Citigroup released a research report stating that it maintains a buy rating for Sinopec SEG (02386) and raises the target price to HKD 7.1. The company's net income for the first half of the year was flat year-on-year, but its revenue increased by 15% year-on-year, in line with expectations, mainly driven by 18% and 16% year-on-year increases in engineering general contracting and construction income, respectively. Despite steady revenue growth, the gross margin was dragged down by equipment manufacturing, falling to 8.7%.

The company distributed a mid-term cash dividend of RMB 0.15 per share, equivalent to a dividend payout ratio of 50%, which exceeded the bank's expectations. Benefiting from Saudi Arabia's shift from offshore oil to onshore natural gas, the bank sees potential new contract expansion. The bank has raised its profit forecast for the company for the next two years by 11%, reflecting strong uncompleted orders and new contracts, which are expected to support value reassessment. The company's strong cash position also supports potential buybacks, providing further support for the stock price.