Dongsheng Hong Reproduced "Big Brush": Capital Increase In PTA, Refining And Other Fields 16 Billion!

A few days ago, the Oriental Sheng Hong announced that the company intends to own capital or raise funds for its wholly owned subsidiary, Jiangsu Sheng Hong Petrochemical Industry Development Co., Ltd. (hereinafter referred to as the "petrochemical industry") to increase its capital by 9 billion yuan in monetary terms.

After the capital increase is completed, the registered capital of the petrochemical industry will increase from 1 billion yuan to 10 billion yuan.

This investment target petrochemical industry was established in February 25, 2019, and its business scope includes petrochemical products (excluding dangerous chemicals) and chemical fiber raw materials sales. Dongsheng Hong holds 100% stake in petrochemical industry investment.

As of March 31, 2019, the total assets of the petrochemical industry's unaudited financial statements amounted to 1 billion 280 million yuan, the total liabilities amounted to 280 million yuan, the net assets were 1 billion yuan, and the operating income of 1-3 yuan in 2019 was 0 yuan, and the net profit was 12 thousand and 600 yuan.

Dongsheng Hong said that the increase in the petrochemical industry was mainly aimed at the acquisition of Jiangsu Honggang Petrochemical Company's equity stake through the petrochemical industry, as well as the replenishment of Sheng Hong refining and chemical (Lianyungang) Co., Ltd. to accelerate the implementation of the long-term development plan and development strategy of the new high end textile industry chain of "-PX/ -PTA- ethylene glycol polyester fiber".

In addition, Dongsheng Hong announced on the same day that the company intends to increase its capital by 7 billion yuan in the monetary way through the petrochemical industry to Sheng Hong refining and chemical (Lianyungang) Co., Ltd. (hereinafter referred to as "Sheng Hong refining").

After the capital increase is completed, the registered capital of Sheng Hong refining will increase from 1 billion yuan to 8 billion yuan.

Dongsheng Hong said that Sheng Hong refining and petrochemical was the main body of "Sheng Hong 16 million tons / year refining and chemical integration project". It started construction in December 14, 2018 and is still in the initial stage of construction.

The company has invested in Sheng Hong refining and petrochemical through wholly owned subsidiary petrochemical industry. It is to accelerate the project construction, so as to form a complete long-term development plan and development strategy of the new high-end textile industry chain of "-PX/ -PTA- ethylene glycol polyester polyester fiber", which is in line with the interests of the whole company and all shareholders.

It is understood that relying on Sheng Hong Group's industrial layout expansion and improvement, Dongsheng Hong main business upstream and downstream continues to expand.

In March 8th of this year, the listed company announced that Shenghong Petrochemical Industry Development Co., Ltd., a wholly owned subsidiary, acquired a 100% stake in Shenghong refinery, Shenghong Suzhou and Shenghong Petrochemical Company, in cash.

In 2010, the Sheng Hong group settled in Lianyungang and entered the petrifaction plate, which opened the curtain for the construction of the Sheng Hong petrochemical industry.

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.

Sheng Hong refinery is the main body of "Sheng Hong 16 million tons / year refining and chemical integration project". The project is listed as a major project in Jiangsu province. It started construction in December 14, 2018, and is now in the initial stage of construction, and is expected to be completed and put into operation in 2021.

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 closing of a complete industrial chain enables the company to have certain bargaining power, which helps to lock in the profit zone and has the right to speak.

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.

From the strategic planning of leading enterprises, listing financing is a fast way to expand capacity and enhance competitiveness of solid polyester enterprises.

As the financing channel of polyester head has been opened up, and the foundation of upstream layout has been rammed, competitive advantages such as pricing power will be firmly grasped in their hands.

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

But there will be obvious two stages of differentiation in the future market, that is, small and medium-sized polyester enterprises will have a hard time to survive without capital supply and without price advantage. If there is no new way, the pattern of big fish eating small fish will emerge again.