Sinopec Kantons International (00934.HK) expects H1 2026 net profit to fall 25%-35% from 563 million HKD a year earlier, citing severe disruption to Strait of Hormuz navigation from Middle East tensions and the liquidation of its Rizhao Shihua crude oil terminal joint venture.
Sinopec Kantons expects H1 net profit to fall as much as 35%, citing Strait of Hormuz disruption and a joint venture liquidation.
"The escalation of the Middle East situation has severely obstructed navigation in the Strait of Hormuz, directly impacting the global oil market and our storage and terminal operations," the company said in a Hong Kong stock exchange filing.
The oil storage and terminal operator expects attributable net profit for the six months ending June 30 to decline approximately 25% to 35% from 563 million HKD in the same period last year. That would put profit in a range of roughly 366 million to 422 million HKD. The company also said its joint venture Rizhao Shihua Crude Oil Terminal Co. has entered liquidation, reducing throughput and investment income contributions.
The Strait of Hormuz, a chokepoint for about a fifth of global oil consumption, has seen heightened risks as Iran-US tensions escalate. Brent crude has climbed above $105 a barrel during the disruption, according to market data. Sinopec Kantons' warning adds to signs that the geopolitical turmoil is affecting energy infrastructure companies with exposure to Middle East routes.
The profit warning from Sinopec Kantons, a unit of state-owned China Petroleum & Chemical Corp., shows the operational toll on companies tied to the region's oil flows. The company's storage and terminal operations both in China and overseas were directly affected by the navigation disruption, it said. Oman has proposed a new framework to manage the Strait of Hormuz, though no agreement has been reached, according to reports. The chokepoint's strategic importance has made it a central factor in global trade geopolitics, with any disruption flowing through supply chains and energy prices.
The Rizhao Shihua joint venture, which operated a crude oil terminal in China's Shandong province, has begun liquidation proceedings, the company said. The venture had been a steady contributor to Sinopec Kantons' investment income, and its winding down removes a recurring earnings stream. The company did not disclose the financial impact of the liquidation on its balance sheet.
The warning shows Sinopec Kantons faces headwinds from both external geopolitical risks and the wind-down of a key asset. Investors will watch for the company's interim results, expected in August, for further detail on the magnitude of the impact and any dividend implications. The stock (00934.HK) may face selling pressure as the market prices in the reduced earnings outlook. Other Hong Kong-listed energy infrastructure stocks with Middle East exposure could also come under scrutiny as the Strait of Hormuz situation develops.
This article is for informational purposes only and does not constitute investment advice.
