3Q16 Results
　　Sinopec posted 3Q17 NP of RMB11.4bn / EPS of RMB0.09, +13% YoY / 7%QoQ. 9M17 results tracks 77% of DBe FY17E. 3Q17 results were in line with ourexpectations and our FY17 estimate, driven by better-than-expected performancefrom E&P segment （lower cost）， Refining （higher GRM） and Chemical （highervolumes） partially offset by lower than expected marketing （non-fuel sales down8% QoQ）。 Capital expenditure through 9M17 （RMB29.1bn, 26% of FY17E budgetlaid out in the beginning of the year） came in below our expectation owing tooptimization of projects. Subsequently, SNP has revised downwards its FY17Ecapex budget to RMB98.5bn （down 11% vs previous estimate）。 With strongbalance sheet and stable price environment, we expect SNP to focus on reserveaddition and development in FY18e. Reiterate Buy3Q17 Results summary by segment （See table in Page 3）
E&P: Segment loss narrowed to RMB8.0bn vs RMB12.5bn in 2Q17,mainly due to ~RMB4.0bn cost savings. Crude oil ASP averaged USD45.7/bbl in 3Q17, was marginally down due to lower realization vs Brent （$52.2/bbl） while crude production remained largely flat. However, gas volumerose by 4% QoQ and 32% YoY, with realized gas prices too down 4%QoQ. After under-spending through 9M17, Sinopec revised its E&P FY17Ecapex budget to RMB42.7bn, down 15% from the previous estimate,implying RMB31.8bn spend estimate for 4Q17.
　　Refining: Segment profit rose to RMB14.6bn, +14% QoQ / +48% YoY,due to three key reasons: 1） higher throughput and 2） high valueaddedproduct yield with diesel-to-gasoline production ratio at 1.16 and3） low feedstock cost due to optimized crude sourcing and improvedprocurement strategy. FY17e capex for the segment too was lowered toRMB21.3bn, down 7% from the previous estimate.
　　Marketing: Segment profit decreased to RMB6.9bn, down -7% QoQand -19% YoY. While the refined products sales increased modestly by1% QoQ but up 6%YoY, profitability declined due to competitive marketconditions. Underperformance in marketing likely meant that the pricewar is yet to finish. Unexpectedly, non-fuel sales' margin declined by8% QoQ. This, we suspect, could be the main reason behind marketingsegment's underperformance. SNP retains the capex budget for thesegment at RMB18bn.
　　Chemicals: Segment profit reached RMB4.6bn, +25% QoQ and -21% YoYmainly due to higher production volume. The segment's EBIT/ton was atRMB1,562/t up 14% QoQ. Production of ethylene went up by 10% QoQand 11% YoY while Synthetic resins' output were up 7% QoQ and +5%YoY. SNP lowered chemicals' FY174E capex by 17% to RMB12.5bn.