Core 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].

Investment Rating - The investment rating for the company is "Buy" with a target price not specified [8] Core Views - The company's performance in the first half of 2025 is significantly pressured by multiple factors, including a decline in oil prices, leading to a revenue drop of 10.6% year-on-year to 1,409.05 billion, and a net profit decrease of 39.8% to 21.48 billion [1] - The upstream segment's earnings are notably impacted by falling oil prices, with crude oil production down 0.3% year-on-year and an average price of $67 per barrel, a 12.9% decrease [2] - The downstream business faces short-term challenges due to reduced inventory profits from declining oil prices, with refining margins remaining stable at 315 yuan per ton, but segment earnings down 50.4% year-on-year [3] - The marketing segment is experiencing a significant decline in sales volume, with gasoline, diesel, and kerosene down 4.9%, 6.8%, and 8.4% respectively, leading to a revenue drop of 45.7% [4] - The company plans to reduce capital expenditures by approximately 5%, which is expected to benefit long-term profitability and cash flow [5] Financial Summary - The company's projected net profit for 2025 has been adjusted to 43.5 billion, down from previous estimates due to oil price pressures, with a price-to-earnings ratio forecasted at 16 [6][8] - The company’s revenue is expected to decline by 9% in 2025, with a gradual recovery projected in subsequent years [6] - The dividend yield for A shares is estimated at 4.3% for 2025, while H shares are projected at 6.2% [5]