Everbright Securities has released a research report adjusting SINOPEC SEG's profit forecasts for 2026 and 2027 downward and introducing a new forecast for 2028. The report attributes the revision to the impact of settlements from earlier overseas projects on the company's performance. Net profit attributable to shareholders is now projected to be RMB 2.355 billion (down 15%), RMB 2.566 billion (down 12%), and RMB 2.831 billion for 2026, 2027, and 2028, respectively. Corresponding earnings per share (EPS) are forecast at RMB 0.54, RMB 0.58, and RMB 0.64. Leveraging the resource advantages of its parent, Sinopec Group, the company continues to expand in domestic and international markets, with its performance expected to sustain growth. Against the backdrop of state-owned enterprise reform, the company's low valuation and high dividend value are becoming increasingly prominent, leading Everbright Securities to maintain a "Buy" rating. The main points from the report are as follows.
The company released its 2025 annual report. For the full year 2025, SINOPEC SEG achieved operating revenue of RMB 70.074 billion, a year-on-year increase of 9.15%. However, net profit attributable to shareholders was RMB 1.798 billion, a decrease of 27.09% compared to the previous year.
While revenue grew steadily in 2025, the company's performance was weighed down by overseas subcontracting projects. The year saw the Chinese energy and chemical industry advancing its transformation, upgrading, and structural adjustment, with the industrial chain moving towards higher-end and more specialized production. The accelerated implementation of projects focused on converting oil to chemicals and specialty products, along with sustained demand for high-end chemical materials, solidified the company's domestic business foundation. Meanwhile, the Middle East Gulf region, capitalizing on its resource and capital advantages, continued to expand oil, gas, and downstream refining capacity, creating global market opportunities. Despite the 9.15% revenue growth, the company's gross profit margin was 7.4%, a decrease of 0.9 percentage points year-on-year. Overseas subcontracting projects secured in 2020-2021 negatively impacted overall毛利率 and net profit. Specifically, the construction contract for the sulfur recovery unit (Package P10) of the Marjan oil and gas capacity expansion project in Saudi Arabia and the construction contract for the Berri oil field oil and gas treatment project, both of which experienced slower progress and lower-than-expected profitability, were major factors. Consequently, the gross profit of the construction segment in 2025 was RMB 200 million, a significant decrease of RMB 1.1 billion year-on-year, with a segment毛利率 of 0.8%, down 4 percentage points.
The value of newly signed contracts demonstrated robust growth, with the proportion from Sinopec Group increasing. Domestically, the company secured new contracts worth RMB 63.2 billion in 2025, up 2% year-on-year. Overseas, new contract value was RMB 38 billion, down 1.3% year-on-year, accounting for 38% of the total. As Sinopec Group's chemical transformation projects, such as the Luoyang ethylene and Maoming ethylene projects, commenced successively, the value of new contracts from Sinopec Group and its affiliates reached RMB 55.4 billion, representing 55% of the total—a substantial 46% year-on-year increase. In contrast, new contracts from the external market amounted to RMB 45.8 billion, a decrease of 27% year-on-year, indicating a rising share of contracts from within the group.
The company is poised to benefit from new opportunities in both domestic and international markets through enhanced business development efforts. Domestically, China is accelerating the construction of a modern industrial system, with the high-quality development of the petrochemical industry progressing steadily. The rapid advancement of large-scale refining and chemical base construction, the continuous extension of the downstream petrochemical industry chain, and sustained capital expenditure in high-end new material projects present significant opportunities. Furthermore, policies related to energy conservation, carbon reduction, process optimization, and the replacement of energy-consuming equipment are creating additional prospects for the company's core businesses. Internationally, active capital expenditure in the Middle East has exceeded one hundred billion US dollars, with oil-producing nations steadily enhancing their refining and chemical production capacities. Sinopec Group's deepening cooperation under the Belt and Road Initiative allows the company to fully leverage its platform advantages, offering broad prospects for securing orders in the Middle Eastern market. By strengthening its market development efforts and as newly signed contracts domestically and internationally progress steadily, the company's business is expected to experience rapid growth.
The report concludes with risk warnings, including fluctuations in the refining and chemical industry's景气度, potential delays in project timelines, and risks associated with overseas markets.