Semi-annual reports of leading polyester companies indicate diversified industrial chain

Recently, listed companies have successively released their 2022 semi-annual reports. There are mainly six leading enterprises in the polyester industry, including Rongsheng Petrochemical (002493), Hengli Petrochemical (600346), Tongkun (601233), Xinfengming (603225), Hengyi Petrochemical ( 000703) and Eastern Shenghong (000301). Performance of these six companies is briefly listed below:

In terms of operating income in the first half of 2022, except for Tongkun's slight year-on-year decline, the other five companies all saw rising operating income year-on-year, especially Rongsheng, with the largest growth rate of about 75%.  Increasing operating income was mainly affected by increasing crude oil price in the first half of 2022. Compared with 2021, price of most polyester products apparently rose in the first half of 2022, except for falling price of MEG. The launch of new capacity also contributed to the operating income. Tongkun, Xinfengming, Hengyi and Hengli also had new units. Among them, Tongkun saw slightly falling turnover in the first half of year was mainly due to surging amount of inventory, while Rongsheng witnessed soaring turnover was mainly benefited from reducing amount of inventory. Among the six leading enterprises, except for the decrease inventory amount in Rongsheng , the rest all saw apparently rising amount of inventory, which affected the operating income of companies.

As for the constitution of gross margin, the refining industry was better than chemicals and petrochemical industry outperformed than chemical fiber industry. Polyester companies were in difficulty this year, especially PFY. It did not mention the PET bottle chip producers, while they were lucrative indeed. Hengyi mentioned that its profit was mainly from Hengyi Brunei. Demand for refined oil was good this year and had high spread, ending up with good profit.

In the first half of 2022, six leading companies saw falling net profit on the year and the decrement was the biggest in Xinfengming. On one hand, polyester feedstock cost surged on the year with high oil price; on the other hand, end-user demand reduced year on year impacted by the spread of pandemic. The competition of polyester industry intensified and the processing fee was squeezed. Compared with the processing fee or cash flow of polyester products in the firts half of 2021 and 2022, PX and PET bottle chip saw improving profit while other products all witnessed slumping profit. MEG, POY, FDY and PSF even turned to be unprofitable.

In general, in the first half of 2022, with rising oil price and higher feedstock cost, the prices of polyester products ascended. Leading polyester companies largely saw increasing operating income compared with the same period of last year, while the increment differed due to the change of inventory amount. Meanwhile, impacted by the spread of pandemic and decreasing demand, the processing spread was squeezed, as well as the profit. Therefore, leading polyester enterprises saw falling net profit on the year.