Semi-annual performance of leading polyester companies diversified in H1 2023

Recently, the leading enterprises in PFY industry have successively released their 2023 semi-annual report. The following is a brief analysis of the performance in each enterprise.

In terms of operating income, Hengli Petrochemical and Hengyi Petrochemical declined in the first half of 2023 compared with last year, while the other four companies increased, among which Eastern Shenghong was far ahead of the others, up by as high as 117.91%. However, according to the specific semi-annual report, the main reason for the year-on-year increase in Shenghong's operating income was the increase of its petrochemical and chemical new material plate, which accounted for 82.42% of the operating income, with a year-on-year growth of 173.72%, while the growth rate of chemical fiber sector was only 12.4%. In terms of price on polyester industry chain, since the crude oil price in the first half of 2023 was obviously lower than that of the same period in last year, the average price of each link of the whole polyester industry chain in the first half of 2023 was lower than that of the corresponding period of last year, which led to the shrinkage of operating income under the same sales volume. However, as many new polyester units satrted operation and sales volume improved, the operating income increased. For example, in terms of polyester sector, these six enterprises all had new plants, among which Tongkun had the largest new polyester capacity. In addition, the operating income of polyester factory was also related to the change of its inventory. The decrease of inventory would increase the corresponding operating income. In the first half of 2023, the inventory of Rongsheng, Hengli, Shenghong and Hengyi decreased, especially the inventory of Rongsheng decreased greatly, up to 15.45 billion yuan. In summary, it was believed that the main reason for the increase in revenue of Rongsheng was the decline in its inventory, the major reason for the increase in revenue of Shenghong was the rise in its petrochemical and chemical new material business, and the main reason for the growth in revenue of Tongkun and Xinfengming might be the release of new capacity.

As for the net profit in H1 2023, in addition to losses in Rongsheng, the rest of the five companies were profitable. But if considering each inventory amount changes, among them Hengli, Shenghong, Hengyi who could be profitable might mainly benefit from the decline of inventory amount. Xinfengming and Shenghong saw rising net profit on the year and the net profit in the remaining four all fell sharply. Although in the first half of 2023, with open pandemic control, the domestic economy recovered somewhat, but it was only a weak recovery trend. New capacity of polyester industry chain was released, while the downstream demand recovered slowly, resulting in narrowing price spread of main products of polyester enterprises and the decline of gross profit rate. Compared with the gross profit rate in recent two years, in addition to Shenghong, the gross profit rate of the rest five dived in H1 2023. Among them, the increase of Shenghong was mainly due to the increase of its petrochemical and chemical new material sector. The gross profit rate of this sector in the first half of 2023 was 15.01%, with a year-on-year increase of 2.58%, while the gross profit of chemical fiber link was 5.09%, down by 5.81% year on year.