UBS: Lower target price for SHANGHAI PECHEM (00338) to HK$2.02, rating "buy"

UBS released a research report stating that based on the outlook for SHANGHAI PECHEM (00338)s main products, it has adjusted its earnings forecasts per share for the years 2026 to 2028, with a 21% decrease, 2% increase, and 1% increase respectively. The target price has been adjusted from HK$2.11 to HK$2.02, with a rating of "buy". SHANGHAI PECHEM's revenue in 2025 decreased by 13% year-on-year to RMB 7.56 billion, with a net loss of RMB 1.4 billion, in line with the previously disclosed profit warning expectations. The net loss for the fourth quarter alone was RMB 1 billion, mainly due to pressure on refining fundamentals during the period, causing the gross profit margin to drop sharply from 17% in the third quarter to 12%, along with a significant decrease in product shipments due to equipment maintenance. The bank suggests continuing to monitor the impact of the Middle East situation on oil prices and freight rates. SHANGHAI PECHEM is pushing for the high-quality development of its carbon fiber business, with industrial trial production of 60K large tow carbon fiber products already achieved. The company is steadily advancing the high-strength and high modulus testing and application research of T800 and T1000 carbon fibers, with an expected capital expenditure of approximately RMB 6 billion in 2026.