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China Petroleum & Chemical (SEHK:386) Is Up 7.2% After China Lifts Long‑Term Domestic Oil And Gas Targets

Simply Wall St · 3d ago
  • China has projected that by 2025 its crude oil output will reach a record 215 million metric tons and natural gas production will be about 35% higher than in the previous Five-Year Plan period, supported by expanded pipelines and storage infrastructure during the 14th Five-Year Plan, which is already under way.
  • Looking further ahead, China expects crude oil output to hold near 200 million metric tons and natural gas production to reach 300 billion cubic meters by 2030, signaling a long-term emphasis on domestic energy security and supply resilience relevant to China Petroleum & Chemical’s operating context.
  • Against this backdrop of expanding oil and gas infrastructure, we’ll explore how strengthened domestic supply capacity could influence China Petroleum & Chemical’s investment narrative.

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What Is China Petroleum & Chemical's Investment Narrative?

For me, owning China Petroleum & Chemical relies on believing that China’s push for energy security and a measured energy transition can keep underpinning this integrated giant, even with modest growth expectations and low returns on equity. The latest government targets for record crude output and sharply higher gas production reinforce that Sinopec’s core businesses should remain central to China’s energy system, which supports the near term catalyst of earnings growth around the mid‑teens and an ongoing dividend stream, despite recent underperformance versus the Hong Kong market and sector. At the same time, stronger domestic supply and new pipelines could compress refining and marketing margins if competition intensifies, adding to existing concerns around thin profit margins, board inexperience and weaker dividend cash coverage.

However, investors also need to weigh how thin margins and a new board could affect resilience. China Petroleum & Chemical's shares have been on the rise but are still potentially undervalued by 48%. Find out what it's worth.

Exploring Other Perspectives

SEHK:386 1-Year Stock Price Chart
SEHK:386 1-Year Stock Price Chart
Six Simply Wall St Community fair value views range from HK$1.74 to HK$8.80, showing very different expectations. Set this against today’s modest growth outlook and evolving policy risks to test your own stance.

Explore 6 other fair value estimates on China Petroleum & Chemical - why the stock might be worth as much as 91% more than the current price!

Build Your Own China Petroleum & Chemical Narrative

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.