According to a report published by Bank of America Securities, Sinopec's net profit after tax for the first quarter of this year fell 10% year-on-year to 18.7 billion yuan, reaching about 29% and 28% of the full-year profit forecast by Bank of America and the market. Among them, profit before interest and tax from the exploration and mining business increased 11% year-on-year, mainly due to the 1.3% and 6% increase in crude oil and natural gas production in the first quarter, the 5% increase in the US dollar from year to year, and the narrowing of liquefied natural gas (LNG) import losses. However, the refining and chemical business performance was weak during the period, offsetting the related growth.
The bank expects the refining business to improve in the second quarter, and as oil prices rise, the exploration and extraction business will continue to grow. It is expected that LNG import losses will decrease and natural gas sales will continue to improve, but the chemical business is still under pressure. Bank of America said it expects management to implement a new round of share repurchase plans after the shareholders' meeting and maintain a “buy” rating. The target price for H shares is HK$5.5.