BofA Securities: Raises SINOPEC CORP (00386) target price to HK$6; quarterly results beat expectations, refining business strong

BofA Securities issued a research report stating that SINOPEC CORP (00386, 600028.SH) third-quarter results beat expectations, with a strong rebound in the refining business; the bank raised its H-share target price from HK$5.5 to HK$6, and based on an average A-H premium of 30%, raised its A-share target price from RMB6.4 to RMB7, reiterating its "Buy" rating. The bank noted that the company's net profit for the first nine months under International Financial Reporting Standards was RMB40 billion, up 25% year-on-year; third-quarter net profit was RMB13.6 billion, up 64% year-on-year and up 54% quarter-on-quarter, above the bank's and market expectations. First-nine-month operating cash flow was RMB162 billion, up 41% year-on-year; capital expenditure was RMB75 billion, up 4% year-on-year, equivalent to 57% of the full-year budget. Third-quarter refining EBIT reached RMB12.6 billion, up 2.4 times year-on-year, reversing a loss of RMB1.4 billion in the second quarter, benefiting from a recovery in processing volumes, strong economics of kerosene and by-products, arbitrage on refined product exports, and inventory gains 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 raised 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, with a dividend yield of approximately 8.5% based on 2026 forecasts and a price-to-book ratio of 0.6 times.