HK Stock Market Move | Sinopec (00386) fell by more than 5%, with second quarter performance under pressure. It is expected that net profit for the first half of the year will decline by up to 43.7%.

Sinopec (00386) opened low and continued to decline today, with the decline expanding by more than 5% in the afternoon. As of the end of the article, the stock was down 5.65% to HK$4.34, with a turnover of HK$14.44 billion. In terms of news, China Petroleum & Chemical Corporation released a performance forecast. According to the Chinese Accounting Standards, it is expected to achieve a net profit of RMB 20.1 billion to 21.6 billion in the first half of 2025, a year-on-year decrease of 39.5% to 43.7%. Looking at the second quarter alone, the company is expected to achieve a net profit attributable to shareholders of RMB 6.8 billion to 8.3 billion, a year-on-year decrease of 52.1% to 60.7%, and a quarter-on-quarter decrease of 37.2% to 48.5%. This is mainly due to the significant decrease in international crude oil prices, intense competition in the petroleum and petrochemical markets, and low profitability in the chemical industry. EB SECURITIES pointed out that with the rapid decline in oil prices in the second quarter, demand for refined oil products continues to decline, and the recovery of the chemical industry is below expectations. They have lowered their profit forecasts for the company for 2025-2027, expecting a net profit attributable to shareholders of RMB 45.3 billion (a decrease of 15.4%)/55.5 billion (a decrease of 3.1%)/66.2 billion (a decrease of 7.6%) respectively, with corresponding EPS of 0.37, 0.46, and 0.55 yuan per share. The company adheres to long-termism, strategically lays out new energy and new materials businesses, and as the overall prosperity of the chemical industry improves, with new production capacities gradually coming online and the new energy layout becoming established, performance is expected to improve. We are optimistic about the company's long-term growth prospects and therefore maintain a "buy" rating for both A-shares and H-shares.