On March 23, Sinopec released its 2024 annual report. Under the current macro environment, it is within expectations that Sinopec's business is under pressure. According to the company's annual report, both Sinopec's overall performance and the performance of its chemical sector have declined.

Annual revenue has declined again. As shown in Chart 1, Sinopec's annual revenue from 2022 to 2024 has seen a year-on-year decrease, with total revenue falling from 3,318.17 billion yuan in 2022 to 3,074.56 billion yuan in 2024. Consequently, Sinopec's profits have also experienced a continuous decline.

From the perspective of Sinopec's major business segments, except for the petrochemical business, the revenue scale of the other segments declined in 2024. In addition to macro-environmental factors, the rapid increase in the penetration rate of new energy in recent years has also had a negative impact on Sinopec's traditional businesses.

Chart 1 Sinopec's Operating Conditions from 2022 to 2024

Source: Sinopec Annual Report DT New Materials Mapping

The chemical sector saw an increase in revenue but not in profit, with losses expanding by nearly 70%. As mentioned earlier, Sinopec's business divisions mainly consist of the Exploration and Development Division, Refining Division, Marketing and Distribution Division, Chemical Division, and Headquarters and Other Businesses. Apart from the Chemical Division, all other divisions experienced a decline in revenue in 2024. Specifically, Sinopec's chemical business revenue for 2024 slightly increased by 1.7% to 523.86 billion yuan, but the loss in the chemical business significantly rose to 10 billion yuan, with the loss widening by nearly 70% year-on-year.

The sales situation of Sinopec's six major types of chemical materials is shown in Chart 2. Although the average selling price of each product has increased relatively well, the procurement prices of chemical raw materials such as naphtha have risen even more, leading to an increase in the operating costs of the chemical business to 533.9 billion yuan.

Chart 2 Sinopec's Chemical Business Operation in 2024

Source: Sinopec

Certainly, the situation of increased revenue without increased profit is not unique in the current environment. For example, Wanhua Chemical recently announced that the company's revenue for 2024 reached 182.069 billion yuan, a year-on-year increase of 3.83%, setting another historical record. However, the net profit attributable to shareholders of the listed company was 13.033 billion yuan, a decrease of 22.49% compared to the previous year.

In addition, Sinopec is focusing on advancing ten major projects in 2024. As of December 31, 2024, the investment completed for the ten projects involved has reached 90.965 billion yuan. The details are as follows:

Western Sichuan Natural Gas (Phase I)

The project mainly includes the construction of a purified gas production capacity of 1.77 billion cubic meters per year, with the deployment of 16 wells. The project started in 2019 and was completed and put into operation in January 2024. As of December 31, 2024, a total investment of 6.6 billion yuan has been completed.

(2) Victory Shale Oil

The project focuses on conducting shale oil exploration and development work in the Jiyang Depression, with a 14th Five-Year Plan target of building new production capacity of 1 million tons per year. The project started in 2019, and by now, 152 new wells have been completed, creating a new production capacity of 870,000 tons per year. As of December 31, 2024, the total investment has reached 14 billion yuan.

(3) Longkou LNG project

The first phase of the project is designed to handle a processing capacity of 6 million tons per year, including the renovation of one 266,000 cubic meter LNG berth and the construction of four new 220,000 cubic meter storage tanks, etc. As of December 31, 2024, a total investment of 5.7 billion yuan has been completed.

(4) Zhenhai Refining 11 million tons/year refining and high-end synthetic new materials project

The project mainly includes the construction of 11 million tons/year refining, 600,000 tons/year propane dehydrogenation and downstream processing facilities, etc. The project started in June 2022 and was mechanically completed by December 2024. As of December 31, 2024, a total investment of RMB 32.9 billion has been completed.

(5) Maoming Refining Upgrading and Transformation and Ethylene Quality Improvement Project

The project mainly includes the construction of a 30 million tons/year catalytic cracking complex and a 10 million tons/year ethylene plant. As of December 31, 2024, a cumulative investment of 6 billion RMB has been completed.

(Qilu) Lu Oil Lu Refining Transformation and Upgrading Technology Renovation Project

The project mainly includes the construction of a new 10 million tons/year atmospheric and vacuum distillation unit, and the renovation of a 1 million tons/year ethylene unit, etc. The project started in December 2024. As of December 31, 2024, the total investment completed was RMB 0.65 billion.

(7) Jiujiang 1.5 million tons/year aromatics and refining supporting renovation project

The project mainly constructs a 15 million tons/year aromatics complex, a 26 million tons/year hydrocracking unit, a 26 million tons/year continuous reforming unit, etc. The project started construction in July 2024. As of December 31, 2024, a total investment of 8 billion yuan has been completed.

(8) Zhenhai 1.5 million tons/year ethylene and downstream high-end new materials industry cluster project

The project mainly includes the construction of a new 1.5 million tons/year ethylene plant and downstream processing facilities, with the project starting in November 2023. As of December 31, 2024, a cumulative investment of 4.4 billion yuan has been completed.

(9) Tianjin Nangang 1.2 million tons/year ethylene and downstream high-end new materials industrial cluster project

The project mainly includes the construction of a new 1.2 million tons/year ethylene plant and downstream processing facilities, etc. As of December 31, 2024, a cumulative investment of 15.4 billion yuan has been completed.

(10) Yizheng Chemical Fiber 3 million tons/year PTA project

The project commenced in July 2021 and went into production in April 2024. As of December 31, 2024, the cumulative investment completed was 5.1 billion yuan.