Since the beginning of 2020, affected by the global epidemic, crude oil has fallen to historically low prices. We have even witnessed the emergence of negative oil prices. This was completely unimaginable a few months ago.
For the petrochemical industry, this It’s the worst moment and it’s the best moment.
The so-called worst moment, the two barrels of oil that dominate the petrochemical industry must have a deep understanding of it. The first quarter report of 2020 shows that PetroChina and Sinopec, the monopoly leaders in the petrochemical industry, each lost more than 10 billion.
The so-called best moment is for the relatively downstream refining and chemical companies.
A year-on-year increase of 196%-221%! Rongsheng Petrochemical’s half-year net profit grew explosively
On July 14, Rongsheng Petrochemical Co., Ltd. (hereinafter referred to as “Rongsheng Petrochemical”) released a performance forecast stating that in the first half of 2020, the company’s net profit attributable to shareholders of listed companies was 3.1 billion-3.36 billion yuan, a year-on-year increase of 196%-221%, and basic earnings per share was 0.49 yuan/share. ~0.53 yuan/share.
Rongsheng Petrochemical stated in the announcement that the company’s year-on-year performance increased significantly, mainly due to its holding subsidiary Zhejiang Petrochemical Co., Ltd. The company’s 40 million tons refining and chemical integration project. The commissioning of this project will, on the one hand, help the company build an integrated industrial chain of “crude oil – aromatics (PX), olefins – PTA, MEG – polyester – spinning – texturing”, achieve high-quality and efficient large-scale production, and reduce costs. Product costs will further enhance the company’s profitability, improve the company’s overall strength and risk resistance, and achieve leapfrog development; on the other hand, it will improve my country’s voice in the aromatics and ethylene industry to a certain extent, and drive the development of mid- and downstream chemical products. production, processing and sales to achieve the company’s economic and social benefits.
According to the annual report, operating income in 2019 was 82.5 billion yuan , -10% year-on-year; net profit attributable to the parent company was 2.209 billion yuan, +37% year-on-year, and non-net profit after deduction was 1.967 billion yuan, +34% year-on-year. In 2020, the revenue was 21,052,685,495.07 yuan, a year-on-year increase of 27.89%; the net profit attributable to shareholders of listed companies was 1,225,861,703.85 yuan, a year-on-year increase of 102.64%.
Good days for private petrochemicals: enjoy special benefits under the plummeting oil prices
Since March, the international crude oil market price has risen sharply. Rongsheng Petrochemical said that the decline in oil prices is a relatively significant benefit for chemical refineries.
▲International oil prices plummeted
The company explained that oil refineries are divided into fuel refineries and chemical refineries, and Zhejiang Petrochemical Phase I plant is a chemical refinery. The price of crude oil is relatively closely related to the price of gasoline and refined oil products. There will be a certain lag for chemicals. The depth of the entire decline is not as deep as that of refined oil or crude oil, which will lead to a widening of the entire processing price difference. The entire Rongsheng Petrochemical’s factories earn the processing price difference between raw materials and products. The current crude oil price not only maintains a relatively low position in history, but currently, as the epidemic improves, this environment is expected to have an impact on Rongsheng Petrochemical’s performance this year. Here comes a big plus.
So, what impact has the historically low oil price had on private petrochemicals?
It should be said that cost reduction is a very significant benefit, and because they are in the middle and lower reaches, private petrochemical companies are actually They are consumers of oil – this is most intuitively reflected in sales profit margins.
Take Hengyi Petrochemical as an example. The overall economy was stagnant due to the impact of the epidemic, and its revenue fell by 14% in the first quarter. However, net profit still increased by 82%, which relied on the improvement of gross profit – Hengyi Petrochemical’s sales gross profit margin in the first quarter reached 8.69%, almost double the 4.39% in the same period last year.
In contrast, Hengyi Petrochemical’s gross profit of 8.69% is still the younger brother among the three major private petrochemical companies. The other two companies are Hengli Petrochemical with 22% and Rongsheng Petrochemical with 17.78%. All far exceeded the same period last year.
To be honest, the expansions of the three major private petrochemical companies are all high-debt expansions, with the asset-liability ratio reaching nearly 80%. The red line is really worrying. However, the low oil prices caused by the epidemic have brought high gross profits, making the three major private petrochemicals bet on their previous expansion. This is like adding several times leverage to buy a continuous daily limit. As long as low oil prices last longer, the macro If the economy does not decline sharply, the good days of private petrochemicals will be longer.
Finally, we should gain some inspiration from the surge in performance of private petrochemical companies:
Watching oil prices hitting new lows repeatedly, everyone thought they were going to buy oil at the bottom. However, judging from the bank’s crude oil product shortfall incident, Chinese investors, Both individuals and institutions are deficient in psychological quality and professional knowledge, and the risks of directly participating in the oil game are not small.
The next best thing is, if oil prices are so low, which companies that consume oil are not worth buying?��? In fact, in the petrochemical industry chain, except for two barrels of oil, a considerable number of companies actually benefit from low oil prices. In investing, we often say that money cannot buy certainty; by buying companies like this that benefit from low oil prices, you can also buy precious high certainty.
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