Sinopec Shares Hit Three-Month High After First-Half Profit Jumps

By Kimberley Kao

Shares of China Petroleum & Chemical Corp. climbed to a three-month high after the Chinese energy major's net profit strengthened on higher oil prices, though analysts cautioned of a weaker outlook for the rest of the year.

Shares of the company, better known as Sinopec, were up 4.7% in Shanghai and 4.4% in Hong Kong by midday Monday, on track to close at a three-month high in both markets.

China's largest oil refiner said Sunday that its first-half net profit jumped 19% from a year earlier, helped by stronger operating profit.

Operating profit was driven by higher oil prices, upstream development efforts and increased production of high-value-added products such as jet fuel.

The results were likely boosted by inventory gains seen in the first quarter, said Pei Hwa Ho, analyst at DBS Group Research. However, oil prices are expected to moderate as geopolitical tensions ease, and year-end earnings tend to be seasonally weaker, she said.

Ho noted that second-quarter net profit fell 10% on lower inventory gains and continued weakness in the downstream business. Sinopec's refining segment also remains a drag, as it swung back to operating losses in the second quarter despite the exceptionally strong performance in the first quarter, the analyst said.

Citi Research analysts expect a subdued earnings recovery for Sinopec, citing China's accelerated demand weakness, which remains a major concern, and the company's conservative production plan for the second half of 2026. Sinopec's management also signaled a muted demand pickup in alternative energy, such as for electric vehicles, they wrote.

Still, core earnings could rebound sequentially in the third quarter due to sharply lower Middle East oil selling prices and potential access to cheaper Russian crude, which will boost Sinopec's underlying gross refining margin, Citi analysts said.

The company's healthy dividend yield of about 6% to 7% will support the stock, they added.

Earnings of two other Chinese energy majors, PetroChina and Cnooc, are slated for this week.

Write to Kimberley Kao at kimberley.kao@wsj.com

(END) Dow Jones Newswires

August 24, 2026 01:35 ET (05:35 GMT)