Sinopec A/H: 3Q26 earnings supported by exports; guiding severe cost inflation as Hormuz risks escalate; remain Neutral

Sinopec's 3Q results briefing painted a bleak outlook for 4Q, with management guiding 「$15-25/bbl」 OSP+logistics costs implying potential for 4Q26 losses to exceed 2Q26 (which saw $15/bbl OSP+logistics cost). While the government has issued a fourth batch of oil product export quotas to help offset this impact, exports remain tightly controlled as China is still relying on drawing down SPR/CPR to maintain steady domestic refinery throughput. Assuming Sinopec fully uses its export quotas, we estimate 4Q26 export-related earnings contribution at Rmb7.6bn (9M26e: Rmb16.5bn, or >50% of refining OP). Considering Sinopec is typically the largest spot charterer of VLCCs in the world, this might not fully offset 4Q logistics cost inflation. Post results, we raise FY26E EPS by 5% to reflect export profits but cut FY27E EPS by 25% to reflect higher logistics costs, and remain Neutral. We roll forward our PTs to Jun-27 at HK$4.8/Rmb5.7, mirroring FY26/27E yields of 5.5%/5.3% for H-shares and 4.2%