Sinopec Corp.(00386) 海通国际·2024-11-12 11:04Investment Rating - The report maintains an "OUTPERFORM" rating for China Petroleum & Chemical Corporation (386 HK) with a target price of HK4.31 [1][4]. Core Insights - In the first three quarters of 2024, the company reported a revenue of RMB 236,654.1 million, a year-on-year decrease of 4.2%, and a net profit attributable to shareholders of RMB 44,247 million, down 16.5% year-on-year. In Q3 alone, the net profit was RMB 8,544 million, reflecting a significant decline of 52.1% year-on-year [2][5]. - The decline in oil prices has adversely affected the company's profitability across all business segments, with Brent crude oil prices averaging USD 81.76, USD 85.03, and USD 78.71 per barrel in the first three quarters of 2024, leading to a general downturn in earnings [2][5]. Business Segment Summaries Exploration and Production - In Q3, the company achieved an oil and gas equivalent production of 128 million barrels, a year-on-year increase of 1.68% but a quarter-on-quarter decrease of 0.37%. The revenue for this segment was RMB 69,620 million, down 6.09% year-on-year, with an operating profit of RMB 13,547 million, a slight decline of 1.62% quarter-on-quarter [12][2]. Refining - The refining segment reported a revenue of RMB 376,731 million in Q3, a decrease of 7.31% year-on-year, and an operating loss of RMB 539 million, marking the first quarterly loss of 2023. The drop in crude oil prices has increased operational pressures due to higher refining costs and inventory losses [14][3]. Chemicals - The chemical segment generated revenue of RMB 135,465 million in Q3, a slight increase of 0.45% year-on-year, but faced an operating loss of RMB 1,732 million. The segment has been under significant pressure since 2022, with the ethylene-naphtha spread remaining low at USD 191.37 per ton, well below the historical average of USD 425 per ton [17][19]. Marketing and Distribution - The marketing and distribution segment saw revenue of RMB 448,978 million in Q3, down 8.16% year-on-year, with an operating profit of RMB 2,589 million, a significant decline of 64.91% year-on-year [3][11]. Earnings Forecast - The company is expected to have EPS of RMB 0.60, RMB 0.61, and RMB 0.63 for 2024, 2025, and 2026 respectively, with a BPS of RMB 6.92 for 2024. The reasonable valuation range is set between HK6.09, corresponding to a PE of 10 times for 2024 [22][4].