BOCI Research expects Sinopec (00386) to experience a 20% decline in net income in the second half of the year compared to the first half.
According to the CC Financial App, BOCI Research released a research report reiterating a "buy" rating for Sinopec (00386), with a target price raised to 6.21 Hong Kong dollars. The company's net income in the first half of this year increased by 3% year-on-year, 4% higher than the bank's forecast, mainly due to higher-than-expected profits from joint ventures and affiliates. Refining and Chemicals sector income, however, fell below the bank's expectations.
Looking ahead, due to the recent drop in oil prices which may put short-term pressure on the profitability of the refining and marketing sector, the bank projects a 20% decline in Sinopec's net income in the second half of the year compared to the first half. In addition, BOCI Research has raised profit forecasts for Sinopec for the 2024 to 2026 fiscal years by 4% to 11%. The company's proposed minimum dividend payout ratio for the 2024 to 2026 fiscal years is 65%, providing good downside protection.