Investment highlights:

Crude oil price shocks partly dragged down Q3 results, and Brunei achieved full production in Phase I

With 2024Q3, the company achieved revenue of 30.051 billion yuan, -7.162 billion yuan year on year, -3.058 billion yuan; realized net profit of -0.199 billion yuan, -0.33 billion yuan year on year, -0.216 billion yuan month on month; realized gross profit of 1.16 billion yuan, -0.672 billion yuan year on year, and +0.052 billion yuan month on month. In terms of period expenses, 2024Q3's sales/management/ R&D/ finance expenses were 0.50/0.267/0.16/0.961 billion yuan, respectively, -0.21/-1.71/+0.27/+0.096 billion yuan year-on-year, and -0.03/-0.23/ -0.08/+0.282 billion yuan.

According to Wind, 2024Q3, the average price of Brent crude oil is 79 US dollars/barrel, -6 US dollars/barrel; the average price of gasoline in Singapore is 85 US dollars/barrel, -9 US dollars/barrel; the average price of diesel in Singapore is 92 US dollars/barrel, -8 US dollars/barrel; PTA average price is 5,441 yuan/ton, -488 yuan/ton. By sector, Hengyi Petrochemical Holdings has a total aggregate production capacity of 11.615 million tons. The production capacity is among the highest in the industry. Entering the fourth quarter, e-commerce festivals at home and abroad and Christmas are coming, and autumn and winter orders are gradually being placed. Demand for filament is expected to be driven by demand for filament. As a leading enterprise in the industry, it is expected to benefit greatly. In recent years, the company has continuously increased the proportion of differentiated chemical fiber varieties, focused on promoting differentiated filament products, and at the same time accelerated the promotion of the new green and environmentally friendly product “Yitaikang”, and continued to lead the technological progress of the chemical fiber industry. In the refining and chemical sector, the first phase of the Hengyi Brunei project has gone through technological transformation and upgrading, and has now achieved full production and smooth overall production and sales. Furthermore, ASEAN countries' GDP growth rate remained high in 2024, driving further growth in demand for refined and chemical products. Meanwhile, there has been some recovery in the price spread of refined oil products in Singapore. With the implementation of this technological transformation and upgrading, the profitability of the Brunei refinery is expected to continue to increase steadily in the future.

A repurchase plan was launched in due course, and the Guangxi Qinzhou nylon project progressed in an orderly manner

On October 23, 2024, the company issued an announcement on the share repurchase plan (phase 5) and a special loan for share repurchase from financial institutions. It plans to use its own funds and special loan funds for stock repurchase to repurchase the company's shares through centralized bidding transactions. The total repurchase capital is not less than RMB 125 million and no more than RMB 250 million; the repurchase price is no more than RMB 9.00 per share. The company plans to use the repurchase of shares to implement employee stock ownership plans or share incentives to further improve The corporate governance structure ensures the achievement of the company's long-term business goals, promotes the interests of all shareholders, and enhances the overall value of the company.

Meanwhile, Guangxi Hengyi's “caprolactame-polyamide industry integration and supporting project with an annual output of 1.2 million tons” has entered the peak stage of equipment installation. After the project is completed and put into operation, the company's performance is expected to further increase, increase the company's market share in the nylon field, effectively reinforce the downstream industrial chain, give full play to the company's unique advantages of “polyester+nylon” dual “polyester” drive, and further enhance the advantages of a balanced integrated industrial chain with a high degree of compatibility between upstream and downstream.

Profit forecasts and investment ratings

The company's 2024-2026 revenue is estimated to be 127.166, 142.079, and 147.063 billion yuan, respectively, and net profit to mother is 0.552, 1.149, and 1.511 billion yuan respectively, corresponding to PE 44, 21, and 16 times, respectively. The company is deeply involved in the petrochemical fiber industry. It is a domestic “refining-chemical-chemical fiber” integrated private multinational leading enterprise. The company continues to expand and strengthen the chain, continue to enrich the variety of products, optimize the product structure, and maintain the “buy” rating.

Risk warning

Policy implementation, new production capacity construction progress falls short of expectations, new production capacity contribution performance falls short of expectations, raw material prices fluctuate, environmental policy changes, exchange rates fluctuate sharply, and the economy has declined sharply.