UBS has released a research report adjusting its earnings per share forecasts for SHANGHAI PECHEM (00338) for 2026 to 2028, citing revised outlooks for the company's primary products. The forecasts were lowered by 21% for 2026, raised by 2% for 2027, and raised by 1% for 2028. The target price was reduced from HK$2.11 to HK$2.02, while the "Buy" rating was maintained.

SHANGHAI PECHEM reported a 13% year-on-year decline in 2025 revenue to RMB 75.6 billion, with a net loss of RMB 1.4 billion, aligning with previously issued profit warnings. The net loss for the fourth quarter alone was RMB 1 billion, primarily due to pressured refining margins that caused gross profit margins to sharply narrow from 17% in the third quarter to 12%. Additionally, product shipments fell significantly quarter-on-quarter as a result of equipment maintenance.

The report advises continued monitoring of the impact of Middle East tensions on oil prices and freight costs. SHANGHAI PECHEM is advancing the high-quality development of its carbon fiber business, having achieved trial industrial production of 60K large-tow carbon fiber products. The company is also steadily progressing with high-strength, intermediate-modulus testing and application research for T800 and T1000 carbon fibers. Capital expenditure for 2026 is projected to be approximately RMB 6 billion.