In recent years, Hengyi Petrochemical has been actively planning for the integration of the industrial chain, completing the upstream layout through the Brunei project, while continuing to expand the scale of the downstream industry. With the successful acquisition of high-quality polyester assets, the dual-fiber driving effect of “polyester + nylon” has emerged.
On August 29, Hengyi Petrochemical announced its 2020 interim results. The company achieved operating income in the first half of the year 39.414 billion yuan, and the net profit attributable to shareholders of listed companies was 1.902 billion yuan, a year-on-year increase of 48.99%.
On the same day, Hengyi Petrochemical announced its subsidiary’s investment in the construction of a new functional fiber project with an annual output of 566,000 tons.
The announcement stated that according to the strategic development planning guidance of Hengyi Petrochemical Co., Ltd. (hereinafter referred to as “Hengyi Petrochemical” or the “Company”), it will meet the market’s demand for functional and differentiated products. The growing demand for chemical fibers will enhance the synergy of the company’s entire industry chain integration, enhance the market competitiveness of chemical fiber products, promote the company’s polyester fiber production capacity increase and technological upgrading, and achieve the dual effects of industry leadership and efficiency improvement. The company’s subsidiaries The company, Fujian Yijin Chemical Fiber Co., Ltd., plans to invest in the construction of an environmentally friendly functional fiber project with an annual output of 566,000 tons. The investment amount is expected to be RMB 335,000,000. Project funds come from the company’s own funds, bank borrowings or other financing methods. After the project is put into production, the company will further consolidate its leading position in polyester fiber, optimize the company’s product structure, and enhance the overall profitability of listed companies.
Brunei refinery has passed the test of extreme circumstances, and reasonable profits of the refinery are expected to return after the epidemic
The full commissioning of the Brunei project is one of the main factors driving the performance growth of Hengyi Petrochemical. Hengyi Petrochemical’s Brunei refining and chemical project was fully put into operation in November last year, announcing that the company has completed the last mile of the integration of the entire industry chain. According to interim report data, Brunei projects continued to develop in the first half of this year, producing a total of 4.03 million tons of products, including 940,000 tons of chemicals and 3.09 million tons of refined oil. The production capacity utilization rate is close to 100%. Through the low inventory strategy and flexible adjustment of oil collection ratio, it has withstood the extreme test of the shutdown of the whole society caused by the epidemic. The Brunei refinery achieved a net profit of 564 million yuan in the first half of the year, with a processing profit of approximately 140 yuan per ton. According to the backtest of refined oil prices in Southeast Asia from 2016 to 2019, the processing profit per ton of Brunei refineries is in the range of 470-740. With the rapid development of vaccines and the maturity of various countries’ handling of the epidemic, social order will gradually return to normal. Even based on a conservative calculation of 400 yuan/ton, the Brunei refinery can contribute 3.2 billion in net profit.
At the same time, as Brunei’s national strategic oil reserve provider, the project began to supply a certain batch of refined oil products to Brunei. With the resumption of work and production in the first half of the year, the company is gradually advancing the planning and feasibility study report of the second phase of the Brunei refining project. The project plans to build a crude oil processing capacity of 14 million tons/year, 1.5 million tons/year ethylene, and 2 million tons/year. 10,000 tons/year PX.
The profit structure continues to be optimized, and the performance of the polyester business exceeds expectations
In terms of PTA, in the first half of the year, Heng Zhejiang Yisheng, controlled by Yi Petrochemical, achieved production and sales of 2.42 million tons and 2.41 million tons. Zhejiang Yisheng achieved a net profit of 410 million yuan, which performed better; Dalian Yisheng and Hainan Yisheng, which held shares, respectively achieved net profits of 368 million yuan and 170 million yuan. In the first half of 2020, the gross profit margin of the consolidated scope of PTA business was 9.18%, maintaining the leading level in the industry.
In the polyester sector, Hengyi Petrochemical’s business scale continues to expand, and most of the new production capacity is advanced manufacturing plants with high added value, high quality and differentiated production. host. According to the interim report, in the first half of 2020, the production and sales of the company’s polyester products (including filament, staple fiber, and chips) continued to maintain a booming trend, with production and sales of 2.97 million tons and 2.47 million tons respectively, a year-on-year increase of 31.42% and 7.86%.
The company achieved a net profit of 1.9 billion yuan in 2020H1, including a net profit of 390 million yuan from Brunei project equity, a net profit from PTA equity of 450 million yuan, and a government subsidy + Zheshang Bank investment income of 5.1 billion, assuming that income tax is required to be paid at 25%, that is, the net profit contribution of this part is 380 million yuan; the scale of the trading business in 2020H1 is 9.78 billion yuan, with a gross profit margin of 3.4%. If the net profit rate of the trading business is generally close to 1% , the net profit of this segment is expected to be around 100 million yuan.
The net profit of the polyester business calculated in this way is 580 million yuan. Based on the sales volume of 2.47 million tons in the first half of the year, the net profit per ton is around 235 yuan, which exceeds expectations. According to the average price difference between POY and 0.865* PTA+0.355MEG in the market in the first half of the year, excluding tax, it was 1,146 yuan/ton. The company’s average price difference for POY in the same period was 1,502 yuan/ton. This was mainly due to the integration of the PX-PTA-polyester industry chain. and the increase in the proportion of film products (the company has a total of 1.5 million tons of PX, 6.22 million tons of PTA and 7.25 million tons of polyester equity production capacity).
In the context of low profits in the polyester business of mainstream companies in the market, the company’s polyester gross profit margin in 2020H1 was 12.7%, a year-on-year increase of 6.4 percentage points.
Looking forward to the future, the commissioning of multiple new projects is expected to become a new profit growth point for Hengyi Petrochemical. For example, in terms of polyester materials, Haining Hengyi New Materials has successively put into production 1 million tons of environmentally friendly functional fibers, and Jiaxing Yipeng’s “annual output of 500,000 tons of differentiated functional fiber improvement and transformation project” was completed and officially put into operation in June 2020.�Run. In addition, Haining New Materials’ 50-ton new functional fiber transformation project and Fujian Yijin’s 566,000-ton new functional fiber project are also under construction.
In addition, the 6 million tons PTA project of Yisheng New Materials, jointly invested and constructed by Hengyi Petrochemical and Rongsheng Petrochemical, is under construction. The two production lines are expected to be completed and put into operation at the end of this year and next year, by which time the company’s PTA production capacity scale competitive advantage will be further enhanced.
In addition to its core business, Hengyi Petrochemical’s “petrochemical +” business also shows relatively good development momentum. Taking “Petrochemical + Finance” as an example, the company holds about 3.52% of the shares of Zheshang Bank, which continues to provide the company with a stable source of profits; “supply chain services” carry out comprehensive distribution services of raw materials and products, and are available online through Hengyi Micro Mall and The marketing supply chain system is the core, and the offline logistics business is the support to achieve effective integration of online and offline. With the Brunei refining and chemical project in full operation, the company is actively developing supporting shipping services for the Brunei refining and chemical project, reducing logistics costs, and accelerating the implementation of the company’s “petrochemical + logistics” industrial layout.
At the same time as the semi-annual report was disclosed, Hengyi Petrochemical also announced the “Share Repurchase Plan”. The announcement shows that the company plans to invest no less than 500 million yuan and no more than 1 billion yuan to repurchase the company’s shares for the implementation of employee stock ownership plans or equity incentives. The large-scale repurchase of shares demonstrates Hengyi’s confidence in future development.
As the leader in petrochemical and chemical fiber, Hengyi Petrochemical’s move may indicate that the industry sector is undergoing positive changes. </p
