Hengyi Petrochemical (000703): The fourth quarter of Brunei project is expected to be fully operational

Hengyi Petrochemical (000703): The fourth quarter of Brunei project is expected to be fully operational

Event: On October 18, the company released three quarterly reports.

At the core of the report, the company achieved operating income of 622.

50,000 yuan, at least -6.

37%; net profit attributable to mothers22.

14 ‰, at least -9.


Among them, Q3 single quarter net profit attributable to mother 9.

370,000 yuan, at least -21.

9%, +9 from the previous quarter.


  Main points: 1. The Q3 PTA spread narrowed 上海夜网论坛 month-on-month, and continued to decline. Space Co., Ltd. participated in the replacement of PTA’s production capacity of 1350, and equity production capacity of 622, the largest in the world.

In the past two years, PTA downstream polyester has expanded rapidly, demand has continued to grow, PTA raw material PX supplies are abundant, and the overall profitability of the PTA industry is good. It has replaced the company’s cost advantage and scale advantage in the PTA industry, and the profitability of the PTA sector has maintained a higher level.

Although the average price difference in Q3 has narrowed from Q2, from 1357 yuan / ton to 1126 yuan / ton, it still maintains a high level.

Recently, the PTA spread has continued to shrink, but in the context of low inventory, it is expected that there will be limited room for continued decline.

  2. Differential and large-scale development, the polyester sector is expected to achieve quantitative change to qualitative change. Through acquisition and reconstruction, the company has a polyester production capacity of 742 and an equity capacity of 622.

5 anion, polyester production capacity has entered the industry echelon.

At present, the concentration of the polyester fiber industry has increased, and the advantages of leading enterprises will continue to strengthen.

In terms of product prices, Q3 has improved 上海夜网论坛 compared to Q2, but due to PTA and glucose prices, the POY spread has increased from 1,385 yuan / ton to 1,633 yuan / ton.

The recent POY spread has remained above 1500 yuan / ton.

  With the easing of Sino-U.S. Trade frictions and the expected improvement in textile exports and the gradual trend of the polyester industry’s own supply growth, it is expected that the profitability of the Q4 polyester industry chain will improve.

Optimistic about the profitability of the average “refining-PX-PTA-polyester” industrial chain, with global competitiveness3, 800-ton refining project in Brunei was put into production, and the profit center went up to a new level. The company invested in Brunei’s Damola IslandThe “PMB petrochemical project”, the first phase of the Brunei Refining and Chemical Project, has continuously made new progress, and it is expected that full production and conversion will begin soon.

The public project was completed and put into operation in March 2019, and the main equipment of the project was fully delivered in July. The daily decompression device was put into qualified products on September 6, and it is expected to be fully put into commercial operation within the year.

The project company’s equity accounted for 70%, with an extraction capacity of 800 tons, equipped with 150 PX, 50 benzoate, 56-inch LPG, 554 final refined oil (263 gasoline, 174 diesel, 117 additives) kerosene), the main export of aromatic productsDomestically, 30% of oil products are sold locally and the rest is exported to Southeast Asia.

The main advantages of this project are: (1) The project is located in the ASEAN Free Trade Area, and is free of import and export duties; it is exempt from corporate income tax for 11 years, and can be extended to 24 years if eligible; and no turnover tax and personal income tax.

(2) In terms of refined oil sales, compared with domestic refined oil export controls, internal competition has intensified. The project’s sales method is relatively flexible, and Singapore’s mature pricing mechanism can also be used.

(3) In terms of raw material procurement, no crude oil import substitution is required. Brunei directly supplies 40% of crude oil, which is close to the Malacca Strait, and the logistics cost of domestic refineries is low.

(4) For public works, according to the announcement, the electricity price and steam price of the project are 0.

$ 05 / degree and 17.

5 USD / ton, domestic correspondence is 0.

$ 1159 / degree and 29.

USD 4 / ton.

(5) Benzene and PX for this project are called self-use. The company has formed a dual-industrial chain layout of “refining-PX-PTA-polyester” and “refining-benzene-caprolactam-nylon”, which further strengthens the integration advantages and competitiveness.

(6) In terms of investment and operation, the project process is relatively simple and easy to operate, with a total investment of 34.

500 million US dollars, short payback period.

At the same time, the company plans to invest in the construction of the second phase of the 1400 / year refining and petrochemical project in Brunei to increase the production capacity of 150 tons of ethylene.

  We expect the project’s profit center to be at 3.

US $ 500-500 million, corresponding to 10% -14 of ROA.

5%.If the exchange rate is 7 and the equity ratio is 70%, the company can increase its net profit by 17.

15 ppm-24.

500 million.

  4. Profit forecast and rating We expect the company to achieve net profit attributable to its mothers of 31 in 2019-2021.

15, 50.

43, 55.

910,000 yuan, corresponding to EPS 1.

10 yuan, 1.

77, 1.

97 yuan, PE 12.

9X, 8X, 7.

2 times.

  Considering the company’s dual-industry chain layout of “refinery-PX-PTA-polyester” and “refinery-benzene-caprolactam-nylon”, after the Brunei project is put into operation, the integration advantages and competition are increasingly strengthened, giving a gradually target market value of 5 million yuanCorresponds to the target price of 17.

64 yuan, maintain “Buy” rating.

  Risk warning: downstream demand growth rate, new projects reach production beyond expectations, lifting ban