Annual Income Of 24 Billion 900 Million! Expansion Of Petrochemical Dongsheng Hong To Improve The New High-End Textile Industry Chain

In 2019, Dongsheng Hong (000301.SZ) continued to exert its strength in building a new high-end textile industry chain and expanded 8 subsidiaries, involving vertical industries such as refining and petrochemical industries.

In the evening of April 8th, Dongsheng Hong published its annual report in 2019. It said that the company carried out a vertical integration of the industrial chain and acquired 100% equity interest of Honghong refining and Honggang Petrochemical to form a new high-end textile industrial chain structure of "-PX/ -PTA- ethylene glycol polyester polyester fiber", which promoted the coordinated development of refining, petrochemical and chemical fibers.

The annual report shows that the business income of Dongsheng Hong during the reporting period was 24 billion 888 million yuan, an increase of 6.98% over the same period. The net profit attributable to shareholders of listed companies was 1 billion 614 million yuan, an increase of 67.18% over the same period last year. The basic earnings per share were 0.4 yuan, up 33.33% over the same period last year. The company intends to offer 1 yuan (including tax) for every 10 shares.

New petrochemical subsidiary

Dongsheng Hong 2019 added 8 subsidiaries to the consolidated statements, including the first tier subsidiary, Jiangsu Sheng Hong Petrochemical Industry Development Co., Ltd. (hereinafter referred to as Sheng Hong petrochemical), two level subsidiary Suzhou Suzhen Bioengineering Co., Ltd., Sheng Hong refining and chemical (Lianyungang) Co., Ltd. (hereinafter referred to as Sheng Hong refining), and Jiangsu Honggang Petrochemical Co., Ltd. (hereinafter referred to as Honggang petrochemical).

Industrial and commercial information shows that the above 8 subsidiaries are involved in petroleum processing, chemical fiber weaving, etc. Among them, Sheng Hong refining is the main body of "Sheng Hong 16 million tons / year refining and chemical integration project". The project was officially launched in December 2018 and is expected to be put into operation at the end of 2021. The project designs crude oil processing capacity of 16 million tons / year, the aromatics combination scale 2 million 800 thousand tons / year (to xylene yield), ethylene cracking plant scale 1 million 100 thousand tons / year, supporting 300 thousand ton crude oil terminal, 4 5 Million tons of liquid chemical terminals.

According to the feasibility study report of Sheng Hong refining and chemical integration project, the total investment of the project is estimated to be about 67 billion 700 million yuan. After the completion of the project, the main business of Sheng Hong refining and chemical industry is the integration of crude oil refining and chemical industry and the production and sale of chemical products. The annual average sales income without tax is about 92 billion 500 million yuan and the annual net profit is about 9 billion 400 million yuan.

It is understood that Sheng Hong refining and chemical products PX will directly supply Honggang petrochemical production of purified terephthalic acid (PTA), Honggang Petrochemical produces PTA and Sheng Hong refining output ethylene glycol (MEG) will be further provided to the national hope high-tech production of differential chemical fiber (POY, FDY, DTY, etc.), the company will form a "drop of oil" to "a silk" of the whole industry chain business operation.

According to the 2019 annual report, Dongsheng Hong's petrochemical business revenue amounted to 4 billion 298 million yuan, accounting for 17.27% of its revenue and 6% of gross profit margin. In the annual report, Dongsheng Hong said that the price changes of the main raw materials PTA and MEG are positively correlated with the fluctuation of crude oil prices.

In March 6th of this year, OPEC and Russia failed to reach a new production reduction agreement, and both announced the increase in production. The international oil price continued to plummet. As of March 31st, NYMEX crude oil prices hit bottom and reported 20.10 yuan / barrel. From April 1st onwards, international oil prices will gradually pick up. In April 9th, OPEC, Russia and the United States and other oil producing countries will hold an "OPEC+" emergency meeting to discuss a new round of "production reduction plan". On the same day, NYMEX crude oil opened for 26.28 yuan / barrel.

What are the advantages and disadvantages of the current low oil price to Sheng Hong refining?

A refinery in Shandong refinery said that many refinery companies processed crude oil last December or January this year. Affected by the epidemic, the utilization rate of land refining in 2 and March was relatively low, and the market consumption was relatively slow.

Xu Lei, an information analyst at JOYOU, said that because of the fact that the stock of raw materials was still the material above the lock price of 40-50 US dollars / barrel, the cost of high cost crude oil and low refined oil prices caused serious losses to some refineries.

Yang Xia, an information analyst at Zhuo Chuang, said that the low priced international crude oil ordered by the refinery should be transported to Shandong for at least 1 months. The refining industry is still basically buying high priced crude oil. The low oil price dividends may gradually emerge after April.

Chemical fiber business accounted for nearly 75% of revenue.

It is understood that the main business of Dongsheng Hong is the R & D, production and sale of civilian polyester filament. In the distribution map of "refining chemical fiber" industrial chain in the annual report of Dongsheng Hong 2019 annual report, the wholly-owned subsidiary of Guo Hong and its subordinate subsidiaries, Shenghong fiber, middle perch Technology and Hong Kong fiber, are responsible for the operation and management of civilian polyester filament.

It is understood that Dongsheng Hong 24 billion 888 million yuan business income, chemical fiber business income amounted to 18 billion 490 million yuan, accounting for 74.30% of the revenue, gross profit margin was 12.20%. Civilian polyester filament is mainly DTY, POY and FDY. It has been applied in the downstream of garments, home textiles and industrial textiles.

Among them, DTY is a type of textured yarn of polyester fiber. It is made of polyester (PET), which is made of high speed spinning polyester preoriented yarn (POY), and then processed by drawing false twist. It can be used for clothing fabrics (such as suits, shirts), bedding (such as quilt, bedspread, mosquito net) and decorative items (curtain cloth, sand release, wall covering, automotive upholstery cloth) and so on.

At present, Dongsheng Hong has 2 million 100 thousand tons / year difference in chemical fiber production capacity, product differentiation rate reached 90%, differentiated products of over 100 kinds, and DTY's operating income amounted to 11 billion 104 million yuan, revenue accounted for 44.62%, gross margin was 15.22%.

In addition, another main raw material of polyester (PET), the main body of the production of PTA, is Honggang petrochemical. At present, it has 1 million 500 thousand tons / year PTA capacity and is building 2 million 400 thousand tons / year PTA capacity. It is reported that Honggang Petrochemical is one of the main suppliers of PTA in East China.

Polyester filament as an important raw material for textiles, its market capacity and market prospects depend on the downstream textile industry's demand for polyester filament products. China has always been a major consumer of textiles and a major exporter of textiles. The textile industry has played an important role in stimulating consumption, booming the market, absorbing employment and expanding exports.

However, the export of domestic textiles has suffered setbacks in recent years. According to the report released by the China Textile Federation industrial and Economic Research Institute from March 25th to April 1st, the report on textile enterprises' resumption of production and resumption shows that the proportion of the 190 enterprises that started in this week reached 80% of the normal situation was 33.7%, and that of the enterprises with an order less than 50% was 23.2%, compared with two weeks ago, the order situation declined significantly.

However, in the long run, as China's economic development and the improvement of people's living standards, China's textile industry will maintain a good momentum of development. Dongsheng Hong expects that the consumption of polyester filament will show a steady growth trend. Meanwhile, the growth of consumption in downstream clothing, home textiles and industrial textiles will bring about a new round of demand growth for differentiated and functional polyester fibers, which is conducive to the structural adjustment and variety improvement of the polyester filament industry, and will also lead the polyester filament market to enter a sustainable development stage. 。