Citigroup has reaffirmed its "Buy" rating on SINOPEC CORP (00386), with a target price of HK$5.2. For the 2025 fiscal year, SINOPEC reported a net profit of 32.5 billion yuan, representing a 34% year-on-year decline, primarily due to a significant asset impairment loss of 8.6 billion yuan. The final dividend per share was 0.112 yuan, with a full-year cash dividend payout ratio of 75%, up 4 percentage points from the previous year. Benefiting from controlled capital expenditures, free cash flow turned positive for the first time since 2022. Management has guided 2026 fiscal year capital expenditures to range between 131.6 billion and 148.6 billion yuan, indicating a change from an 11% decrease to a 1% increase compared to the prior year. Looking ahead to 2026, the bank expects SINOPEC's natural gas production growth target to be only 1%, while its marketing segment remains weak. Non-fuel profits in 2025 fell by 5% year-on-year, and the 2026 sales volume target is set to decline by 4.3%. The bank anticipates pressure on SINOPEC's refining margins in the second quarter of 2026, mainly due to rising crude oil premiums and freight costs associated with the situation in the Strait of Hormuz. Citigroup expressed a more favorable view on PetroChina (00857), citing its competitive pipeline natural gas and access to favorably priced Russian crude oil supplies.