When a chemical fiber company reports a net profit surge of over 23 times in the first half of the year, the market tends to attribute it to cyclical tailwinds. But behind Hengyi Petrochemical's forecasted 5.5 to 6 billion yuan in net profit for H1 2026 lies a more significant signal: the profit logic of the fiber industry is being rewritten.
Three Pillars of the Profit Explosion
Hengyi's H1 net profit is expected to reach 5.5-6 billion yuan, a year-on-year increase of 2,326% to 2,547%. The first quarter alone contributed about 1.995 billion yuan, with the second quarter growing 76% to 101% sequentially. This explosive growth is not driven by a single factor.
The Brunei refinery project is the largest contributor. Supply-demand dynamics in Southeast Asian refined oil products remain tight, with spreads widening. The Brunei plant benefits from local tax incentives, market-based pricing, and low freight and insurance costs, achieving full production and sales. As the only Chinese chemical fiber company with an overseas refinery, Hengyi's locational advantage amplified in Q2.
Meanwhile, the 'anti-involution' in the PTA and polyester sectors is taking effect. After substantial optimization of capacity structure, profit recovery is sustainable. The ramp-up of the nylon chain also provides additional incremental gains. This means the chemical fiber segment is no longer a drag but forms a positive synergy with refining.
Three Projects Reshaping Industry Boundaries
More noteworthy are the three strategic projects under construction, which will determine the company's growth ceiling for the next five years.
Phase II of the Brunei refinery has a design capacity of 12 million tons per year and is expected to be completed by the end of 2028, bringing total Brunei capacity to 20 million tons per year. This is the only overseas capacity addition among private mega-refineries in recent years, making it strategically scarce. The Xinjiang coal-to-ethylene glycol project, with an annual capacity of 2.4 million tons, is expected to start production in H1 2028, opening a feedstock channel between coal chemicals and chemical fibers. The Jingzhou recycling new materials project uses waste textiles as feedstock to build a 300,000-ton-per-year demonstration facility, aligning with the 'dual carbon' policy.
Once these projects are completed, Hengyi will form a feedstock pattern of 'oil, coal, and textiles,' completely breaking free from dependence on a single crude oil source. For an industry long constrained by raw material price volatility, this is a fundamental restructuring of the industrial logic.
Can the Boom Last?
The market's biggest question is whether the 23-fold profit growth can be sustained.
From an industry logic perspective, the tight supply-demand balance in Southeast Asian refined oil products is unlikely to reverse in the short term, and the high profitability of the Brunei refinery should persist throughout the year. The capacity optimization in PTA and polyester has made substantial progress, and profit recovery is sustainable. Combined with the nylon project ramp-up, the full-year profit center will be permanently elevated compared to previous years.
However, risks remain: sharp fluctuations in international crude oil prices could trigger inventory write-downs; the Brunei Phase II and coal-to-ethylene glycol projects involve large investments and long construction periods, posing risks of delays; concentration of core capacity in a single region exposes the company to policy and geopolitical shocks; and weak downstream textile demand could dampen polyester profit recovery.
Industry Implications: From Cyclical to Growth Stock Valuation
Hengyi's case offers an important reference for the chemical fiber industry: as a company completes its upgrade from a 'refining-chemical fiber leader' to an 'oil-coal-textile integrated new materials enterprise,' its valuation logic should shift from cyclical to growth stock. The certainty of earnings and the sustainability of growth are the core drivers of value revaluation.
For buyers and factories, this means the raw material supply landscape is undergoing structural change. Going forward, the risk of relying on a single feedstock source will increase, while companies with multi-feedstock channels will gain advantages in pricing power and supply stability.