Updating our model: Revise down FY26E earnings; 2027E profitability may normalize; roll forward PT; stay Neutral

Research evidence excerpt

Updating our model: Revise down FY26E earnings; 2027E profitability may normalize; roll forward PT; stay Neutral

Asia Pacific Equity Research

18 June 2026

SPC-H/A

Updating our model: Revise down FY26E earnings;

2027E profitability may normalize; roll forward PT; stay

Neutral

We revise down our FY26E earnings to reflect worse-than-expected 2Q/3Q26 China

gross refining margins (GRM) for SPC. We believe GRM normalization may Asia Oils

occur in 2027 with a recovering earnings outlook for SPC. We roll forward AC Lei Mu

our H/A PTs to Jun-27, at HK$1.22/Rmb2.99, and remain Neutral. Feedstock (86-21) 6106 6319

of crude oil and refined products inventories experienced price increases in lei.mu@jpmorgan.com

1Q26; the implied inventory gain could be as much 201-994-4050as SAC Registration Number: S1730521050002

Rmb1,300mn+. China GRM was pressured down into 2Q26 by significantly J.P. Morgan Securities (China) Company

increased spot cargo premiums for crude oil, energy shipping costs and the Limited

Middle East to Asia Official Selling Price (OSP). We see a relaxation of

geopolitical risk going forward and believe SPC’s net profit may normalize in

FY27, although the weak demand outlooks for refined products and

petrochemicals may remain near-term due to China’s macroeconomy and new

energy vehicle development. We expect SPC’s profitability to normalize in

2027.

• Negatives of feedstock and shipping cost inflation, and inventory loss.

With geopolitical risk since late March, we see significant increases in

global crude oil spot cargo price premiums and energy transportation costs

(shipping + insurgence); this cost inflation could not be passed through to

end markets due to China’s existing refined products price mechanism.