Sinopec’s Q3 Results See Weaker Downstream Contributions; Upstream Earnings Remain Robust

Sinopec’s cumulative nine months 2022 net profit of CNY 57.3 billion was 5.9% lower year on year. The results were within our expectations, with strong upstream earnings offset by weaker downstream performance. We keep our fair value estimate at HKD 5.50 per H-share (CNY 4.76 per A-share), after taking into account our latest energy price and foreign exchange assumptions. We think Sinopec’s H-shares are currently undervalued, but we favor CNOOC given its upstream focus amid high oil prices, cost efficiency and robust production growth.