Hengyi Petrochemical expects net profit of 5.5 to 6.0 billion yuan for the first half of 2026, a year-on-year increase of over 23 times. This figure is extremely rare in the chemical fiber industry, with single-quarter profit growth of 76% to 101%. The explosive profit growth is not accidental, but a concentrated release of the Brunei refining project against the backdrop of persistently tight supply and demand in the Southeast Asian refined oil market.
Overseas Refining Becomes Core Profit Engine
Hengyi Petrochemical is the only leading chemical fiber company with an overseas refinery. Its Brunei refining project enjoyed multiple advantages during the reporting period, including tax incentives, market-based pricing, and low freight and insurance costs, achieving full production and full sales. The long-term tight supply of refined oil products in Southeast Asia and the widening price spread in Q1 2026 led to a significant increase in refining business profitability, becoming the core factor for the company's current and future performance growth.
Three Major Projects Build 'Oil-Coal-Cloth' Structure
Beyond profit growth, Hengyi is accelerating three strategic projects to reduce dependence on a single crude oil feedstock.
- Brunei Phase II: Optimized capacity of 12 million tons/year, producing diesel, PX, benzene and other high-value products, targeting completion by end of 2028. Total capacity will reach 20 million tons/year.
- Xinjiang Coal-to-Ethylene Glycol Project: 2.4 million tons/year of high-quality fiber-grade coal-to-ethylene glycol, expected to be operational by H1 2028.
- Hubei Jingzhou Recycling New Materials Project: 300,000 tons/year of recycled new materials using waste textiles as feedstock, construction period 18 months.
These projects will create a unique 'oil, coal, cloth' industry structure, enhancing profit stability across the entire chain.
Can High Boom Continue? Risks and Opportunities
The market is concerned about the sustainability of high earnings. The tight supply-demand pattern for refined oil products in Southeast Asia is unlikely to reverse quickly, so high profitability from Brunei is expected to last for the whole year. The capacity landscape for PTA and polyester has been substantially optimized, making profit recovery sustainable. However, potential risks include: sharp fluctuations in international crude oil prices; project delays and funding pressure for large-scale projects; geopolitical risks in Brunei; and weaker-than-expected downstream textile demand.