels of crude oil, a decrease of 4.7% year-on-year, with refined product output declining across gasoline, diesel, and kerosene [3] - The operating profit margin for refining and chemical business was 1.9%, down 0.7 percentage points year-on-year, reflecting reduced profitability [3] - The company is focusing on chemical transformation, with ethylene production remaining stable at 2.27 million tons, while synthetic resin and polymer production showed mixed results [3] Group 3: Shareholder Confidence - The controlling shareholder, China National Petroleum Corporation, plans to increase its stake in the company by investing between 2.8 billion and 5.6 billion yuan over the next 12 months, representing 0.2% to 0.4% of the company's total market value as of April 29, 2025 [4] Group 4: Investment Outlook - The company is positioned as a leading player in the domestic oil and gas sector, with rich upstream resources and a complete downstream supply chain [5] - Projected net profits for 2025 to 2027 are 143.13 billion, 154.33 billion, and 164.36 billion yuan, with corresponding EPS of 0.78, 0.84, and 0.90 yuan per share [5]