Everbright Securities has released a research report stating that the settlement of earlier overseas projects has impacted the company's performance. The firm has lowered its profit forecasts for SINOPEC SEG (02386) for 2026 and 2027, while adding a profit forecast for 2028. It is estimated that the company's net profit attributable to shareholders for 2026-2028 will be RMB 2.355 billion (down 15%), RMB 2.566 billion (down 12%), and RMB 2.831 billion, respectively. The corresponding earnings per share (EPS) are projected to be RMB 0.54, RMB 0.58, and RMB 0.64 per share. Backed by the resource advantages of the SINOPEC Group, the company continues to expand its domestic and international markets, with its performance expected to sustain growth. Against the backdrop of state-owned enterprise reform, the company's low valuation and high dividend value are becoming increasingly prominent. The brokerage maintains its "Buy" rating on the company.
The main views of Everbright Securities are as follows:
The company released its 2025 annual report. In 2025, the company achieved operating revenue of RMB 70.074 billion, a year-on-year increase of 9.15%, and a net profit attributable to shareholders of RMB 1.798 billion, a year-on-year decrease of 27.09%.
Revenue saw steady growth in 2025, but performance was dragged down by overseas subcontracting projects. In 2025, the transformation, upgrading, and structural adjustment of China's energy and chemical industry progressed in tandem, with the industrial chain continuing to move towards higher-end and more specialized segments. The accelerated implementation of oil-to-chemicals and oil-to-specialties projects, coupled with sustained demand for high-end chemical materials, solidly supported the company's domestic business foundation. Leveraging their resource and capital advantages, the Middle East Gulf region maintained the expansion of oil, gas, and downstream refining and chemical capacity, presenting global market opportunities. While the company's operating revenue increased by 9.15% year-on-year, its net profit attributable to shareholders fell by 27.09%. The gross profit margin was 7.4%, down 0.9 percentage points year-on-year. Overseas construction subcontracts signed in 2020-2021 negatively impacted the company's overall gross margin and net profit. Affected by the progress and profitability of the construction contract for the sulfur recovery unit (Package P10) of the Saudi Marjan oil and gas production increase and expansion project and the construction contract for the Saudi Berri oil field oil and gas treatment project falling short of expectations, the construction segment's gross profit in 2025 was RMB 200 million, a decrease of RMB 1.1 billion year-on-year, with a gross margin of 0.8%, down 4 percentage points year-on-year.
The value of newly signed contracts demonstrated robust growth, and the proportion of contracts from within the SINOPEC Group rebounded. In 2025, the company secured domestic new contracts worth RMB 63.2 billion, up 2% year-on-year, and overseas new contracts worth RMB 38 billion, down 1.3% year-on-year. Overseas contracts accounted for 38% of the company's newly signed contracts. With the sequential launch of chemical transformation projects such as Luoyang Ethylene and Maoming Ethylene under China Petroleum & Chemical Corporation (SINOPEC), the value of new contracts secured from the SINOPEC Group and its affiliates reached RMB 55.4 billion, accounting for 55% of the total, a 46% increase year-on-year. New contracts from the external market amounted to RMB 45.8 billion, a decrease of 27% year-on-year, indicating a rising proportion of internal contracts.
New opportunities are emerging in domestic and international markets, and the company's enhanced market development efforts are expected to yield significant benefits. Domestically, China is accelerating the construction of a modern industrial system, with high-quality development in the petrochemical industry steadily advancing. The rapid progress of several large-scale refining and chemical base constructions, the continuous extension of the downstream petrochemical industry chain, and sustained capital expenditure in high-end new material projects, along with policies related to energy-saving and carbon reduction renovations, process optimization upgrades, and energy-using equipment replacements, are creating more opportunities for the company's core business. In the international market, active capital expenditure in the Middle East has exceeded one hundred billion US dollars, with oil-producing countries continuously enhancing their refining and chemical production capacity. As the SINOPEC Group deepens its cooperation under the Belt and Road Initiative, the company stands to fully benefit from its platform advantages, with promising prospects for securing orders in the Middle East market. By strengthening its market development initiatives and steadily advancing newly signed contracts both domestically and internationally, the company's business is poised for rapid growth.
Risk warnings include fluctuations in the refining and chemical industry's景气度 (prosperity index), potential delays in project timelines, and risks associated with overseas markets.
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