CICC lowers SINOPEC SEG (02386) rating to "hold" with target price cut to HK$7.01

Bank of China International released a research report stating that SINOPEC SEG (02386) had an unexpected year-on-year profit decline of 27% to approximately 1.8 billion RMB in 2025, which was 33% lower than expected. The significant drop in profit was mainly due to losses from two construction contracts in the Middle East. The profit expectations for SINOPEC SEG from 2026 to 2027 were revised downward by 18% to 20%, with the target price lowered to 7.01 Hong Kong dollars and the rating downgraded to "hold". The bank pointed out that SINOPEC SEG's business in the Middle East has been affected by recent conflicts, posing uncertainties for its 2026 profit. The decline in new order volume guidance for 2026 is also a negative signal.