Hengyi Petrochemical Co., Ltd. (000703)

Individual Stock Analysis Report | Industry: Petrochemical-Chemical Fiber Integration | Report Date: September 14, 2026 | As of the close on September 11, 2026; certain technical indicators are taken from the Investing.com page at 10:05 GMT on September 11, 2026, and are not definitive official calculations after the A-share close.

This report is automatically compiled and generated by AI based on public information, for reference only, and does not constitute investment advice.

1. Core Summary

Hengyi Petrochemical's performance in the first half of 2026 showed a significant cyclical reversal: operating revenue of RMB 67.309 billion, up 20.28% year-on-year; net profit attributable to parent of RMB 5.902 billion, up 2,500.73% year-on-year, already significantly exceeding the full-year 2025 net profit attributable to parent of RMB 258 million. Among this, Hengyi Brunei achieved net profit of approximately RMB 6.521 billion in the first half, which is the core source of the performance improvement; the repair of refining-chemical spreads, improved profitability of Southeast Asian refined oil products and chemicals, as well as the profit recovery in the nylon, caprolactam (CPL), and polyester industrial chains jointly drove profit growth. However, net cash flow from operating activities during the same period was negative RMB 488 million, and the first-half profit has strong cyclical attributes and cannot be simply extrapolated as long-term stable profitability.

The company has built an integrated refining—aromatics—PTA—polyester/nylon industrial chain. In 2025, revenue was dominated by polyester products, accounting for 52.63%, with refining products accounting for 25.09%. The company possesses sizable refining-chemical, PTA, polyester fiber, polyester bottle chip, and CPL—PA6 assets, and has formed differentiated competitiveness through overseas refineries, port logistics, and industrial chain synergies. However, products such as PTA, conventional polyester filament, and polyester bottle chips are highly standardized, and overall bargaining power is limited; in 2025, PTA gross margin was only 0.37%, and polyester product gross margin was 4.07%, with profitability still clearly dependent on crude oil, PX, MEG prices, and product spread changes.

The market already has high expectations for the company's 2026 profit recovery. The institutional average forecast for 2026 net profit attributable to parent is approximately RMB 8.644 billion, approximately RMB 8.112 billion for 2027, and approximately RMB 9.376 billion for 2028. The forecast ranges and year-over-year fluctuations reflect divergent views on refining-chemical spreads, chemical fiber prosperity, and profit sustainability after a high base. As of September 11, 2026, the share price was RMB 17.35, down approximately 17.2% from the stage high of RMB 20.95 on August 24; the closing price was below MA5, MA10, and MA20, MACD was negative, and the short-term technical pattern was weak, but the share price has approached the lower Bollinger Band, with RSI at approximately 34, suggesting a possible technical rebound.

Recently, the company completed the early redemption arrangement for "Hengyi Convertible Bond 2," with conversion increasing total share capital from 3.821 billion shares to 4.112 billion shares, an increase of approximately 7.60%; at the same time, it plans to implement a 2026 interim cash dividend, with expected actual total dividend distribution of approximately RMB 3.357 billion, and is advancing the seventh employee stock ownership plan. The above matters improved the disposal of existing convertible bonds and shareholder return arrangements, but the share capital expansion will also bring potential dilution effects; as of September 14, 2026, the company had not yet released third-quarter or full-year earnings guidance.

2. Company Overview

2.1 Basic Information

2.2 Main Business and Product Layout

• Upstream refining and aromatics: Operates the Brunei refining Phase I project through Hengyi Brunei, with products including gasoline, diesel, jet fuel, PX, pure benzene, etc.; Phase I designed capacity is 8 million tons/year, mainly selling refined oil products and chemicals to Southeast Asia, Australia, and other markets
• Midstream petrochemical raw materials: Mainly include PTA, PIA, CPL, PX, pure benzene, and refining-chemical by-products; PTA is used to produce PET polyester products, PIA mainly supports polyester bottle chips, and CPL is mainly used to produce PA6 nylon chips
• Downstream polyester, nylon, and packaging materials: Include polyester filament POY, FDY, DTY, polyester staple fiber PSF, polyester chips, polyester bottle chips and RPET, PA6 chips, and related products
• Supply chain services: 2025 revenue RMB 6.567 billion, accounting for 5.78% of operating revenue

2.3 Upstream and Downstream Position in the Industrial Chain and Cost-Profit Structure

Hengyi Petrochemical covers multiple segments including refining, aromatics, PTA, polyester, and nylon, and is positioned as a midstream-to-integrated leader in the petrochemical-chemical fiber industrial chain. The company relies on refining and polymerization scale, internal industrial chain synergies, ports and cross-regional layout, and product structure upgrading to gain competitive advantages, but conventional PTA, polyester filament, and polyester bottle chips remain bulk products, and overall bargaining power is limited.

• Main purchases include crude oil, MEG, PX, pure benzene, and related aromatic raw materials: crude oil is used for Brunei refining, PX is used to produce PTA, MEG and PTA are jointly used to produce polyester, and pure benzene and related aromatic raw materials are used to produce CPL and other products.
• In 2025, the proportion of major raw material procurement amounts in total procurement was: crude oil 32.50%, MEG 8.90%, PX 6.81%, pure benzene 0.63%; the above raw materials all adopt inquiry-based procurement mode.
• Crude oil is the single raw material with the highest proportion of procurement cost, and the company's profitability is clearly affected by changes in international crude oil, PX, MEG prices, and product spreads.
• The company has certain internal conversion capability. Brunei refining produces PX and pure benzene, and domestic PTA and polyester segments absorb some industrial chain raw materials; however, MEG is still mainly externally purchased and cannot be regarded as complete self-sufficiency in polyester raw materials.
• The procurement amount from the top five suppliers was RMB 42.460 billion, accounting for 39.17% of total procurement in 2025; of which related-party procurement accounted for 29.50% of total annual procurement. The company's procurement is mainly bulk commodities, and supplier bargaining power is more affected by market benchmark prices and cannot be simply equated with the supplier concentration risk of core component suppliers in general manufacturing.
• Main downstream includes textiles and apparel, home textiles, industrial textiles, packaging, engineering materials, transportation, and industrial production. Polyester filament is mainly used for apparel, home textiles, and industrial textiles; bottle chips and RPET are used for beverage bottles, edible oil packaging, daily chemical packaging, pharmaceutical packaging, and films; PA6 is used for apparel, carpets, industrial yarn, engineering plastics, and films.
• In 2025, domestic revenue accounted for 58.43%, and overseas revenue accounted for 41.57%; direct sales revenue accounted for 96.73%, and distribution revenue accounted for 3.27%. The sales model is mainly direct sales, and customers are likely large chemical fiber, textile, packaging, trading, and industrial enterprises rather than end consumers.
• In 2025, sales to the top five customers totaled RMB 26.341 billion, accounting for 23.20% of total annual sales. This data is based on the 2025 annual report disclosure basis; the minutes did not provide other years' data for cross-verification; customer names in public reports are anonymized, and it is impossible to further determine the specific industry attributes of customers.
• Downstream customer concentration is not extreme, but products such as PTA, conventional polyester filament, and polyester bottle chips are highly standardized, and the company is usually a price taker. Product prices follow changes in PX, MEG, crude oil, and industry supply and demand, and it is difficult for the company to independently determine market prices.
• The proportion of differentiated fiber output increased to 35% in 2025, but this statistical basis cannot be directly equated with the proportion of differentiated product revenue or profit; the company also has layout in biodegradable fibers, recycled polyester, high value-added polyester, and nylon materials.
• In 2025, the top five customers accounted for 23.20% of sales, and the top five suppliers accounted for 39.17% of procurement. Supplier concentration was higher than customer concentration; the minutes did not provide specific data such as accounts receivable balance, accounts receivable as a proportion of revenue or net profit, accounts receivable turnover days, prepayments, and accounts payable, so it is impossible to further quantify working capital to verify bargaining relationships in the industrial chain.
• The 2025 customer and supplier concentration data comes from the company's annual report disclosure basis: top five customers accounted for 23.20% of total sales, top five suppliers accounted for 39.17% of total procurement, and related-party procurement among the top five suppliers accounted for 29.50% of total procurement. Customer and supplier names are anonymized as Customer 1, Supplier 1, etc.; the minutes did not provide other years' data for cross-verification, and the latest annual report shall prevail.

The company is positioned in the midstream-to-integrated part of the petrochemical-chemical fiber industrial chain, rather than being an upstream resource-monopoly type or a downstream brand high-margin enterprise. At present, profitability is mainly determined by changes in costs such as crude oil, PX, and MEG, refining and polyester product spreads, facility operating efficiency, and industry supply and demand; further improvement depends on the repair of refining-chemical product spreads, improvement in PTA supply and demand, an increased proportion of differentiated polyester and recycled materials, gradual ramp-up of the Guangxi CPL—PA6 project, and large-scale cost control. After the completion of Brunei refining Phase II, planned capacity is expected to reach 20 million tons/year, but this planned target cannot be counted as capacity already in operation as of the end of 2025.

3. Financial Data and Valuation Analysis

3.1 Recent Operating Performance

The first-half 2026 data comes from Hengyi Petrochemical's 2026 semi-annual report; the 2025 annual data comes from Hengyi Petrochemical's 2025 annual report. The first-half 2026 year-on-year data is calculated according to the company's retrospectively adjusted basis for the same period of 2025, involving changes in accounting policies and business combinations under common control. In the first half of 2026, basic earnings per share were RMB 1.75, diluted earnings per share were RMB 1.59, weighted average return on equity was 21.32%, net cash flow from operating activities was negative RMB 488 million, and net assets attributable to parent at period-end were RMB 30.493 billion.

In the first half of 2026, the company's performance showed a clear cyclical reversal, and net profit attributable to parent was already significantly higher than the full year of 2025. Profit growth mainly came from improved profitability of the Brunei refining project, relatively good spreads for Southeast Asian refined oil products and chemicals, volume growth in nylon and caprolactam businesses, and profit recovery in the polyester industrial chain. Subsidiary Hengyi Brunei achieved operating revenue of approximately RMB 28.369 billion and net profit of approximately RMB 6.521 billion in the first half, one of the core sources of performance growth. Operating cash flow during the same period remained negative, and first-half 2026 profit has strong cyclical attributes and should not be simply extrapolated as long-term stable profit.

3.2 Profit Forecast

The forecast data mainly comes from institutional forecasts for the past 6 months aggregated by Hithink RoyalFlush as of September 11, 2026; the number of institutions participating in the 2026 forecast was 12, and 11 for 2028; the number of institutions participating in the 2027 forecast was not disclosed. Institutions had significant divergence in 2027 profit forecasts, reflecting different judgments on refining-chemical spreads, chemical fiber prosperity, and profit sustainability after a high base.

3.3 Valuation Level and Institutional Ratings

As of September 11, 2026, the share price was approximately RMB 17.34—17.35, total share capital approximately 4.112 billion shares, and total market capitalization approximately RMB 71.3 billion to RMB 71.4 billion. The static or dynamic price-to-earnings ratio disclosed on market pages is approximately 12x; China Finance Online shows a price-to-earnings ratio of approximately 12.02x and price-to-book ratio of approximately 1.80x, while Lixinger shows a price-to-earnings ratio of approximately 12.47x and price-to-book ratio of approximately 2.48x. Different platforms differ due to different net assets, repurchased shares, earnings per share, and adjustment bases. According to the research minutes' own estimate, net profit attributable to parent for the trailing 12 months was approximately RMB 6.396 billion, corresponding to a PE of approximately 11.2x; based on net assets attributable to parent of RMB 30.493 billion at the end of June 2026, PB was approximately 2.34x. Based on the institutional average EPS forecast, the share price of RMB 17.35 corresponds to expected PE of approximately 7.6x, 8.1x, and 7.0x for 2026, 2027, and 2028, respectively; based on the institutional profit forecast range, the 2026 expected PE is approximately 6.9x to 13.0x. Recently explicitly disclosed brokerage target prices are mostly concentrated between RMB 19.10 and RMB 21.03, but third-party platform summaries differ considerably. The current low valuation is mainly based on the substantial 2026 profit recovery. The company's profitability is highly dependent on refining-chemical and chemical fiber industrial chain spreads, and first-half 2026 operating cash flow was negative RMB 488 million, with significant divergence in 2027 profit forecasts. Therefore, the current low valuation is closer to a low valuation after cyclical profit recovery and should not be simply regarded as an unconditional long-term low valuation; analysis should also focus on normalized profit, PB, and historical cyclical profit.

4. Recent News and Announcements

4.1 Early Redemption of "Hengyi Convertible Bond 2" Enters Implementation Stage

Hengyi Petrochemical disclosed on September 8, 2026 the "Important Indicative Announcement on the Early Redemption of 'Hengyi Convertible Bond 2' and the Last Conversion Day" (Announcement No.: 2026-146). The conditional redemption clause trigger date for "Hengyi Convertible Bond 2" was August 17, 2026, and September 8, 2026 was the last conversion day. Convertible bonds not converted after market close would be mandatorily redeemed at RMB 100.25 per bond. The trading suspension date was September 4, the conversion suspension date and redemption date were both September 9, the issuer's funds arrival date was September 14, and investor redemption payments were expected to arrive on September 16. This was a full redemption, and after completion, "Hengyi Convertible Bond 2" would be delisted from the Shenzhen Stock Exchange. The current annual interest rate of the convertible bond was 1.8%, and the conversion price had been adjusted from RMB 10.37/share to RMB 10.32/share since June 15, 2026. Convertible bond conversion will drive an increase in the company's total share capital. Early redemption helps conclude the existing convertible bond matter, but also brings share capital expansion and potential dilution effects.

4.2 Convertible Bond Conversion Leads to Substantial Increase in Registered Capital and Total Share Capital

Hengyi Petrochemical disclosed on September 10, 2026 the "Announcement on Changing Registered Capital and Amending the Articles of Association" (Announcement No.: 2026-149). From April 11, 2026 to September 8, 2026, due to conversion of "Hengyi Convertible Bond 2," the company's total number of shares increased from 3,821,083,211 shares to 4,111,588,968 shares, an increase of 290,505,757 shares, or approximately 7.60%; registered capital increased from RMB 3,821,083,211 to RMB 4,111,588,968. The company plans to amend the Articles of Association accordingly. As of September 14, 2026, this matter still needs to be submitted to the shareholders' meeting for deliberation.

4.3 2026 Interim Cash Dividend Plan About to Be Implemented

Hengyi Petrochemical disclosed on September 10, 2026 the "2026 Interim Equity Distribution Implementation Announcement" (Announcement No.: 2026-147). This time, based on the distribution base of 3,729,748,896 shares, being total share capital of 4,111,588,968 shares less 381,840,072 shares held in the repurchase special securities account, a cash dividend of RMB 9 per 10 shares (tax inclusive) will be distributed to all shareholders, with no bonus shares and no capital reserve conversion into share capital. The expected actual total cash dividend is RMB 3,356,774,006.40. The record date is September 17, 2026, and the ex-rights/ex-dividend date and expected cash dividend payment date are September 18. As of September 14, the dividend had not yet completed registration and distribution. Repurchased shares in the repurchase special securities account do not participate in this dividend.

4.4 Transfer Price of the Seventh Employee Stock Ownership Plan Adjusted Down to RMB 11.56/Share

Hengyi Petrochemical disclosed on September 10, 2026 the "Announcement on Adjusting the Transfer Price of the Seventh Employee Stock Ownership Plan" (Announcement No.: 2026-150). The seventh employee stock ownership plan plans to transfer repurchased shares in the company's repurchase special securities account, with the total number of shares to be transferred not exceeding 150,813,800 shares. Due to the company's implementation of the 2025 annual profit distribution and the 2026 interim profit distribution, the transfer price was adjusted from RMB 12.43/share to RMB 11.56/share. The original plan was to raise total funds of no more than RMB 1.550 billion, with the shares sourced from repurchased shares corresponding to the company's third repurchase plan. This adjustment has been reviewed and approved by the board's remuneration assessment and nomination committee and the board of directors, and no further submission to the shareholders' meeting is required. As of September 14, 2026, the final number of transferred shares, actual transfer timing, funding sources, and subsequent unlocking and performance assessment arrangements had not yet been fully determined.

4.5 The Fifth Extraordinary Shareholders' Meeting of 2026 Will Be Held on September 28

Hengyi Petrochemical disclosed on September 10, 2026 the "Notice on Convening the Fifth Extraordinary Shareholders' Meeting of 2026" (Announcement No.: 2026-151). The on-site meeting time is 14:30 on September 28, 2026, online voting time is September 28, and the record date is September 18. The meeting plans to deliberate matters such as the "Proposal on Changing Registered Capital and Amending the Articles of Association." As of September 14, 2026, the shareholders' meeting had not yet been held, and the registered capital and articles amendment matters were still at the stage before shareholders' meeting deliberation.

4.6 Repurchased Shares to Be Used Subsequently for Employee Stock Ownership Plan; No New Repurchase Plan in September

Hengyi Petrochemical completed the sixth share repurchase within 2026. The previous repurchase plan had total funds of no less than RMB 500 million and no more than RMB 1 billion, repurchase price no more than RMB 15/share, and repurchase period within 12 months from the date the board of directors approved the repurchase plan. The company disclosed the repurchase completion and share change announcement in May 2026. As of the disclosure basis of the 2026 semi-annual report, the company's repurchase special securities account held 381,840,072 shares, approximately 9.99% of total share capital. Some repurchased shares are intended for the seventh employee stock ownership plan, and another portion continues to remain in the repurchase special securities account. As of September 14, 2026, no announcement was found of the company initiating new repurchases or adjusting repurchase amounts in September.

4.7 Shareholder Pledge Ratio Approximately 2.92%; No New Large Pledges or Reductions Found in September

As of September 4, 2026, important shareholders had pledged approximately 120 million shares, approximately 2.92% of total A-share capital; among them, Zhejiang Hengyi Group Co., Ltd. had pledged approximately 115 million shares, approximately 6.79% of its shareholding and approximately 2.80% of total share capital. As of September 11, public data still showed the company's total pledge ratio at approximately 2.92% and total pledged shares at approximately 120 million shares, and no September announcements of new large pledges or release of pledges were found. Relevant pledge data mainly comes from equity pledge data platforms, and the company's formal announcements and China Securities Depository and Clearing data should ultimately prevail. The most recently explicitly disclosed controlling shareholder pledge release occurred in June 2026, when Zhejiang Hengyi Group released a pledge of 20 million shares.

4.8 First-Half 2026 Performance Basically in Line with Previous Earnings Guidance; No Third-Quarter or Full-Year Guidance Released Yet

The company's previously disclosed 2026 semi-annual earnings guidance showed that it expected net profit attributable to shareholders of the listed company in the first half of 2026 to be RMB 5.5 billion to RMB 6.0 billion, up approximately 2,326.31% to 2,546.88% year-on-year. The subsequently disclosed 2026 semi-annual report showed net profit attributable to parent of approximately RMB 5.902 billion, up 2,500.73% year-on-year, basically in line with the earnings guidance range. As of September 14, 2026, no new earnings guidance, earnings flash report, or earnings correction announcement for the third quarter or full year of 2026 was found.

4.9 No New Regulatory Penalties, Inquiries, or Investigations Found in September

The company had disclosed a stock trading abnormal fluctuation announcement on August 21 because the cumulative deviation of closing price gains exceeded 20% for three consecutive trading days from August 18 to August 20, 2026. The company stated that after verification, there was no information previously disclosed that needed correction or supplementation, and no undisclosed material information was found in recent public media reports that might have a relatively large impact on the company's share price. This matter occurred in August, not a new September regulatory penalty or inquiry. As of September 14, 2026, no September announcements of new administrative penalties, exchange disciplinary actions, regulatory letters, inquiry letters, or investigations were found.

4.10 No New Major M&A, Asset Restructuring, or Asset Sale Announcements Found in September

As of September 14, 2026, no new major M&A, major asset restructuring, or asset sale announcements by Hengyi Petrochemical in September 2026 were found. Earlier in 2026, the company's wholly owned subsidiary acquired 100% equity of Hengyi Energy Technology (Turpan) Co., Ltd. held by Hengyi Group for RMB 500 million in cash. That matter occurred in January to February 2026 and is not a latest September event.

5. Share Price Trend and Technical Analysis

5.1 Price Overview

5.2 Technical Indicators

Hengyi Petrochemical rose rapidly to RMB 20.95 in mid-to-late August 2026 and then pulled back. As of the September 11 close of RMB 17.35, it was already below MA5, MA10, and MA20, and the short-term moving averages showed a bearish arrangement. The share price is close to the lower Bollinger Band of RMB 16.78, and RSI is approximately 34, indicating relatively heavy selling pressure but not yet extreme oversold; at the same time, MACD is approximately -0.30 and judged as sell, indicating that a technical rebound is not yet equivalent to a trend reversal. Recent turnover was approximately RMB 1.256 billion to RMB 1.675 billion, with turnover rate of 1.76% to 2.40%. On September 11, turnover and turnover rate were within the recent normal range, and no extreme liquidity panic had yet appeared. In terms of shareholder structure, under the June 30, 2026 basis, the top ten circulating shareholders had relatively high concentration, with controlling shareholders and related parties accounting for a relatively large proportion, and actual free-float chips may be lower than nominal circulating share capital, but this data has a quarterly lag.

5.3 Short-Term Outlook (Next Week, Scenario Deduction, for Reference Only)

*⚠️ Risk warning: The following content is only a subjective scenario deduction based on data as of the September 11, 2026 close, historical prices, and technical indicators. It does not constitute investment advice, nor does it represent a deterministic forecast of actual future prices.*

① Key Technical Levels

② Next Week Scenarios (Subjective Weights, Not Statistical Probabilities)

• Consolidation (relatively high weight, approximately 60%; a subjective heuristic weight based on the current technical pattern, trading volume, and fund flows, not a statistical probability.): Price observation range is RMB 16.80~18.50. Trigger conditions are that the share price receives support near RMB 16.80~17.20, but the rebound cannot effectively break through RMB 18.10~18.50, and turnover remains at the recent normal level of approximately RMB 1.2 billion~1.7 billion. RSI approaching the oversold zone may support a technical rebound, but MACD is negative and the share price is below MA5, MA10, and MA20, so there is temporarily no confirmation of a trend reversal.
• Weaker downside (relatively medium weight; a subjective heuristic judgment, not a statistical probability.): Price observation range is RMB 16.20~16.80. Trigger conditions are an effective close below the lower Bollinger Band and recent lows near RMB 16.80, while single-day turnover continues to expand to more than RMB 1.8 billion~2.0 billion, or the chemical fiber and petrochemical sectors weaken in tandem. If the decline is accompanied by volume expansion, it indicates insufficient support near RMB 16.80, and the price may fall back to the strong support area of RMB 16.20~16.60; if the strong support is further lost, focus on the RMB 15.30~15.80 area.
• Rebound strengthening (relatively low weight; a subjective heuristic judgment, not a statistical probability.): Price observation range is RMB 18.50~19.20. Trigger conditions are the share price regaining RMB 18.50 and remaining above the MA10 area for at least one consecutive trading day; at the same time, single-day turnover reaches approximately RMB 2.0 billion or higher, main funds show continuous net inflow, and the petrochemical and chemical fiber sectors rebound in tandem. If MA5 and MA10 are recovered with明显 volume expansion, short-term prices may rebound toward the resistance area of RMB 18.80~19.10; further observation of RMB 19.50~20.00 still requires facing pressure from the previous dense trapped area and near the prior high.

③ Fund and Liquidity Background

As of September 11, 2026, the daily turnover rate was 1.95%, the turnover rate over the past 5 trading days was 1.76%~2.40%, and the average turnover over the past 5 trading days was approximately RMB 1.403 billion; daily turnover on that day was RMB 1.396 billion, within the recent normal range. Hengyi Petrochemical is not a low-volume small-cap stock, and daily turnover is usually in the range of more than RMB 1 billion. Under normal circumstances liquidity is acceptable, but controlling shareholders and related parties have relatively concentrated shareholdings, and actual free-float chips participating in daily trading may be lower than nominal circulating share capital, making the stock potentially more sensitive to active capital inflows and outflows during rapid price fluctuations. In terms of funds, on September 11, combined super-large and large order net inflow was approximately RMB 20,916,100, but super-large orders had net outflow while large orders had net inflow, so the fund structure was not consistent. Shareholder concentration data is as of June 30, 2026, with the top ten circulating shareholders holding approximately 64.8% in total and the top two shareholders holding approximately 55% in total; this data has a lag of more than two months, during which increases/decreases in holdings or fund rebalancing may have occurred, and it cannot be regarded as a real-time structure. The observable volume signal is: if the share price regains RMB 18.10~18.50 while single-day turnover continuously expands to more than RMB 2.0 billion and main funds show continuous net inflow, the rebound validity is higher than a simple low-volume rebound; conversely, if turnover simultaneously expands to more than RMB 1.8 billion~2.0 billion when the price breaks below RMB 16.80, the weaker downside scenario warrants increased attention.

Volume observation signal: If the share price regains RMB 18.10~18.50 while single-day turnover continuously expands to more than RMB 2.0 billion and is accompanied by continuous net inflow of main funds, it can be regarded as an observation signal that the rebound has received volume confirmation; if turnover simultaneously expands to more than RMB 1.8 billion~2.0 billion when the price breaks below RMB 16.80, attention should be paid to increased selling pressure.

④ Key Points to Watch (Observation Ideas Only, Not Operational Instructions)

• Observe whether the area around RMB 17.35 can stabilize, and whether the RMB 16.80~17.20 area shows stabilization and support; this observation idea does not constitute an operational instruction.
• Observe whether RMB 18.10~18.50 can be regained; this area corresponds to the first resistance zone near MA5 and MA10; this observation idea does not constitute an operational instruction.
• Observe whether turnover can expand from the recent normal level of approximately RMB 1.4 billion to more than RMB 2.0 billion and coordinate with price direction; this observation idea does not constitute an operational instruction.
• Observe whether main funds shift from single-day divergence to continuous net inflow, and avoid judging the trend based only on single-day fund data; this observation idea does not constitute an operational instruction.

The above scenario deduction is based on the September 11, 2026 closing data and historical prices and technical indicators. Short-term share prices will also be disturbed by multiple factors such as news, capital flows, and the broader market environment. Technical indicators themselves have lag and limitations, do not guarantee actual future trends, and do not constitute buy or sell recommendations. Please make independent judgments in conjunction with the latest market information and bear investment risks yourself.

6. Industry Landscape and Competitor Analysis

6.1 Industry Status

The petrochemical-chemical fiber industry in which Hengyi Petrochemical operates covers segments including refining, aromatics, PTA, polyester, CPL, and PA6, and has characteristics such as large scale, capital intensity, strong product cyclicality, and relatively low gross margins for conventional products. In 2025, the company's revenue was dominated by polyester products, while it also possesses industrial chain assets such as Brunei refining, PTA, polymerization, and CPL—PA6.

6.2 Competitive Landscape

• PTA industry: As of the end of 2025, China's total PTA capacity was approximately 92.09 million tons. In 2025, domestic new capacity was approximately 8.70 million tons and long-term shutdown and exited capacity was approximately 2.625 million tons, with net growth of approximately 7.1%. The industry average operating load fell to 76.8%, supply was periodically loose, and product profits were under pressure.
• Hengyi Petrochemical's equity-participated and controlled PTA capacity is 21.50 million tons, approximately 23.3% of China's total PTA capacity according to the company's disclosed basis; the company's PTA bases are located in coastal areas such as Dalian, Ningbo, and Hainan Yangpu. This proportion is based on equity-participated and controlled capacity and total industry capacity, and cannot be directly equated with the proportion of capacity controlled under the listed company's consolidated statements.
• Polyester industry: As of the end of 2025, China's total PET capacity was approximately 89.72 million tons, including polyester filament 44.86 million tons, polyester staple fiber 10.04 million tons, and polyester bottle chips 21.47 million tons. The industry is large in scale, fully competitive, and highly standardized, and gross margins for conventional products are generally at single-digit levels.
• Hengyi Petrochemical's equity-participated and controlled polymerization capacity is 14.68 million tons, including polyester fiber 9.38 million tons and polyester bottle chips 5.30 million tons, with overall scale among the industry's leading positions; in 2025, the proportion of differentiated fiber output was 35%, but the company's polyester product gross margin was 4.07%.
• CPL and PA6 industry: As of the end of 2025, China's CPL capacity was approximately 8.23 million tons and PA6 capacity was approximately 6.318 million tons. The company's Guangxi annual 1.2 million tons caprolactam—polyamide industrial integration and supporting project has completed the full process and entered the trial production stage, forming 1 million tons/year equity-participated and controlled CPL capacity and 600,000 tons/year PA6 capacity.
• Key factors in industry competition include raw material sources and degree of integration, facility scale and energy consumption/environmental protection levels, port logistics conditions, downstream supporting capacity, production-sales rate and inventory management, proportion of differentiated products, customer certification, and financial strength. Industry capacity data mainly cites CCF, Platts, and data cited in the company's annual report. Different institutions may differ in statistical bases, treatment of long-term shut-down facilities, and calculation of equity-participated and controlled capacity.

6.3 Main Competitors

Comparable companies can be divided into two categories: Rongsheng Petrochemical, Hengli Petrochemical, and Eastern Shenghong are large refining-chemical integration competitors; Tongkun Group and Xinfengming are polyester and polyester filament leader competitors. Hengyi Petrochemical's differentiation lies in simultaneously owning overseas refining projects, large-scale PTA and polyester assets, and layout in CPL—PA6, differentiated fibers, recycled polyester, and high-end materials. Compared with upstream resource-based enterprises, the company lacks the high gross margins brought by mineral resource monopoly; compared with downstream brand or high-tech material enterprises, the company's conventional products remain strongly cyclical, and competitive advantages mainly come from scale, integration, port layout, cross-regional capacity, and product structure upgrading.

7. Risk Warnings

• Refining-chemical profit volatility risk: First-half 2026 profit growth was highly dependent on Hengyi Brunei and improved spreads for Southeast Asian refined oil products and chemicals; if international crude oil prices, refined oil product spreads, or spreads for products such as PX and pure benzene change unfavorably, Brunei refining profitability may decline significantly.
• PTA overcapacity risk: As of the end of 2025, China's total PTA capacity was approximately 92.09 million tons, and the industry average operating load fell to 76.8%; the company's equity-participated and controlled PTA capacity is relatively large, but 2025 PTA gross margin was only 0.37%. If loose supply continues, the PTA segment may continue to face pressure.
• Low-margin risk for conventional polyester products: Polyester product revenue accounted for 52.63% of 2025 operating revenue, but polyester product gross margin was only 4.07%; products such as conventional polyester filament and polyester bottle chips are highly standardized, and the company cannot independently dominate prices, so profitability is vulnerable to industry supply and demand and raw material spreads.
• Raw material price and cost pass-through risk: Crude oil accounted for 32.50% of major raw material procurement in 2025, MEG 8.90%, and PX 6.81%; the company's MEG is still mainly externally purchased. If raw material prices rise while downstream product prices or spreads cannot be passed through simultaneously, polyester and chemical fiber profits may be compressed.
• Performance cyclicality and forecast divergence risk: First-half 2026 net profit attributable to parent was RMB 5.902 billion, while full-year 2025 was only RMB 258 million, a significant change in profit base; institutions have considerable divergence in 2027 profit forecasts. If refining-chemical and chemical fiber prosperity declines, actual profit may be lower than the current market expectation for cyclical recovery.
• Cash flow risk: First-half 2026 net cash flow from operating activities was negative RMB 488 million. Despite substantial profit growth, the conversion of profit into operating cash flow remains to be observed; given the company's large asset scale and long business chain, cash flow fluctuations may affect funding arrangements and operating flexibility.
• Project ramp-up and execution risk: The Guangxi annual 1.2 million tons caprolactam—polyamide industrial integration and supporting project has entered the trial production stage and still faces uncertainty in capacity ramp-up, facility operating efficiency, and realization of product profitability, and the project's actual contribution may be lower than expected.
• Share capital expansion and shareholder return arrangement risk: Conversion of "Hengyi Convertible Bond 2" increased the company's total share capital by approximately 7.60%, which may dilute per-share indicators; the company is also implementing a relatively large interim dividend and advancing an employee stock ownership plan. Subsequent funding arrangements, share transfer, and unlocking assessment results may still affect earnings per share and share capital structure.
• Share price volatility and technical weakening risk: As of September 11, 2026, the share price had fallen approximately 17.2% from the stage high of RMB 20.95 and was below MA5, MA10, and MA20, with MACD in negative territory; if support near RMB 16.80 fails and is accompanied by turnover expansion, short-term correction pressure may further increase.
• Shareholder and supplier concentration risk: As of June 30, 2026, the top ten circulating shareholders held approximately 64.8% in total, and controlling shareholders and related parties had relatively concentrated shareholdings; in 2025, procurement from the top five suppliers accounted for 39.17% of total procurement, of which related-party procurement accounted for 29.50%. Relevant concentration and related-party transaction arrangements require continuous attention.

8. Conclusion and Outlook

Hengyi Petrochemical's core growth logic lies in the profit recovery of the refining-chemical business, operational improvement of the overseas Brunei refining project, volume growth of nylon and caprolactam projects, and an increased proportion of differentiated fibers, recycled polyester, and high value-added materials. The Guangxi CPL—PA6 project has completed the full process and entered the trial production stage. If subsequent capacity release proceeds smoothly, it may enhance the company's synergies in the nylon industrial chain; however, the ramp-up pace and profit contribution of the relevant projects still need to be verified through subsequent operating data.

The company's current profit improvement is closer to the combined result of cyclical recovery and improved industrial chain spreads, rather than a stable high-profit model already fully verified by data. Institutional 2027 profit forecasts decline compared with the 2026 average forecast, and forecast ranges among different institutions are relatively wide, indicating that the normalized profit level remains uncertain. Going forward, focus should be on the sustainability of Brunei refining profitability, PTA supply and demand and processing spreads, gross margins of polyester and nylon products, improvement in operating cash flow, and the actual profit contribution after new projects are put into operation.

Overall, the company has a strong foundation in scale, integration, and cross-regional assets, and its first-half 2026 performance recovery was significant; however, its profit quality and sustainability still depend on bulk raw material prices, refining-chemical and chemical fiber spreads, industry supply and demand, and facility operating efficiency. In the short term, the share price is in a weak consolidation stage after a surge and pullback, and technical indicators have not yet confirmed a trend reversal. The degree of subsequent fundamental realization and the market's repricing of cyclical profit will jointly affect performance.

Data Sources

• https://disc.static.szse.cn/download/disc/disk03/finalpage/2026-04-15/d1cf3d86-3007-4b83-80d3-0b837413c84e.PDF
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• Hengyi Petrochemical (000703)_Company Announcement_Hengyi Petrochemical: 2023 Annual Report Sina Finance_Sina.com
• Hengyi Petrochemical (000703)_Company Announcement_Hengyi Petrochemical: 2024 Annual Report Sina Finance_Sina.com
• Hengli Petrochemical (600346)_Company Announcement_Hengli Petrochemical: 2025 Annual Report Sina Finance_Sina.com
• Company Announcement_Rongsheng Petrochemical: 2025 Annual Report Sina Finance_Sina.com
• Tongkun Group (601233)_Company Announcement_Tongkun Group: 2025 Annual Report Sina Finance_Sina.com
• Company Announcement_Xinfengming: 2025 Annual Report Full Text Sina Finance_Sina.com
• Eastern Shenghong (000301)_Company Announcement_Eastern Shenghong: 2025 Annual Report Summary Sina Finance_Sina.com
• [HENGYI

Hengyi Petrochemical

2026 Semi-Annual Report

Stock Code: 000703.SZ](https://static.cninfo.com.cn/finalpage/2026-08-11/1225467439.PDF?utm_source=openai)

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This report was automatically retrieved, compiled, and generated by AI based on public channel information. Information is as of the close on September 11, 2026; certain technical indicators are taken from the Investing.com page at 10:05 GMT on September 11, 2026, and are not definitive official calculations after the A-share close. There may be timeliness differences, and specific data should be subject to the company's formal announcements and authoritative data terminals. This report is only for information compilation and research reference, does not constitute any investment advice, and investors should make independent judgments and bear investment risks themselves.