A private chemical fiber giant has delivered a stunning half-year report: net profit is expected to reach up to RMB 6 billion, a 23-fold year-on-year increase. Behind this figure lies the explosive power of overseas refining assets under a specific supply-demand structure, and more importantly, the strategic execution of a full-industry-chain layout beyond single-business dependence.
Core Logic Behind the Profit Surge
According to the company's public performance forecast, Hengyi Petrochemical's net profit attributable to shareholders for the first half of 2026 is expected to be between RMB 5.5 billion and 6 billion, a year-on-year increase of 2326% to 2547%. In the first quarter, net profit reached RMB 1.995 billion, and in the second quarter, it grew another 76% to 101% quarter-on-quarter, showing a steep upward profit curve.
The primary driver is the Brunei refining project. The supply-demand balance for refined oil products in Southeast Asia has been persistently tight, and in the first quarter of 2026, the crack spread widened significantly, substantially boosting refining margins. As the only domestic chemical fiber company with an overseas refinery, Hengyi's Brunei plant benefits from local tax incentives, market-based pricing, and much lower freight and insurance costs than domestic plants, keeping per-ton product profitability at a high level with full production and full sales.
Meanwhile, after years of capacity consolidation, the PTA and polyester sectors have seen a substantial improvement in the supply-demand balance, and profit recovery is underway. Capacity release from the nylon chain has also provided additional profit growth. The combination of these factors means Hengyi's first-half performance is not a single-point explosion but a systemic resonance.
Three Strategic Projects Reshaping the Industry Landscape
Beyond the high profit growth, what deserves more industry attention are the three strategic construction projects Hengyi is advancing. These projects will fundamentally change the company's asset structure and risk resilience.
The Brunei Phase II project has been fully launched, with an optimized design capacity of 12 million tons per year, mainly producing diesel, PX, and benzene, and is scheduled for completion by the 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 addition among private mega-refineries in recent years.
The Xinjiang coal-to-ethylene glycol project plans to build an annual production capacity of 2.4 million tons of high-quality fiber-grade coal-to-ethylene glycol, expected to be operational in the first half of 2028. The strategic significance is to replace crude oil with coal as a raw material source, creating a cost hedge when oil prices fluctuate.
The Hubei Jingzhou recycling new materials project targets the waste textile recycling track, planning to build a 300,000-ton-per-year demonstration project with a construction period of only 18 months. This project aligns with the national "dual carbon" strategy and circular economy policies. Once operational, it will give Hengyi a unique "oil-coal-fabric" three-pronged raw material structure, completely breaking its dependence on a single crude oil source.
For buyers and downstream companies, this means Hengyi's supply chain stability will significantly improve in the future—regardless of crude oil price fluctuations, the company can adjust costs through different raw material routes, thereby influencing the pricing logic of polyester and chemical fiber products.
Assessing the Sustainability of High Profitability
A key question for the market is whether this 23-fold profit surge is a cyclical pulse or a new profit baseline.
From an industry fundamental perspective, the tight supply of refined oil products in Southeast Asia is unlikely to reverse in the short term. Refining capacity growth in the region is limited, while demand continues to rise with economic development, suggesting crack spreads can remain high. This means the excess profit from the Brunei refining project can at least sustain through 2026.
The capacity landscape in the PTA and polyester sectors has undergone substantial optimization. Past anti-cannibalization competition has eliminated some outdated capacity, and the bargaining power of leading companies is recovering. The continued ramp-up of the nylon project will also provide profit increments.
However, risks are not negligible. A sharp drop in international crude oil prices would not only bring inventory devaluation pressure but also erode refining profits as crack spreads narrow. The Brunei Phase II and Xinjiang coal-to-ethylene glycol projects involve massive investments and long construction periods, posing risks of delays and financial strain. Concentrating core refining capacity in a single region like Brunei exposes the company to potential policy or geopolitical changes that could impact supply stability. If downstream textile demand recovery falls short of expectations, it will also drag on polyester-side profit recovery.