The "report card" of the refining and chemical giants has been released one after another.
As of April 27, the six major private refining and chemical enterprises in A-share - Hengli Petrochemical, Rongsheng Petrochemical, Dongfang Shenghong, Hengyi Petrochemical, Tongkun Co., Ltd., and Xinfengming have all disclosed their 2023 annual reports. After experiencing a short boom cycle before 2019, the refining and chemical industry has encountered headwinds since 2020, and the refining and chemical polyester industry is facing a vicious circle of continuous high costs, continuous expansion of midstream and downstream product production capacity, and continuous convergence of processing fees, and the industry will still present a state of "only production but not profit" in 2023.
Judging from the financial reports, the performance of most refining and chemical enterprises has improved marginally, and the overall profit has returned to positive. However, a detailed analysis shows that in recent years, the integrated projects laid out by major enterprises have shown a divergent trend in business results.
Looking forward to 2024, analysts told reporters that PTA and polyester processing fees in the polyester industry chain are still difficult to boost in the short term, and refining and chemical companies may aim at profitable products and continue to take the initiative to adjust their business.
Differentiated performance
Although they belong to the same large refining and chemical industry, the differences in business focus, technical level, and asset structure have led to large differences in the profitability of each company.
Among the six major refining and chemical enterprises, Hengli Petrochemical has the best life. Its net profit attributable to the parent company in 2023 will be 6.905 billion yuan, an increase of 197.83% year-on-year, which is higher than the sum of the net profit attributable to the parent company of the other five companies in 2023. At the same time, the company's gross profit margin will increase by 3.04 percentage points in 2023, of which the contribution of the refining and chemical sector to gross profit will increase to 40%, which has become the main reason for the gap with other peers.
The reason behind this is that crude oil prices will maintain a medium-to-high level in 2023, and will begin to rise in the second half of the year with the global geopolitical situation, and the price of refining and chemical products will increase accordingly, which will stimulate the profitability of PX products in the refining and chemical sector of Hengli Petrochemical to continue to rise.
In addition, Hengli Petrochemical Unit has advantages in cost and product structure, so it is unique in the performance of the six major refining and chemical enterprises.
"The company's crude oil processing adaptability is strong, and even under medium to high oil prices, it can still obtain stable profits through the processing of inferior oil and unique refining processes...... The boiling bed process adopted by the residue hydrogenation unit has largely solved the problem that heavy oil cannot be eaten and squeezed out, increased the utilization rate of crude oil by 5%, and increased the production of high value-added chemicals by more than one million tons. Wu Junyan, an analyst at Donghai Securities, mentioned in the research report.
Of course, PX production capacity is not exclusive to Hengli Petrochemical. Among the remaining five refining and chemical companies, Rongsheng Petrochemical's Zhejiang Petrochemical has a total PX production capacity of 900 tons/year in the two phases, which is higher than Hengli Petrochemical's 5.2 million tons/year, while Shenghong Refining & Chemical, a subsidiary of Dongfang Shenghong, also has a PX capacity of 2.8 million tons/year. However, neither company has been able to rely on PX profits to achieve strong performance.
Among them, Oriental Shenghong will increase its operating income by 119% year-on-year in 2023 due to the commissioning of its Shenghong refining and chemical integration project of 16 million tons/year. However, in the same period, the company's net profit attributable to the parent company was only 717 million yuan, and the net profit deducted from the non-attributable parent company after deducting subsidies and tax rebates was only 217 million yuan, and the profit increase was very limited.
The reason for "increasing revenue but not increasing profits" is mainly due to the fact that Dongfang Shenghong's 2023 financial report has made a provision for the decline in the price of inventory commodities of up to 1.719 billion yuan, resulting in the impairment of assets with an overall inventory decline of up to 2.21 billion yuan.
At the same time, both Dongfang Shenghong and Rongsheng Petrochemical have formed a large proportion of refined oil business due to the commissioning of Shenghong Refining & Chemical (put into operation at the end of 2022) and Zhejiang Petrochemical (put into operation in the second phase of 2022), respectively, and thus face a large amount of consumption tax costs.
Among them, the total consumption tax of Dongfang Shenghong in 2022 will be 7.464 billion yuan, an increase of 17 times year-on-year, and the consumption tax of Zhejiang Petrochemical will be as high as 20.158 billion yuan, a year-on-year increase of about 34%. In contrast, the Hengli petrochemical products of "heavy chemical and light oil" have preferential consumption tax exemption or tax rebate policies, and the annual consumption tax is only 557 million yuan.
The polyester end drags its feet
Judging from the performance of the polyester end of each enterprise, it can be described as "treating everyone equally".
For example, the PTA gross profit margin of Hengli Petrochemical in 2023 will only be -1.36%, Rongsheng Petrochemical will be -0.64%, Hengyi Petrochemical will be -0.85%, Tongkun Shares and Xinfengming will be -0.96% and -0.36% respectively.
The low gross profit margin of PTA is related to the fact that almost all leading enterprises have invested in new equipment in recent years.
An Guang, an analyst at Zhuochuang Information, said in an interview with the 21st Century Business Herald: "In 2023~2024, 19.5 million tons of new PTA production capacity will be added, and the overall processing cost line of the new capacity is mostly between 300~350 yuan/ton. ”
"Although the expansion rate of PTA will slow down in 2024, there will be no expansion of PX, and the mismatch of production capacity will lead to the concentration of profits in the industrial chain on PX. An Guang pointed out.
In addition, although PTA's downstream polyester products enjoy a certain cost advantage in the context of PTA expansion and price reduction, due to the poor global total demand boom and the expansion of polyester devices, polyester processing costs continue to maintain a low level.
For example, the gross profit margin of the chemical fiber segment was 5.77% and 5.6% respectively, although it increased by 2.30 and 2.33 percentage points respectively over the same period last year, but it was still in a historically low position.
The good news is that polyester production capacity will face an inflection point in 2024, but it remains to be seen whether the processing fee will increase in price.
"The pace of high capacity expansion of polyester staple fiber will end in 2024, and the production capacity will turn negative. In 2024, the contraction of the supply side of polyester staple fiber will be more obvious, and the expansion of the demand side will be relatively weak, but the pattern of oversupply will not change, and the processing fee will still be at a low level during the year. From the perspective of the long cycle, the supply and demand pattern of polyester staple fiber will gradually improve in the next few years, which is expected to help the processing fee rebound. However, at present, the gross profit loss of polyester staple fiber is serious, and some polyester companies will focus more on the production of other polyester products with reasonable profits, while the single production of polyester staple fiber enterprises will face great pressure. Zhuochuang Information analyst He Qing pointed out in an interview with reporters.
It is worth noting that Xin Fengming abandoned its plan to participate in the Tongkun Guangxi integration project last year, and Hengyi Petrochemical recently announced the termination of its private placement financing plan to shareholders. The pace of production in the polyester industry is suspected to have begun to downshift.
"With the development of industrial chain integration, the concentration of polyester filament industry continues to increase, and leading enterprises also intend to improve the industry through their own influence, mainly through self-discipline and convergence of new production rhythm to improve the industry cycle. Zhuochuang Information analyst Zhai Xinyu pointed out.
Zhai Xinyu also pointed out that with the rapid development of the domestic polyester industry chain in recent years, the company is nearing the end of making up for shortcomings, and the follow-up is more focused on sustainable and differentiated product investment, and the strategic direction of the enterprise has also developed from focusing on domestic to global, so the investment performance is relatively cautious.
Source: 21st Century Business Herald