In the first half of 2026, Hengyi Petrochemical delivered a stunning performance: net profit attributable to shareholders is expected to reach 5.5 to 6 billion yuan, a year-on-year surge of 2,326% to 2,547%. This figure not only sets a new earnings record for the company but also establishes a benchmark in the chemical fiber industry.
Three Engines Behind the Profit Surge
The profit explosion did not happen by chance. The primary driver is the Brunei refinery project. The supply-demand balance for refined oil products in Southeast Asia has remained persistently tight, with spreads widening significantly. The Brunei refinery, benefiting from tax incentives, market-based pricing, and low transportation and insurance costs, has achieved full production and full sales, with per-ton product margins at historic highs. In Q1, Hengyi's net profit reached 1.995 billion yuan, a nearly 38-fold increase year-on-year. In Q2, it grew another 76% to 101% quarter-on-quarter, demonstrating the strong elasticity of the refining business.
Meanwhile, the price war in the PTA and polyester sectors has eased, and improving supply-demand dynamics are driving profit recovery. New capacity in the nylon chain also began to contribute in the first half. The combination of these three factors has pushed Hengyi's profit curve sharply upward.
Three Major Projects: From Refining Leader to 'Oil, Coal, Fabric' Integration
While the first-half profit surge reflects the payoff from existing assets, the three strategic projects under construction will determine Hengyi's competitive position over the next five years.
Phase II of the Brunei refinery has been fully launched, with an optimized design capacity of 12 million tons per year, targeting completion by the end of 2028. Once operational, the total capacity of the Brunei refinery will reach 20 million tons per year, making it the only overseas capacity addition among private mega-refiners. The strategic scarcity of this layout is particularly prominent given the limited expansion of refining capacity in Southeast Asia.
The Xinjiang coal-to-ethylene glycol project plans to produce 2.4 million tons of high-quality fiber-grade ethylene glycol annually, expected to be operational by the first half of 2028. This project directly links coal chemicals with chemical fiber raw materials, reducing dependence on the crude oil route.
The Hubei recycled materials project targets waste textile recycling, with a planned annual capacity of 300,000 tons of recycled new materials. With a construction period of only 18 months, this project aligns with China's 'dual carbon' policy and, upon completion, will create a unique 'oil, coal, and fabric' raw material system, significantly enhancing the resilience of the entire industry chain against risks.
Can the Boom Sustain?
The key question in the market is whether such high profit growth can be maintained. From an industry logic perspective, the tight supply-demand balance for refined oil products in Southeast Asia is unlikely to reverse in the short term, and the high profitability of the Brunei refinery is expected to persist throughout the year. After multiple rounds of industry consolidation, overcapacity pressure in the PTA and polyester sectors has eased, providing some sustainability to profit recovery.
However, risks cannot be ignored. A sharp drop in international crude oil prices would directly compress refining spreads and create inventory write-down pressure. Phase II of the Brunei project and the Xinjiang coal-to-glycol project involve large investments and long construction periods, posing risks of delays or cost overruns. Furthermore, the concentration of core capacity in a single region, Brunei, exposes the company to potential changes in host country policies or geopolitical environment, which could impact the stability of raw material supply. Weak downstream textile demand would also slow the pace of profit recovery in the polyester segment.