<Research>CLSA's Investment Ratings and Target Prices for Oil Stocks (Table)

The analyst rating for SINOPEC CORP (00386.HK) is set at "Buy" with a target price of $5.2. This positive outlook is based on the anticipated benefits from the restructuring with China National Aviation Fuel (CNAF) Group, which is expected to enhance SINOPEC's development in aviation fuel and sustainable aviation fuel. This move is seen as a way to bolster its refining and sales business while mitigating the impact of the declining demand for gasoline and diesel in China. The report highlights the potential synergies between SINOPEC's aviation fuel business and CNAF Group, indicating a resilient long-term demand growth for aviation fuel.

The analyst rating from JPMorgan is maintained as Neutral due to the following reasons: 1. State-Owned Enterprise Restructuring: The approval of the restructuring of Sinopec Group and CNAF reflects the importance of such initiatives in China's "15th Five-Year Plan." However, JPMorgan does not expect this restructuring to have a direct impact on SINOPEC CORP's earnings or cash flow. 2. Uncertainty of Business Integration: There is uncertainty regarding whether the restructuring will lead to business integration with listed companies, which adds to the cautious outlook. 3. Short-Term Challenges: SINOPEC CORP is anticipated to continue facing challenges in the short term, which supports the decision to keep the Neutral rating. Overall, these factors contribute to the decision to maintain a target price of HKD4 for SINOPEC CORP.

The analyst rating from Morgan Stanley is based on the expectation that China's fuel export quotas will be significantly increased for 2026 due to a continuous decline in domestic fuel demand. This increase is viewed as a strong "anti-involutionary" measure to combat deflation and improve domestic refining margins to align with global levels. As a result, Morgan Stanley anticipates that SINOPEC CORP will experience a marked improvement in its 2026 earnings and achieve the highest dividend yield among major Chinese oil companies, leading to an Overweight rating on the stock.