A textile fiber enterprise achieving a net profit increase of over 23 times in half a year is not a random cyclical pulse but the result of global layout and deep industrial integration.
Hengyi Petrochemical's 2026 first-half performance forecast shows expected net profit attributable to shareholders of 5.5 to 6.0 billion yuan, a year-on-year increase of 2326% to 2547%. Even within the entire chemical sector, such growth is striking.
The Underlying Logic of the Profit Surge The steep profit curve did not appear from nowhere. In the first quarter, Hengyi already achieved net profit of 1.995 billion yuan, a year-on-year surge of 3774%, with non-recurring net profit rising an astonishing 23,640%. Entering the second quarter, single-quarter net profit further climbed to 3.5 to 4.0 billion yuan, a quarter-on-quarter increase of 76% to 101%.
Deconstructing the drivers, the core engine is the Brunei refining project. The refined oil market in Southeast Asia has long been in a state of tight supply and demand, with spreads widening significantly. Leveraging its geographical advantages, the Brunei refinery enjoys tax benefits, market-based pricing, and lower freight and insurance costs, achieving full production and full sales. According to industry public data, the per-ton profit of the Brunei project far exceeds that of similar domestic units, becoming the company's profit anchor.
Simultaneously, capacity release from the nylon chain and a recovery in the polyester market also contributed. After years of overcapacity, the supply-demand landscape in PTA and polyester has seen substantial optimization, laying a foundation for sustainable profit recovery.
Three Strategic Projects: From Refining to 'Oil-Coal-Textile' Integration More noteworthy are three strategic construction projects Hengyi is advancing, which will define its future industrial boundaries.
The Brunei Phase II project has been fully launched, with designed capacity adjusted to 12 million tons per year, primarily producing high-value products like diesel, PX, and benzene, targeting completion by the end of 2028. Upon completion, the Brunei refinery's total capacity will reach 20 million tons per year, forming deep industrial synergy. Notably, this is the only overseas capacity increment among private large-scale refiners in recent years, highlighting its strategic scarcity.
The Xinjiang coal-to-ethylene glycol project plans to produce 2.4 million tons per year of high-quality fiber-grade coal-based ethylene glycol, expected to be operational by the first half of 2028. This layout breaks the single reliance on crude oil for traditional refining, extending raw material sources to coal.
The Jingzhou recycling material project in Hubei uses waste textiles as raw material to build a 300,000 tons per year demonstration project, with a construction period of 18 months. This project directly responds to the national 'dual carbon' strategy and waste textile recycling policies. Once operational, it will create a parallel 'oil, coal, and textile' raw material structure, significantly enhancing the stability of overall chain profits.
Can the High Boom Continue? The market is divided on the sustainability of Hengyi's high-profit growth cycle. From an industry logic perspective, the tight supply-demand situation for refined oil in Southeast Asia is unlikely to reverse in the short term, and the high profitability of the Brunei refinery is expected to last for the full year. The capacity reduction in the PTA and polyester sectors has entered a substantive phase, making profit recovery sustainable. Coupled with the ramp-up of the nylon project, the full-year profit center is likely to shift upward compared to previous years.
However, risks cannot be ignored.
- Significant fluctuations in international crude oil prices: A rapid price drop could trigger inventory write-down pressure, and narrowing crack spreads would directly erode refining profits.
- Long project construction periods: Projects like Brunei Phase II and the coal-to-ethylene glycol project involve massive investment, posing risks of delayed commissioning or capital strain.
- Regional concentration risk: Core refining capacity is concentrated in a single region (Brunei), where changes in host country policies or geopolitical environment could impact cost advantages and raw material supply stability.
- Downstream demand volatility: If textile demand falls short of expectations, it will affect the pace of profit recovery in the polyester segment.