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Integrated polyester companies see better performance in 2020

2021-04-22 08:36:08 CCFGroup

In April, listed companies successively announced their 2020 annual reports. The performance of the leading polyester companies including Hengli Petrochemical, Rongsheng Petrochemical, Hengyi Petrochemical, Tongkun, Xinfengming, and Eastern Shenghong are as following:

Key data in corporate financial statements for 2020
Company	Hengli Petrochemical	Rongsheng Petrochemical	Hengyi Petrochemical	Tongkun	Xinfengmin	Eastern Shenghong
Total operating income (Billion yuan)	152.373	107.265	86.43	45.833	36.984	22.777
Year-on-year growth rate of total operating income	51.19%	30.02%	8.55%	-9.39%	8.30%	-8.48%
Net profit (Yuan)	13.462 billion	7.309 billion	3.072 billion	2.847 billion	603 million	316 million
Year-on-year growth rate of net profit	34.28%	231.17%	-3.70%	-1.31%	-55.43%	-80.40%
Net assets per share (Yuan)	6.66	5.48	6.39	11.61	8.33	3.63
ROE	32.55%	26.34%	12.56%	13.71%	5.09%	1.98%
Operating cash flow per share (Yuan)	3.43	2.59	1.36	1.52	2.28	0.43
Gross profit margin	18.54%	19.71%	6.92%	6.32%	4.96%	5.95%
Earnings per share	1.92	1.14	1.08	1.52	0.43	0.07
Disclosure date	2021-4-12	2021-4-14	2021-4-19	2021-4-15	2021-4-19	2021-4-14

In 2020, Hengli Petrochemical and Rongsheng Petrochemical saw record high revenue and net profit; Hengyi Petrochemical’s revenue increased by 8.55% year-on-year, and net profit declined slightly; Tongkun’s net profit fell by 1.3%, which was less than the reduction of revenue; Xinfengming's revenue increased by 8.30% year-on-year, but net profit fell by more than 50%; Eastern Shenghong's revenue and net profit both fell, of which net profit dropped by 80%.

Company	Reasons for performance changes
Hengli Petrochemical	The 20 million tons/year refining and chemical integration project ran at full capacity throughout the year, and the PTA project operated stably. The 1.5 million tons/year ethylene project, which started commercial operation in the third quarter of 2020, began to contribute to the profitability of listed companies.
Rongsheng Petrochemical	The company's performance increased significantly　year-on-year, mainly because the the first phase of the "40 million tons of refining and chemical integration project" of Zhejiang Petrochemical Co., Ltd., a holding subsidiary, was put into operation. The production of each device was progressing smoothly, the operating rate steadily increased, and the benefits obviously improved.
Hengyi Petrochemical	Affected by the COVID-19 pandemic, Hengyi Petrochemical still achieved stable performance, mainly due to Hengyi's advantages in the entire petrochemical industry chain. Its refining and chemical project in Brunei has maintained stable and high run rate throughout the year, and the overall production and operation remained stable. In 2020, the refined products of the Hengyi Brunei project contributed 18.73% of the revenue of Hengyi Petrochemical, which was 554.86% higher than the level in 2019.
Tongkun	The first phase of Zhejiang Petrochemical’s “40 million tons/year refining and chemical integration project” in which the company invested through its wholly-owned subsidiary Tongkun and holds 20% of the equity has been put into operation, which achieved good economic benefits. The profit during the period contributed RMB 2.23 billion in investment income and constituted the main part of the company's profit source during the reporting period.
Eastern Shenghong, Xinfengming	The decline of performance in 2020 was mainly due to the huge impact of the COVID-19 pandemic on the macro economy. Especially in the first three quarters, downstream demand of the chemical fiber industry dropped significantly, superimposed on the impact of volatile oil prices and falling industrial prosperity. The price gap between products and raw materials narrowed, and profit margins were compressed.

Based on the performance announced by listed companies, Hengli Petrochemical and Rongsheng Petrochemical's performance increased sharply in 2020, mainly due to the commissioning of large-scale refining and chemical integration project; Hengyi Petrochemical could achieve stable performance under the pandemic also due to the strength of the refining and chemical project in Brunei; Tongkun’s equity participation in the Zhejiang Petrochemical project contributed a lot of investment income to it, so its net profit fell only by 1.31% year-on-year; Unlike the above four companies, the profit of Xinfengming and Eastern Shenghong was mainly from the polyester fiber business. Affected by factors such as the pandemic in 2020, downstream demand for chemical fiber shrank, and the product profitability space was compressed, resulting in a significant decline in their net profit.

In recent years, domestic private enterprises have successively extended to upstream sector and invested in the construction of large-scale refining and chemical integration equipment to build the entire industrial chain structure. According to the comparison of performance in 2020, significant advantages of integrated operation of the entire industry chain were seen. With the subsequent improvement of integrated projects, the profitability and anti-risk ability of the company will be further advanced.

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