It Started With Several Manual Hosiery Machines. The Textile Giant Last Year Had A Revenue Of 80 Billion.

Heng Yi Formosa Petrochemical Co (hereinafter referred to as "Hengyi petrochemical") released the 2019 performance report today (March 29th). During the reporting period, the company achieved operating income of 80 billion 26 million 630 thousand and 900 yuan in 2019, a decrease of 9.13% compared with the same period last year, operating profit of 4 billion 796 million 708 thousand and 800 yuan, an increase of 92.96% over the same period last year, and a total profit of 477. 8 million 775 thousand and 900 yuan, an increase of 91.11% over the same period last year, and net profit attributable to shareholders of listed companies was 3 billion 202 million 308 thousand and 600 yuan, an increase of 70.90% over the same period last year.

　　 Heng Yi Petrochemical explained that the main reasons for the change in performance during the reporting period were:

1. During the reporting period, Brunei refinery project has been completed and put into operation. The business advantages, policy advantages and technological advantages have been brought into full play, and the operating efficiency has been highlighted, adding profits to the listed companies.

2, the company as a polyester fiber industry chain leading enterprises, PTA, caprolactam (CPL), polyester fiber (including FDY, POY, DTY and staple fiber) and bottle products and other main products competitiveness increased significantly, the gross margin of products continued to maintain a good level. At the same time, the company continued to increase investment in product development and intelligent manufacturing. The differentiated product structure was further optimized, production efficiency was further improved, processing costs continued to decrease, and unit profitability increased. The net profit of these main business products continued to increase compared with the same period last year, and net profit increased significantly.

According to public information, Hengyi Petrochemical Company is a subsidiary of Zhejiang Hengyi Group Limited. In 1974, Hengyi group was founded in Xiaoshan County Yamen former commune knitting factory, with only a few manual hosiery machines. After twenty years of bold development, Hengyi group was formally established in 1994, forming a production and operation system of chemical fiber spinning, weaving, dyeing and finishing. From 2001 to 2010, Hengyi group stripped weaving and printing and dyeing business, and successfully expanded to the upstream of polyester and PTA industries, forming an industrial structure of PTA, polyester spinning and chemical fiber plus elastic yarn integration. In 2011, Heng Yi Petrochemical was successfully launched on the backdoor of the century. In 2012, the company announced that it was planning to invest in refinery projects in Brunei (PMB) to enter the upper reaches vertically, and to establish a joint venture with Sinopec for the production of caprolactam and the horizontal layout of the nylon industry.

With the capacity expansion of PTA, polyester and caprolactam in recent years, Hengyi Petrochemical has become the world's leading manufacturer of PTA and PET fibers. At the same time, with the PMB phase I project put into operation in 2019, Hengyi Petrochemical will soon enter into a new pattern of refining and chemical integration.

Hengyi petrochemical business segments are divided into raw material trade, polyester fiber, PTA and other businesses. The company mainly produces pure terephthalic acid (PTA), caprolactam (CPL), polyester (PET) chips and polyester preoriented yarn (POY), polyester drafting yarn (FDY), polyester and elastic wire (DTY) and other products. From the current business structure, taking into account the stability of profitability, the company's "PTA+ polyester" business is still the company's most important business segment.

Liu Jun, a Northeast Securities analyst, said that Hengyi Petrochemical Co., Ltd. has commissioned the first melt straight spinning line in Hengyi polymer since 2001. In 2005, the first set of 650 thousand tons / year PTA installation was put into operation in Yisheng, Ningbo. In 2005, the first 200 thousand ton / year caprolactam project was put into operation in 2012. At present, the controlling capacity is 13 million 600 thousand tons / year PTA capacity, 6 million 300 thousand tons / year polyester production capacity, 400 thousand tons of caprolactam production capacity. Based on the polyester industry chain and the nylon industry chain, the strategic layout of PTA- polyester and CPL- nylon has been realized.

Liu Jun analysis, looking back on the development of nearly 10 years, clearly shows that the performance of Hengyi petrochemical company has improved significantly since 2016, including three logic:

First, the upgrading of the industry structure is the essence of the upgrading of the oil price and the improvement of the economy. The upgrading of the industry must be directly caused by the improvement of the supply and demand pattern of the industry. From the PTA industry, after the painful "going to capacity", the pattern of the industry has changed. There are, of course, two catalysts: first, the price of crude oil is the uptrend of the market, and the two is 2. In the past 017 years, the improvement of the global economy has been catalyzed. Polyester industry chain is one of the lower reaches of petrochemical industry, and its price is driven by the price of crude oil. Looking back at the trend of the polyester industry chain in the past two years, we can easily find that the bottom up of crude oil prices in the second half of 2016 will play a catalytic role in the recovery of the overall industrial chain, and the recovery of the global economy in 2017 has ensured the catalytic effect. It needs to be pointed out that the recovery of the global economy is related to the recovery of crude oil prices.

From the point of view of revenue structure or from the gross profit structure, Liu Jun believes that Hengyi petrochemical "PTA+ polyester" business is still the most important business segment affecting Hengyi Petrochemical's performance. Therefore, the prosperity of PTA and polyester links almost determines the performance of the past few years.

Financial reports show that in 2018, Hengyi Petrochemical's PTA business revenue was 17 billion 500 million yuan, an increase of 4% over the same period last year. However, the PTA industry has a better structure, so the gross profit margin of the business has increased significantly. The gross profit margin of PTA is 1 billion 100 million yuan, an increase of 36% over the same period last year. The polyester fiber business grew faster in 2018, which was mainly due to two reasons: 1) the rise in crude oil prices increased the overall sales of the filament. Price; 2) part of the Taicang yfeng, Jiaxing Yi Peng and the double rabbit; in terms of gross margins, the polyester business has declined by 0.43% to 9.11%.

Data show that from 2015 to 2018, Hengyi petrochemical PTA ginseng holding capacity maintained 13 million 600 thousand tons / year, the rights and interests of 6 million 160 thousand tons of production capacity; polyester's Ginseng holding capacity increased from 2 million 700 thousand tons / year in 2016 to 3 million 900 thousand tons / year in 2017 and 6 million 300 thousand tons / year in 2018. The stability of PTA productivity has promoted the steady and slow growth of Hengyi Petrochemical's PTA production and sales volume. Meanwhile, with the expansion of polyester production capacity in recent years, the production and sales volume of polyester has been increasing at a relatively high speed, especially in 2018, polyester production and polyester sales increased by more than 50% over the same period in 2017. PTA capacity and production and sales volume stable and slow growth and polyester production capacity and production and sales volume rapid growth to promote the company's performance in 2018 steadily.

In addition, on 2019, 11, 3, Hengyi Petrochemical announced that the Brunei PMB petrochemical project was put into operation and became the second target of private production. Liu Jun believes that Brunei project profit is likely to exceed the market expectations, the next 2-3 years, the profit center in the 4 billion yuan or more, and a stable low tax environment, the company should enjoy a certain premium, the valuation level is expected to further enhance.