UBS: Shanghai Petrochemical (00338) turned a loss into a profit in the third quarter, but not meeting expectations. Target price lowered to 1.87 Hong Kong dollars.

UBS released a research report stating that based on SHANGHAI PECHEM's third-quarter performance and the outlook for its main products, they have lowered their forecast for SHANGHAI PECHEM to a loss of 385 million yuan for the year and reduced their earnings forecast for 2026 to 2027 by 7% to 10% per share. The corresponding target price has been lowered from 1.89 Hong Kong dollars to 1.87 Hong Kong dollars, and they have maintained a "buy" rating. SHANGHAI PECHEM's revenue for the first nine months of this year decreased by 11% year-on-year, with a net loss of 432 million yuan. Due to the gradual reduction of asset impairment losses, the company reported a net profit of 31 million yuan in the third quarter, turning from a loss to a profit on a quarterly basis. However, due to lower-than-expected sales of refined oil and the continued weakness in the fundamentals of olefins, the company's performance has not met the bank's expectations. The bank believes that with the advancement of the "anti-insourcing" campaign, the medium to long-term fundamentals of the refining and chemical industry may improve.