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Hengli Shares Have Been Qualified To Meet The Catalyst To Further Refine The Oil
Jan 17, 2018


December 14, Hengli shares issued shares to buy assets and raise matching funds cum connected transactions were subject to conditions. Company stock resume trading on December 15.


Increase will be guaranteed from the financial level of the company's refining project construction progress. According to the Hengli shares released on October 26, 2017 << issue assets to buy assets and raise matching funds and related party transactions >>, the subject of the transaction Henglian 100% equity investment transaction price of 8.315 billion yuan, 100 % Of the equity transaction price of 3.205 billion yuan. Among them, Hengli Petrochemical owns 6.6 million tons of PTA capacity and Hengli Refining currently has 20 million tons / year of refining and chemical integration under construction. After the meeting was increased, the company's financing ability will be greatly enhanced, from the financial level to ensure the progress of the construction of large oil refining projects.

Large refining project smoothly, the company is expected to take the lead in completing the integration process. According to the company announcement, Constant 20 million tons / year refinery project is in accordance with the investment plan and orderly construction, the current progress of the project, the company has invested a total of more than 10 billion yuan, is expected to start trial production in the fourth quarter of 2018, The first quarter of 2019 to achieve project production. Compared with other planned large-scale private refining project, Zhejiang Petrochemical Project, Hengyi Brunei PMB project planning progress, the company put into production earlier planning time, the solution to the financial problems is expected to be the first to put into operation, open up the whole industry chain, the completion of the integration process.

PTA complex production settled, the industry boom comes. 16 years PTA and polyester production and cleaning effect gradually appear, PTA and polyester profitability range have greatly expanded. 17 years PTA effective production capacity of about 36,600,000 tons, the industry operating rate to maintain a high level of new capacity in the future, the end of 17 Xianglilu Petrochemical 4.5 million tons, Far Eastern Petrochemical 1.4 million tons of re-production, and Tong Kun Jiaxing Petrochemical 2.2 million Tons of new capacity can be put into production, no additional capacity planning after 18 years. In terms of capacity, there is little pressure on capacity growth after 18 years. Considering the natural growth of the polyester industry and the 2.5 million tons of primary polyester replacement recycled polyester brought by the 18-year "ban", the demand side increases Quite impressive, PTA industry boom comes.

Refining and chemical integration to solve the PX supply pressure, polyester faucets to share the upper reaches of profit. The four leading polyester enterprises Hengyi Petrochemical and Rongsheng Petrochemical PTA has a production capacity of 13.5 million tons, Hengli shares have PTA production capacity of 6.6 million tons, Tong Kun shares will have PTA capacity of 3.8 million tons, a total of 23.9 million tons, the total effective capacity The proportion of more than 50%. Currently, only Rongsheng Petrochemical, a leading polyester company with PX capacity, owns 1.6 million tons. Domestic PX foreign reliance exceeds 50%. At present, the main sources of domestic PX import are South Korea, Japan and other places in Northeast Asia. Domestic PTA manufacturers have weaker bargaining power and profit in the industry chain is divided upstream. After the domestic large-scale refinery put into operation, the basic solution to the PX supply problem, Hengli refinery PX production capacity of 4.43 million tons, a PX production capacity of Zhejiang Petrochemical 4 million tons, Heng Yi PMB project PX production capacity of 1.5 million tons, to solve the supply of raw materials, Polyester leading enterprises will share the upper reaches of profits.

Optimistic about the profitability brought about by the integration of refining and chemical industry, the value of polyester investment highlights. We use big out big measure, the product price with reference to the 17-year average, measured the profitability of large-scale private oil refining projects, and according to different scenarios for flexibility analysis. Under the benchmark scenario, if the refinery operating rate of 80%, the terminal go wholesale channels, the private refining and petrochemical in Zhejiang, Hengli Petrochemical profits were 96.8529 billion yuan, Brunei refinery profits of 2.31 billion yuan. Judging from the profitability, investing in major refining projects will significantly enhance the profitability of polyester leading companies.

Investment Advice

Polyester leading investment to build a large private refining project has inherent advantages, aromatic products on the one hand to solve their own raw materials problems, on the other hand will lead to a substantial increase in the profits of the leading polyester enterprises. We maintain the rating of "Buy" in the industry and recommend that we should focus on the polyester industry leading companies that have put into operation: Tongkun, Hengyi Petrochemical, Rongsheng Petrochemical and Hengli.

risk warning

International oil prices fell sharply: If the international oil prices fell sharply due to the impact of the United States faster than the expected second half of the production, it will seriously affect the profitability of the polyester chain, will also affect the profit forecast of large oil refining projects, resulting in sharp fluctuations in the stock price; polyester downstream Demand sharp decline: If the downstream demand for polyester slowed sharply, which led to the upstream polyester and PTA oversupply situation, which led to declining profits in the industrial chain.