Orient Sheng Hong Hit 1 Billion To Buy Sheng Hong Refining And Refining, And At Least 7 Billion 600 Million Net Profit Per Year After Commissioning.

Jiangsu Oriental Sheng Hong Limited by Share Ltd (hereinafter referred to as "Oriental Sheng Hong") announced in the evening of March 8th that the wholly owned subsidiary of the company, Jiangsu Sheng Hong Petrochemical Industry Development Co., Ltd. ("petrochemical industry") and Sheng Hong (Suzhou) Group Co., Ltd. (Sheng Hong Suzhou) and Sheng Hong Petrochemical Group Co., Ltd. (Sheng Hong petrochemical) signed the "equity purchase agreement" in Wujiang District of Suzhou, and the petrochemical industry acquired the 100% equity interest of Sheng Hong refining and Petrochemical Co., Ltd., which was jointly held by Sheng Hong Suzhou and Sheng Hong Petrochemical Company in cash.

According to the asset appraisal report issued by Shanghai Dongzhou Asset Appraisal Co., on the basis of the assessment date, the value of shareholders' equity in Sheng Hong refining and chemical industry using the asset based method is about 961 million yuan.

The paction is based on the assessment results of the asset appraisal report. At the same time, after receiving the audit and assessment benchmark, Sheng Hong received a 50 million yuan increase in the amount of shareholders. After consultation, the trading parties agreed that the paction price of Sheng Hong's 100% stake was about 1 billion 11 million yuan.

After the completion of the paction, the company indirectly holds the 100% stake in Sheng Hong refining and petrochemical industry through the petrochemical industry. Sheng Hong refining and chemical industry will be incorporated into the consolidated financial statements of the company.

The acquisition of Sheng Hong refining and chemical industry is an important measure to promote the integrated development strategy of oil refining and chemical industry in response to the call of the state to develop high-end petrochemical products policy.

The listed companies will make full use of capital platform to accelerate the implementation of "Sheng Hong 16 million tons / year refining and chemical integration project", further open up the industrial chain of crude oil refining and high-end chemical industry, and develop new materials for downstream high-end chemicals.

Through this paction, Dongsheng Hong will set up the integration project of Sheng Hong refining and refining on the basis of the existing main industry of civilian polyester filament, extending the company's industrial chain from chemical fiber to the whole industrial chain of refining and petrochemical industry.

Sheng Hong refining and chemical integration project can meet the PTA production demand for p-xylene (PX), ethylene glycol (MEG) and produce gasoline, diesel and aviation kerosene and other products.

After the project is completed and put into operation, the listed company will form a complete industrial chain of "crude oil refining -PX/ ethylene glycol -PTA- polyester chemical fiber", so as to achieve vertical integration along the upstream of the industrial chain, and further enhance the profitability and core competitiveness of listed companies.

First textile network reporter learned that Sheng Hong refining and chemical (Lianyungang) Co., Ltd. (Sheng Hong refining and chemical) is the main body of "Sheng Hong 16 million tons / year refining and chemical integration project" ("Sheng Hong refining and chemical integration project"). Sheng Hong refining and chemical integration project is listed as a major item of Jiangsu province. It started construction in December 14, 2018, and is now in the initial stage of construction, and is expected to be put into operation in 2021.

Dongsheng Hong's acquisition of Sheng Hong refining and chemical industry is an important measure to respond to the development of high-end petrochemical products and promote the integrated development strategy of oil refining and chemical industry. It will help the listed companies to form a complete new high-end textile industrial chain of "crude oil refining -PX/ ethylene glycol -PTA- polyester chemical fiber", which is in line with the long-term planning and development strategy of listed companies, and is conducive to improving the comprehensive competitiveness and profitability of listed companies.

It is understood that Sheng Hong refining and chemical integration project officially started in December 2018, is currently in the initial stage of construction, is expected to be completed and put into operation in 2021, the construction stage has no business income, non project construction related directly to the cost of management, resulting in Sheng Hong refining 2017, 2018 and predictable 2019 and 2020 loss, it is estimated that the next two years, an average annual loss of about 35 million yuan.

The company's acquisition of Sheng Hong refining and investment and construction of Sheng Hong refining and chemical integration project will have a certain impact on the performance and cash flow of Listed Companies in the short term. However, after the project is released, according to the feasibility study report of Sheng Hong refining and chemical integration project, it is estimated that the annual sales revenue excluding tax will be about 72 billion 200 million yuan, and net profit will be about 7 billion 600 million yuan, which will significantly enhance the profitability of listed companies.

In response to the call of the state to develop high-end petrochemical products policies, effectively solve the long-term dependence on imports of PX and MEG, and ensure the safety of the state industry, it will provide more returns to shareholders of listed companies.

It is understood that in 2010, Sheng Hong group settled in Lianyungang, officially entered the petrochemical sector, Sheng Hong petrochemical industry construction began.

In order to further develop and solve the raw materials problems of PTA project and alcohol based polygeneration project, Sheng Hong Group has set up Sheng Hong refining and chemical (Lianyungang) Co., Ltd. to build a 16 million ton / year refining and chemical integration project in Lianyungang petrochemical industrial base.

Everbright Securities analyst Qiu Xiaofeng believes that in China, polyester and PTA have realized the integration of chemical fiber enterprises are currently building a large scale aromatics project in the upstream layout of the industrial chain, so as to achieve the integration of the whole industry chain, including Hengli Petrochemical 4 million 500 thousand tons PX, Hengyi Petrochemical 1 million 500 thousand tons PX, Zhejiang Petrochemical's 4 million tons PX, Sheng Hong Group's 2 million 800 thousand tons PX, etc. refining and chemical integration is the main development direction of the industry in the future.

With the gradual injection of PTA and refinery projects, Dongsheng Hong will also connect the industrial chain of "refining -PTA- polyester filament" and gradually form an integrated pattern.

Observation, Sheng Hong Group refining and petrochemical projects smoothly to make the company's industrial chain more perfect, and Sheng Hong Group's future PTA, refinery project injection is expected to be stronger.

The closure of a complete industrial chain to make the company have a certain bargaining power, help to lock the profit margin, more utterance.

At the same time, the cost of raw material pportation and procurement cost have been greatly reduced, and the efficiency of resource utilization has been improved, so that listed companies can effectively resist industry cycle risks.

It is understood that the main products of Dongsheng Hong are DTY, FDY and POY. Although the change trend of the unit price of the civilian polyester filament is consistent with the changing trend of the average price of the market, the price of the products is higher than the market average price due to the leading differentiation rate of the civilian polyester filament products, and there is a higher price difference.

With the price of filaments getting warmer, the price differentials of DTY products have gradually expanded since September 2018, and the company's profitability has improved.

Dongsheng Hong's main competitors are Hengli, Xin Fengming, Tong Kun, Hengyi petrochemical, Rongsheng petrochemical and so on. The six leading enterprises in the polyester filament industry have different positioning and differentiated competition.

Among them, Hengli shares and Rongsheng Petrochemical are mainly FDY, new Feng Ming and Tong Kun share are mainly POY, Hengyi Petrochemical is developing in balance with DTY, FDY and POY. While the company hopes to focus on the development direction of high-end products and DTY, due to its advantages in technology accumulation, customer scale and marketing mode, it continuously optimizes the product structure, so as to maintain the growth trend of production and sales ratio of high value-added products.

The differentiated development strategy of the six leading enterprises in the industry is conducive to avoiding homogenization competition in the industry and promoting the healthy development of the industry.

According to the financial report, in the first three quarters of 2018, Dongsheng Hong realized business income of 13 billion 399 million yuan, operating cost of 11 billion 301 million yuan, net profit attributable to the parent company amounted to 650 million yuan, Dongsheng Hong estimated that the net profit of shareholders belonging to listed companies in 2018 was 750 million -10.50 billion yuan, up from (after restructuring) 47.52%-26.53%, and the basic earnings per share was 0.23-0.33 yuan / share.