SINOPEC CORP (00386) reported a 34% year-on-year decline in net profit to RMB 32.5 billion for 2025, implying a fourth-quarter net profit of RMB 411 million, which fell 89% year-on-year and 95% quarter-on-quarter, meeting expectations. The weak performance in the fourth quarter was mainly due to inventory losses and increased year-end impairments. The firm maintained a "Buy" rating on SINOPEC CORP, with an H-share target price of HK$6 and an A-share (600028.SH) target price of RMB 7.6. Management guided 2026 capital expenditure at RMB 131.6 billion, with upstream, refining, marketing, and chemical segments accounting for 55%, 13%, 7%, and 21%, respectively. Upstream capital spending increased 2% year-on-year, while downstream spending decreased 21% to 35% year-on-year. Additionally, depending on market conditions, management has reserved an extra RMB 17 billion for flexible capital expenditure adjustments.