BofA Securities has released a research report stating that Sinopec Corp (00386, 600028.SH) reported better-than-expected third-quarter results, with a strong rebound in its refining business. The bank raised its H-share price target from HK$5.5 to HK$6 and, based on an average A-H premium of 30%, lifted its A-share price target from RMB6.4 to RMB7, while reiterating its Buy rating.
The bank noted that the company's net profit for the first nine months under International Financial Reporting Standards reached RMB40 billion, up 25% year-on-year. Third-quarter net profit came in at RMB13.6 billion, up 64% year-on-year and 54% quarter-on-quarter, beating both the bank's and market expectations.
Operating cash flow for the first nine months totaled RMB162 billion, up 41% year-on-year, while capital expenditure reached RMB75 billion, up 4% year-on-year, equivalent to 57% of the full-year budget.
Third-quarter refining EBIT hit RMB12.6 billion, up 2.4 times year-on-year, reversing a loss of RMB1.4 billion in the second quarter. This was driven by a recovery in processing volumes, strong economics from kerosene and by-products, arbitrage opportunities in refined product exports, and an inventory gain of RMB900 million.
After raising its Brent crude assumptions to US$100 per barrel for the fourth quarter of 2026 and US$80 per barrel for 2027, the bank revised up its 2026 net profit forecast by 18% to RMB56 billion, while keeping its 2027 forecast unchanged.
The bank noted that Sinopec Corp's H-shares offer an attractive valuation, trading at an estimated dividend yield of approximately 8.5% and a price-to-book ratio of 0.6 times based on 2026 forecasts.
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