A company that started with polyester and PTA has seen its half-year net profit surge over 23 times—one of the most revealing cases in the 2026 chemical industry. Hengyi Petrochemical's June 25 performance forecast shows H1 net profit attributable to shareholders is expected between RMB 5.5 billion and 6 billion, up 2,326% to 2,547% year-on-year. This far exceeds the industry average and is not merely a cyclical spike, but the crystallization of years of overseas refinery deployment and full-chain cultivation.
Brunei Refinery: The Core Profit Engine
Hengyi's Q1 net profit reached RMB 1.995 billion, up 3,774% YoY, with adjusted net profit surging 23,640%. In Q2, tight supply-demand in Southeast Asian refined oil products further released the profit elasticity of the Brunei refinery. Estimates show Q2 net profit of about RMB 3.5-4 billion, up 76%-101% quarter-on-quarter. CITIC Securities noted that Q1 2026 Southeast Asian refined oil spreads widened significantly, boosting refining profits. Hengyi is the only domestic chemical fiber leader with an overseas refinery, a scarce advantage amid global overcapacity.
The Brunei refinery enjoys tax incentives, market-based pricing, and low freight, achieving full production and sales. Its high per-ton product profitability makes it the core of current and future growth. For buyers, this means Hengyi has a cost advantage in supplying PX and benzene, reducing raw material price volatility risk.
Three Strategic Projects: From 'Refining-Chemical Fiber' to 'Oil-Coal-Textile' Integration
While profits soar, Hengyi is accelerating three major projects. The Brunei Phase II project, with optimized capacity of 12 million tons/year, targets diesel, PX, and benzene, aiming for completion by end-2028. Total Brunei capacity will then reach 20 million tons/year, creating deep industrial synergy. This is the only overseas capacity addition among private Chinese mega-refiners in recent years.
The Xinjiang coal-to-ethylene glycol project plans 2.4 million tons/year of high-quality fiber-grade MEG, expected online by H1 2028. This reduces reliance on crude oil. The Hubei Jingzhou circular new materials project, a 300,000-ton/year demonstration plant using waste textiles as feedstock, aligns with China's dual-carbon goals and circular economy policies. Its 18-month construction cycle means rapid deployment.
After these projects, Hengyi will form a unique 'oil-coal-textile' structure. For downstream textile firms, this means more diversified raw material supply and potentially greater price stability.
Sustainability of High Prosperity: Opportunities and Risks
The key question is whether this profit surge can last. Tight Southeast Asian refined oil supply-demand is unlikely to reverse soon, supporting Brunei's high margins through the year. PTA and polyester industry capacity has meaningfully optimized, making profit recovery sustainable. Coupled with the nylon project ramp-up, the annual profit center may permanently shift upward.
But four risks loom: First, sharp oil price drops could cause inventory write-downs and narrow crack spreads. Second, large-scale projects like Brunei Phase II face delays and capital pressure. Third, concentration of refining capacity in Brunei exposes Hengyi to policy and geopolitical shifts in the host country. Fourth, weaker-than-expected downstream textile demand could slow polyester profit recovery.