In the first half of 2026, Hengyi Petrochemical delivered a financial report that caught the entire chemical fiber industry's attention: net profit attributable to shareholders is expected to range between RMB 5.5 billion and 6.0 billion, a year-on-year increase of over 23 times. This surge is no cyclical fluke but a concentrated release of years of global布局 and full-industry-chain深耕.
Core Engine of Profit Explosion
The core driver of Hengyi's profit explosion is its Brunei refining project. As the only leading domestic chemical fiber company with an overseas refinery, Hengyi fully benefits from the persistently tight supply-demand balance in Southeast Asia's refined oil product market. In Q1, net profit reached RMB 1.995 billion, up over 37 times year-on-year; in Q2, refining profitability in Southeast Asia further expanded, with quarterly net profit growing 76% to 101% sequentially, reaching approximately RMB 3.5 to 4.0 billion.
The Brunei refinery's advantages lie in three areas: first, long-term supply shortages of refined products in Southeast Asia create much wider spreads than in China; second, local tax incentives, market-based pricing, and low freight and insurance costs form a cost moat; third, profitability of chemical products like PX and benzene remains high. These factors combined enable the Brunei refinery to operate at full capacity with full sales, maintaining high per-ton product profitability.
Three Strategic Projects Reshape Industrial Landscape
While enjoying profit growth, Hengyi is advancing three strategic projects that will fundamentally change its business structure.
The Brunei Phase II project has been fully launched, with design capacity optimized to 12 million tons per year, mainly producing diesel, PX, benzene, and other high-value-added products, targeting completion by end of 2028. Upon completion, the total capacity of the Brunei refinery will reach 20 million tons per year, making it the only overseas capacity increment among private large-scale refineries in recent years.
The Xinjiang coal-to-ethylene glycol project plans to build 2.4 million tons per year of high-quality fiber-grade coal-to-ethylene glycol, expected to start production in the first half of 2028. This布局 frees the company from sole dependence on crude oil feedstock, forming a dual feedstock system of 'oil head' and 'coal head'.
The Hubei Jingzhou recycled materials project targets waste textile recycling, planning a 300,000-ton-per-year industrial demonstration project with an 18-month construction period. This project aligns with the national 'dual carbon' strategy, and upon completion, the company will form a unique 'oil, coal, textile' parallel industrial structure.
Sustainability of Boom: Short-Term Certain, Long-Term Cautious
The market is widely concerned about whether this high-profit cycle can continue. From an industry logic perspective, the tight supply-demand balance in Southeast Asian refined products is unlikely to reverse in the short term, and Brunei's high refining profitability is expected to last through the year. The PTA and polyester industry capacity structure has been substantially optimized, with anti-internal-competition policies progressing, making profitability recovery sustainable. Combined with the continued ramp-up of the nylon project, the full-year profit center will permanently shift upward compared to previous years.
However, potential risks cannot be ignored:
- Sharp fluctuations in international crude oil prices may cause inventory write-down pressure, and narrowing crack spreads will directly impact refining profitability
- Projects like Brunei Phase II and coal-to-ethylene glycol involve large investments and long construction periods, posing risks of delayed production and funding pressure
- Core refining capacity concentrated in a single region of Brunei exposes the company to host-country policy and geopolitical changes that could impact cost advantages and feedstock supply stability
- If downstream textile demand falls short of expectations, it will affect the pace of polyester profitability recovery