A 23-fold net profit surge is no cyclical pulse but a concentrated payoff of global expansion. Hengyi Petrochemical expects H1 2026 net profit of 5.5-6 billion yuan, up 2,326%-2,547% year-on-year—a rare milestone in the chemical fiber industry.
The Refining Dividend: Brunei Project's Locational Moat
The core driver is the Brunei refining project. Southeast Asia's refined oil market remains structurally tight, with spreads widening sharply in Q1 2026. Hengyi's Brunei plant benefits from local tax incentives, market-based pricing, and low freight costs, achieving full-capacity production. Q1 net profit hit 1.995 billion yuan, surging 3,774% year-on-year. Q2 rose another 76%-101% sequentially to 3.5-4 billion yuan.
This means Hengyi's per-ton profitability stays high, acting as a profit stabilizer. Compared to domestic refiners constrained by overcapacity and price controls, Hengyi's overseas footprint creates a natural competitive barrier. For downstream buyers, supply stability for PX and benzene improves, but price volatility remains a concern.
Three Major Projects: From Refining Leader to 'Oil-Coal-Fabric' Integration
Hengyi is accelerating three strategic projects to reshape industry boundaries. The Brunei Phase II, with optimized capacity of 12 million tons/year, targets completion by end-2028, bringing total Brunei capacity to 20 million tons/year—the only overseas capacity addition among private mega-refiners. The Xinjiang coal-to-ethylene glycol project, 2.4 million tons/year, is slated for H1 2028, directly lowering polyester feedstock costs. The Jingzhou recycling project uses waste textiles as raw material for 300,000 tons/year, aligning with carbon-neutral policies.
These moves free Hengyi from sole reliance on crude oil, creating an 'oil-coal-fabric' parallel structure. For the textile industry, diversified feedstock supply could stabilize prices, while the recycling project offers a green transition model.
Sustainability of the Boom: Risks and Opportunities
Short-term, Southeast Asia's tight oil product market is unlikely to reverse, sustaining Brunei's high profitability. PTA and polyester sectors have structurally optimized capacity, supporting earnings recovery. However, risks loom: sharp oil price swings could trigger inventory write-downs; long project lead times pose delay risks; concentration in Brunei exposes to geopolitical shocks.
Downstream textile demand, if weaker than expected, would pressure polyester margins. Global textile consumption recovery is uneven, so foreign trade firms should watch demand-side transmission.