UBS released a research report stating that SINOPEC CORP (00386) posted a 40% year-on-year decline in net profit for the first half of the year to RMB 21.5 billion, in line with the company's earlier profit guidance. The company's second-quarter profit was RMB 8.2 billion, down 53% year-on-year and 38% quarter-on-quarter. The bank slightly lowered the company's target price from HK$5.3 to HK$5.2, but believes that the fundamentals of the refining industry will recover in the long term, and therefore maintains a "Buy" rating.

UBS expects SINOPEC CORP's third-quarter earnings to improve slightly. Oil prices were more stable compared to the previous quarter, and the negative impact from crude oil inventory on earnings is expected to be smaller. Additionally, as the third quarter is the traditional peak season for chemicals, the chemical business profits may increase.

From a long-term perspective, UBS believes that China's anti-involution measures, combined with overseas capacity exits, will boost refining fundamentals. Furthermore, the company has lowered its full-year capital expenditure guidance by 5%.