Sinopec Shanghai Petrochemical Company Limited

In 1H 2025, IFRS turnover was CNY39.5 billion, down 9.17% YoY. Profit before tax was negative CNY583 million versus CNY12.43 million a year ago, net profit attributable to the parent was negative CNY449 million versus CNY2.845 million a year ago, and EPS was negative CNY0.04. As of June 30, 2025, total assets were CNY41,896 million, total liabilities CNY17,502 million, equity attributable to shareholders CNY24,293 million, net assets per share CNY2.3, and gearing ratio 41.77% (up 2.06 percentage points from 39.71%). Operating cash inflow was CNY768 million, investing cash inflow was CNY734 million, and financing cash outflow was CNY1,281 million. On operations, the company processed 6,324,900 tons of crude oil, down 4.93% YoY, and sold 5,578,500 tons of main products, down 3.68% YoY; average selling prices fell to CNY4,836/ton for refinery products (-10.09% YoY), CNY6,769/ton for chemical products (-10.84% YoY), and CNY5,270/ton weighted average (-9.4% YoY). For 2H, management said the environment remains challenging, but it expects to continue projects and is striving to achieve no loss in 3Q. Full-year capex was originally CNY2.8 billion, but management said it may be revised down to CNY2 billion or a little less.

Chairman Xiaojun Guo framed the quarter as one of operating through a severe and complicated domestic and international environment while pushing high-quality development projects forward. He repeatedly emphasized upgrading, innovation, and the need to align with government policy on eliminating backward capacity, stressing that Shanghai Petrochemical should use this cycle to modernize older assets and strengthen competitiveness. His tone was constructive and policy-aligned, with confidence that the company’s long-running transformation projects can support future improvement.

CFO Jun Du highlighted the weak market backdrop: unstable crude prices, tariff-related disruption, geopolitical volatility, and intense petrochemical competition. He quantified the main drivers of the loss as lower selling prices, lower processing volumes, and inventory impairment, noting CNY407 million of impairment provisions and CNY392 million of reversals in 1H. He also detailed cash flow: CNY768 million operating inflow, CNY734 million investing inflow, and CNY1,281 million financing outflow mainly due to loan repayment. On capital spending, he confirmed the company had spent CNY408 million in 1H, mainly on the cogeneration clean and efficiency improvement project.

Analysts focused on two main issues: potential policy-driven capacity cuts in petrochemicals and the company’s inventory losses. Management said it could not comment on an unreleased policy, but argued that anti-involution measures and orderly exit of backward capacity would ultimately support industry structure and competitiveness; Guo also said Shanghai Petrochemical does not have refining capacity below 2 million tons, with its smallest unit above 2.5 million tons. On inventory losses and 3Q profitability, Du said the company used a low-inventory, fast-in-fast-out approach, had no crude inventory impairment in 1H, and was aiming for no loss in 3Q if the market holds. Management also said capex may be cut from CNY2.8 billion to around CNY2 billion or slightly less because much of 1H was spent on approvals.