China Petroleum & Chemical (Sinopec): Downstream Earnings Disappoint in 2022; Expect 2023 Recovery

China Petroleum & Chemical Corp.'s, or Sinopec’s, 2022 net profit of CNY 66.2 billion, down 8% year on year, was below our expectation, largely due to weak refining and chemicals earnings, partly offset by a CNY 13.7 billion gain from disposal of Shanghai SECCO. We cut fair value estimate to HKD 5.00 per H-share (CNY 4.40 per A-share) from HKD 5.50 (CNY 4.76) after taking into account our latest energy price and foreign exchange assumptions. We think Sinopec’s H-shares are currently fairly valued, while the attractive 2023 dividend yield of more than 8% and the company’s shares buyback plan should continue to support share prices.