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1、2019 Annual Report of Hengyi Petrochemical Co.,Ltd.Stock abbreviation:Hengyi Petrochemical Stock code:000703 Annual Report 2019 Disclosure date:Apr.28,2020 This document is a translated version of the Chinese version 2019 Annual Report(“2019 年年度报告全文”),and the published annual report in the Chinese v
2、ersion shall prevail.The complete published Chinese 2019 Annual Report may be obtained at http:/.2019 Annual Report of Hengyi Petrochemical Co.,Ltd.2 Section I Important Notes,Contents and Interpretation The Board of Directors,Supervisory Committee,directors,supervisors and senior management of Heng
3、yi Petrochemical Co.,Ltd.(hereinafter referred to as the Company)hereby guarantee that the information presented in this Annual Report 2019(hereinafter referred to as the Report)is authentic,accurate and complete and free of any false records,misleading statements or material omissions,and they will
4、 bear joint and several liability for such information.The Report has been deliberated and passed at the 38th meeting of the 10th Board of Directors of the Company.All directors attended the meeting of the Board of Directors for deliberation of this annual report.The financial report of the Report h
5、as been audited by Zhongxinghua Certified Public Accountants LLP(special general partnership)which has issued a standard unqualified audit report.Qiu Yibo,the person in charge of the Company,Mao Ying,the person in charge of accounting work,and Wu Zhen,the person in charge of the accounting departmen
6、t(Accounting Officer),declare:This is to guarantee the authenticity,accuracy and integrity of the financial report in the Annual Report.The profit distribution proposal approved by the Board of Directors is:It is planned to distribute RMB 1,136,690,189.60 cash dividends(tax-inclusive)in 2019,account
7、ing for 35.51%of retained profits belonging to parent companys 2019 Annual Report of Hengyi Petrochemical Co.,Ltd.3 shareholders in the 2019 consolidated statements of the Company.Taking 2,841,725,474 shares as the basis,RMB 4(tax included)of cash dividend and 0 bonus share for every 10 shares will
8、be distributed to all shareholders,transfer to increase 3 shares per 10 shares to all shareholders by capital reserve.If additional issue,repurchase of shares or convertible bonds converted into capital stocks of the Company before the registration date of dividend-paying equities causes the change
9、in total share capital on the registration date of the dividend-paying equities,the Company intends to keep the distribution(increase by transferring)proportion unchanged and adjust the corresponding total share capital.The 2019 annual profit distribution plan shall be also submitted to the 2019 ann
10、ual General Shareholders Meeting for deliberation and approval.Forward-looking statements(such as future plan,development strategy,industry discussion and prospect)involved in the Report dont constitute the Companys substantive commitment to its investors and the investors shall pay attention to the
11、 investment risks.The Report describes main risks faced by the Company now and solutions in details and the investors shall view related content in Section IV.2019 Annual Report of Hengyi Petrochemical Co.,Ltd.4 Contents Section I Important Notes,Contents and Interpretation.2 Section II Company Prof
12、ile and Main Financial Indicators.8 Section III Corporate Business Overview.15 Section IV Discussion and Analysis on Business Circumstance.27 Section V Significant Events.77 Section VI Changes in Shares and Information about Shareholders.125 Section VII Information of Preferred Shares.139 Section VI
13、II Convertible Corporate Bonds.140 Section IX Directors,Supervisors,Senior Management and Employees.141 Section X Corporate Governance.157 Section XI Corporate Bonds.167 Section XII Financial Report.178 Section XIII Documents Available for Reference.339 2019 Annual Report of Hengyi Petrochemical Co.
14、,Ltd.5 Definitions Item Refers to Definitions Hengyi Petrochemical Co.,Ltd.,company、the Company Refers to Hengyi Petrochemical Co.,Ltd.exchange Refers to Shenzhen Stock Exchange Hengyi Group Refers to Zhejiang Hengyi Group Co.,Ltd.Hengyi Petrochemical Co.,Ltd.Refers to Zhejiang Hengyi Petrochemical
15、Co.,Ltd.Hengyi Brunei Refers to Hengyi Industries Sdn Bhd Zhejiang Yisheng Refers to Zhejiang Yisheng Petrochemical Co.,Ltd.Yisheng Dahua Refers to Yisheng Dahua Petrochemical Co.,Ltd.Hainan Yisheng Refers to Hainan Yisheng Petrochemical Co.,Ltd.Hengyi Polymer Refers to Zhejiang Hengyi Polymer Co.,L
16、td.Hengyi High-Tech Refers to Zhejiang Hengyi High-Tech Materials Co.,Ltd.Haining New Materials Refers to Haining Hengyi New Materials Co.,Ltd.Taicang Yifeng Refers to Taicang Yifeng Chemical Fiber Co.,Ltd.Jiaxing Yipeng Refers to Jiaxing Yipeng Chemical Fiber Co.,Ltd.Shuangtu New Materials Refers t
17、o Zhejiang Shuangtu New Materials Co.,Ltd Hangzhou Yichen Refers to Hangzhou Yichen Chemical Fiber Co.,Ltd.Shaoxing Hengming Refers to Shaoxing Keqiao Hengming Chemical Fiber Co.,Ltd.Suqian Yida Refers to Suqian Yida Niew Materials Co.,Ltd.Ningbo Hengyi Trading Refers to Ningbo Hengyi Trading Co.,Lt
18、d.Hangzhou Yijing Refers to Hangzhou Yijing Chemical Fiber Co.,Ltd.Hengyi Caprolactam Refers to Zhejiang Baling Hengyi Caprolactam Co.,Ltd.Yisheng New Materials Refers to Zhejiang Yisheng New Materials Co.,Ltd.China Zheshang Bank Refers to China Zheshang Bank Co.,Ltd.Yisheng Investment Refers to Dal
19、ian Yisheng Investment Co.,Ltd.2019 Annual Report of Hengyi Petrochemical Co.,Ltd.6 Item Refers to Definitions Hong Kong Tianyi Refers to Hong Kong Tianyi International Holding Co.,Ltd.Hengyi Investment Refers to Hangzhou Hengyi Investment Co.,Ltd.Hengyi Polyamide Refers to Zhejiang Hengyi Polyamide
20、 Co.,Ltd.Fulida Group Refers to Fulida Group Holding Co.,Ltd.Xinghui Chemical Fiber Refers to Xinghui Chemical Fiber Group Co.,Ltd.Hengyi(Brunei)PMB Petrochemical Project Refers to Petrochemical project invested by the Company and constructed in Brunei PX Refers to Paraxylene(colorless clear liquid)
21、used for production of plastic,polyester fiber and film PTA Refers to Pure terephthalic acid MEG Refers to Ethylene glycol,mainly used for production of polyester fiber,anti-freezing agent,unsaturated polyester resin,lubricant,plasticizer,non-ionic surfactant and explosive PET and polyester Refers t
22、o Polyethylene glycol terephthalate-fiber-forming polymer by direct esterification continuous polycondensation with PTA and MEG as raw materials POY Refers to POY(full name:PRE-ORIENTED YARN or PARTIALLY ORIENTED YARN)FDY Refers to Fully drawn yarn,also called as polyester drawn yarn(full name:FULLY
23、 DRAWN YARN)DTY Refers to Draw-textured yarn,also called as draw texturing yarn(full name:DRAW TEXTURED YARN)CPL Refers to Caprolactam and differentiated yarn Refers to Variety innovated in terms of technology or performance or having a certain characteristic which is different from conventional yar
24、n 2019 Annual Report of Hengyi Petrochemical Co.,Ltd.7 Item Refers to Definitions RMB and RMB 10,000 Refers to RMB yuan and RMB 10,000 Reporting period/within the reporting period/this reporting period Refers to from Jan.1,2019 to Dec.31,2019 Ending of the reporting period/ending of this reporting p
25、eriod Refers to As of Dec.31,2019 2019 Annual Report of Hengyi Petrochemical Co.,Ltd.8 Section II Company Profile and Main Financial Indicators I.Company Information Stock abbreviation Hengyi Petrochemical Stock code 000703 Name of shares after changes(if any)N/A Stock Exchange Shenzhen Stock Exchan
26、ge Company name in Chinese 恒逸石化股份有限公司 Company abbreviation in Chinese 恒逸石化 Company Name in Foreign Language(if any)HENGYI PETROCHEMICAL CO.,LTD.Foreign abbreviation of the Company(if any)HYPC Legal Representative Qiu Yibo Registered address No.G,7th Floor,Haifu Mansion,No.16 Beihai Avenue West,Beiha
27、i City,Guangxi Zhuang Autonomous Region,China Post code of Registered Address 536000 Office address Building 3,Hengyi Nanan Mingzhu,No.260,Shixin North Road,Xiaoshan District,Hangzhou City,Zhejiang Province Postal Code of Office Address 311215 Website http:/ E-mail II.Contact Person and Contact Info
28、rmation Secretary of the Board Representative of Securities Affairs Name Zheng Xingang Deng Xiaolong and Chen Shasha 2019 Annual Report of Hengyi Petrochemical Co.,Ltd.9 Contact Address Board Office,24th Floor,Building 3,Nanan Mingzhu,No.260,Shixin North Road,Xiaoshan District,Hangzhou City,Zhejiang
29、 Province Board Office,24th Floor,Building 3,Nanan Mingzhu,No.260,Shixin North Road,Xiaoshan District,Hangzhou City,Zhejiang Province Tel.(0571)83871991 (0571)83871991 Fax (0571)83871992 (0571)83871992 E-mail III.Information Disclosure and Locations The Media Selected by the Company for Disclosure C
30、hina Securities Journal,Securities Times,Shanghai Securities News and Securities Daily Website Designated by CSRC for Publishing Annual Report CNINFO(http:/)Location for Annual Report of the Company Board Office of Hengyi Petrochemical Co.,Ltd.IV.Registration Change Organization code 9296
31、6X4 Changes in Main Business Since Listing(if any)No change Change of Controlling Shareholders(if any)No change V.Other Related Information Accounting firm Hired by the Company Name of the accounting firm Zhongxinghua Certified Public Accountants LLP(special general partnership)Office address of the
32、 Accounting Firm 15th Floor,East Tower,No.1,Fuwai Street,Xicheng District,Beijing Name of Certified Public Accountant Liu Hongyue and Wang Guohai The sponsor institution hired by the Company to perform the continuous supervision in the 2019 Annual Report of Hengyi Petrochemical Co.,Ltd.10 reporting
33、period Applicable Not applicable The financial adviser hired by the Company to perform the continuous supervision in the reporting period Name of Financial Adviser Office address of Financial Adviser Name of sponsors of Financial Adviser Continuous supervision period CITIC Securities Co.,Ltd.No.48 L
34、iangmaqiao Road,Chaoyang District,Beijing City Mao Zongxuan and Jiang Wenhua Jan.2020-Dec.2020 VI.Key Accounting Data and Financial Indicators Whether the Company needs to retroactively adjustment or restatement of accounting data in prior years or not Yes No Retrospective adjustment or reason resta
35、tement Business merger under the same control In 2019 In 2018 Increase/Decrease Compared with the Same Period of the Previous Year In 2017 Before adjustment After adjustment After adjustment Before adjustment After adjustment Operating income(RMB)79,620,543,631.74 84,947,688,333.86 88,065,815,535.96
36、-9.59%65,959,511,485.73 66,733,242,136.48 Net profit attributable to the shareholders of the listed company(RMB)3,201,348,425.33 1,962,052,783.55 1,872,494,729.34 70.97%1,684,556,358.80 1,685,306,459.49 Net profit attributable 2,725,438,479.51 1,536,880,249.17 1,536,880,249.17 77.34%1,588,002,050.65
37、 1,588,002,050.65 2019 Annual Report of Hengyi Petrochemical Co.,Ltd.11 to shareholders of the listed company after deducting non-recurring profits and losses(RMB)Net cash flow generated by operational activities(RMB)-112,081,728.16 1,674,591,241.52 1,607,078,608.23-106.97%2,379,505,467.04 1,862,399
38、,374.88 Basic earnings per share(RMB/share)1.13 0.80 0.76 48.68%0.69 0.69 Diluted earnings per share(RMB/share)1.13 0.79 0.76 48.68%0.69 0.69 Weighted average ROE 14.73%13.41%12.29%2.44%14.56%14.56%End of 2019 End of 2018 Increase/Decrease at the End of the Current Year Compared with the End of the
39、Previous year End of 2017 Before adjustment After adjustment After adjustment Before adjustment After adjustment Total assets(RMB)85,230,757,616.78 59,624,677,810.44 61,834,734,496.64 37.84%35,803,733,495.10 36,951,119,599.15 Net assets attributable to shareholders of listed company(RMB)23,253,008,4
40、14.00 17,801,881,185.16 18,363,073,231.64 26.63%13,774,198,891.65 13,774,948,992.34 Prompt:1.The Companys operating income decreases by 9.59%mainly because the Companys Hengyi(Brunei)PMB Petrochemical Project goes into full operation,the polyester capacity increases as well as the Companys trade vol
41、ume and PTA export quantity decrease synchronously in the reporting period,of which the PTA sales 2019 Annual Report of Hengyi Petrochemical Co.,Ltd.12 revenue decreases by RMB 4.918 billion(year-on-year decrease:29.99%)and the trade income decreases by RMB 14.118 billion(year-on-year decrease:33.90
42、%).See Section IV Discussion and Analysis on Business Circumstance for details.2.Because the Companys Hengyi(Brunei)PMB Petrochemical Project went into operation at the end of 2019,the daily production expenditure increased,the product distribution was subject to L/C settlement and the L/C not expir
43、ing was included into receivables,the Companys receivables increased by RMB 4.5 billion,causing the net cash flow from the Companys operating activities decreased in comparison to that of previous years.See Section IV Discussion and Analysis on Business Circumstance for details.VII.Differences in Ac
44、counting Data under Domestic and Foreign Accounting Standards 1.Differences of net profits and net assets in the financial reports disclosed according to the international accounting standards and Chinese accounting standards There is no difference between net profits and net assets in the financial
45、 report disclosed in accordance with international accounting standards and the Chinese accounting standards in the reporting period of the Company.2.Differences between the net profits and net assets in the financial report disclosed according to the overseas accounting standards and the Chinese ac
46、counting standards There is no difference between the net profits and net assets in the financial report disclosed according to the overseas accounting standards and the Chinese accounting standards in the reporting period of the Company.VIII.Key Indicators by Quarter Unit:RMB Q1 Q2 Q3 Q4 Operating
47、income 22,025,886,192.47 19,703,610,932.42 20,475,258,083.43 17,415,788,423.42 Net profit attributable to the shareholders of the listed company 443,760,028.67 833,036,924.31 936,829,830.81 987,721,641.54 Net profit attributable to shareholders of listed company 411,237,818.85 660,648,535.98 828,995
48、,924.19 824,556,200.49 2019 Annual Report of Hengyi Petrochemical Co.,Ltd.13 after deducting non-recurring profits and losses Net cash flows from operating activities -106,149,164.21 920,017,062.49 1,275,079,391.69-2,201,029,018.13 Whether there are significant differences between above financial in
49、dexes and their total value and relevant financial indexes in the Companys revealed quarterly reports and semi-annual bulletin Yes No IX.Non-recurring Profit and Loss Items and Their Amounts Unit:RMB Item Amount in 2019 Amount in 2018 Amount in 2017 Description Profits and losses from disposal of no
50、n-current assets(including the write-off for the accrued impairment of assets)-1,811,565.51 2,249,652.18-336,648.60 Tax refund and exemption with unauthorized approval or without the formal approval document 5,957,948.27 7,979,386.68 5,466,237.13 Government subsidies included in the current profits
51、and losses(closely related to enterprise business,except government subsidies enjoyed in fixed amount or quantity according to uniform national standard)420,716,519.76 102,224,764.73 26,619,457.38 Net gains and losses of the subsidiaries under the same control and arising from the business merger si
52、nce the beginning of the period to the merger date 47,338,830.48 161,261,977.54 124,828,260.78 Profits and losses arising from contingent matters not related to the normal operation of the Company -2,173,136.66-118,450.84 0.00 Except for the effective hedging related to the normal business of the Co
53、mpany,the profits and losses from 301,297,013.33 187,235,582.94-157,319,455.06 2019 Annual Report of Hengyi Petrochemical Co.,Ltd.14 Item Amount in 2019 Amount in 2018 Amount in 2017 Description fair value changes arising from the holding of trading financial assets,derivative financial assets,tradi
54、ng financial liabilities,and derivative financial liabilities,and investment income from the disposal of trading financial assets,derivative financial assets,trading financial liabilities,derivative financial liabilities and other creditors investments Profits and losses obtained from external entru
55、sted loans 29,136,336.48 36,538,791.66 28,072,265.82 Trustee fee income from entrusted operations 1,698,114.17 4,622,641.50 2,594,339.62 Other non-operating incomes and expenses in addition to the above items -14,994,635.24 4,640,725.70-99,662.05 Other items of profits and losses complying with the
56、definition of non-recurring profits and losses -2,065,748.97 5,731,998.98 224,828.37 Less:Impact of income tax 139,947,035.37 137,414,288.03-30,647,165.76 Impact of minority equity(after-tax)169,242,694.92 39,338,302.87-36,607,619.69 Total 475,909,945.82 335,614,480.17 97,304,408.84-For the non-recu
57、rring profit and loss items defined by the Company based on the definitions in Explanatory Announcement No.1 on Information Disclosure for Companies Offering their Securities to the Public-Non-recurring Profits and Losses,and the non-recurring profit and loss items listed in Explanatory Announcement
58、 No.1 on Information Disclosure for Companies Offering their Securities to the Public-Non-recurring Profits and Losses defined by the Company as recurring profit and loss,the reasons should be specified.In the Companys reporting period,there are no items defined as recurring profit and loss,which ar
59、e defined and listed as non-recurring profit and loss items in Explanatory Announcement No.1 on Information Disclosure for Companies Offering their Securities to the Public-Non-recurring Profits and Losses.2019 Annual Report of Hengyi Petrochemical Co.,Ltd.15 Section III Corporate Business Overview
60、I.The Main Business of the Company during the Reporting Period Whether the Company needs to comply with disclosure requirements of a specific industry No (I)Overview of main business Hengyi Petrochemical Co.,Ltd.(stock code:000703)aims at developing into one of the advanced Chinese and leading inter
61、national petrochemical industry groups,now has formed the petrochemical industry chain core businesses driven by polyester+polyamide dual-wheels,with petrochemical finance,trade and logistics as growing business and differentiated fiber products and application of industrial intelligence technologie
62、s as emerging business,and thus gradually improves and enhances the multi-level and three-dimensional industry core competitiveness of petrochemical+.1.Overview of petrochemical and chemical fiber business (1)One of the world leading refining+chemical fiber enterprises With Hengyi(Brunei)PMB Petroch
63、emical Project going into full operation,the Companys unique industrial layout of crude oil and polyester&polyamide has been gradually improved,reflecting advantages like production expansion and quality improvement of the polyester industry,comprehensive exploitation and transformation of the PTA i
64、ndustry as well as full operation of the refining industry,thus making its industry chain further integrated with a more balanced and internationalized business mode.Currently,as one of the worlds leading enterprises with an integrated refining and chemical fiber industry chain,the Company concentra
65、tes on its main business and continuously increases investment in product R&D and industrial intelligence technologies,ranking among the best of the industry in terms of comprehensive competitive advantages for many years.Within the reporting period,the Companys product variety has been gradually en
66、riched and product mix further improved which has consolidated the core competitiveness of the main 2019 Annual Report of Hengyi Petrochemical Co.,Ltd.16 businesses,improved the profitability of industry chain products and enhanced its ability to withstand market risks.The main products of the Compa
67、ny include petroleum products such as gasoline,diesel oil,kerosene,etc.and petrochemicals like paraxylene(PX),benzene,purified terephthalic acid(PTA)and caprolactam(CPL)and chemical fiber products like PRE-ORIENTED YARN(POY),fully drawn yarn(FDY),draw-textured yarn(DTY),polyester staple fiber,polyes
68、ter(PET)chip and polyester bottle chip.Up to the disclosure date of the Report,the design crude oil processing capacity of the Company has reached 8 million tons/year and according to disclosure,its proposed to enhance the crude oil processing capacity by another 14 million tons/year;The holding PTA
69、 production capacity has reached 13.5 million tons/year and proposed to increase by another 6 million tons/year;Caprolactam(CPL)production capacity has reached to 400 kt/year;Polyester fiber production capacity has reached 6.35 million tons/year with a production capacity of 5.47 million tons/year f
70、or the polyester filament yarn(including POY/FDY/DTY/chip)and proposed to increase by 1.35 million tons/year;The polyester bottle chip production capacity has reached 1.5 million tons/year and proposed to increase by 500 kt/year.The scale of production capacity ranks among the best of the industry.W
71、ithin the reporting period,guided by green manufacturing and circular economy,the Company continuously increases investment in product R&D,increases the share of differentiated polyester fiber products,and notably improves functional high value-added products,thus significantly enhances industrializ
72、ation efficiency.Currently,it has formed three differentiated product matrix featuring green and environmental-friendly products,complex fiber products and functional products.Products like Yitaikang,Yizhu yarn,Yilong yarn,Yicai yarn,Yihui yarn,cationic chip and fiber,flame retardant chip and fiber,
73、SPH composite elastic fibre,CEY composite filament,T3 composite filament and ECDP have been developed in full swing.Different series of fire resistant fibres such as flame retardant black yarn,flame retardant full extinction and flame retardant catio have been developed on the basis of the original
74、fire resistant fibre products and the differentiated modified products of Yixuan series has been developed based on ECDP and well applauded by the market.Meanwhile,the Company is marketing PTT,T400 and regenerated fiber.Up to the disclosure date of the Report,the Company has become the largest enter
75、prise in online additions of melt directly spinning and the largest manufacturer of melt directly spinning polyester 2019 Annual Report of Hengyi Petrochemical Co.,Ltd.17 polyamide composite fibers as well as the main supplier of natural-like chemical fiber raw materials like sunday angora yarn and
76、cotton-like materials in China.Notes:Polyester fiber products cover POY,FDY,DTY,short fiber and chip products.(2)Products produced by the Company are raw materials of all basic necessities for daily life with rigid demand The end products of the Company mainly include petroleum products like gasolin
77、e,diesel,kerosene,etc.and polyester products such as polyester filament yarn,polyester staple fiber and bottle chip,of which the petroleum products including gasoline,diesel and kerosene,etc.will be used as energy supply for relevant equipment;The polyester filament yarns cover products like POY,FDY
78、 and DTY which are applied to shell fabrics and linings such as clothing,home textiles and decoration as well as to industrial purposes including braid,zipper,tent,automotive trim and ear thread of mask.The Companys FDY products can be used as isolation materials of protection suits to meet the incr
79、eased demand of protective equipment raw materials by downstream customers.The polyester staple fiber can be widely used in spinning,non-woven and filling.The spunlace non-woven fabric can also be used as isolated layer of masks and downstream disinfecting wipes.Now,the demand for spunlace non-woven
80、 fabric increases continuously;The bottle chip is mainly used for food packaging(including coke bottle,beverage bottle,water bottle and oil bottle).Table 1 Production Capacity of the Main Products of the Company(10,000 tons/year)Product Productivity Chemicals 265 Refined oil 565 PTA 1,350 Polyester
81、fiber 635 Polyester bottle chip 150 Caprolactam 40 2019 Annual Report of Hengyi Petrochemical Co.,Ltd.18 Notes:The polyamide chip is the product operated by the controlling shareholder-Hengyi Group (3)Characteristics and application of the Companys main products Table 2 Characteristics and Applicati
82、on of the Companys Main Products Main products Product display Application PX One hydrocarbon,colorless clear liquid and extensive use,main raw material for producing the purified terephthalic acid(PTA)and also used for synthetic plastics,drug and pesticide Refined oil Mainly used as fuel of various
83、 fuel oil power plants and supply of heat.Used as A fuel of automobiles,motorcycles,speedboats,helicopters,agricultures and forestry aircrafts,vehicles with diesel engines(including trains),vessels and diesel boilers PTA Mainly used for producing polyester products,widely used for all the aspects of
84、 national economies(such as clothing,decoration,electronics and architecture).75%used for polyester fiber,20%used for bottle polyester and 5%used for film polyester(mainly for civil use in the downstream)Figure 1 Layout of the Petrochemical Chemical Fiber Industry Chain Where the Company Is Petroleu
85、mBenzene Olefin EthyleneAreneP-xyleneOil refiningPetrochemical Refining integration Refined oil Diesel oil Kerosene GasolinePolyethylene terephthalate Pure terephthalic acid Ethylene glycolPolyester filament yarn Polyamide short fiber Industrial yarn Industrial yarn Polyester filament yarnPolyamide
86、short fiberCaprolactamPolyamidePolyamide chip Chemical fiberIndicate the domestic business Indicate the Brunei business Draw texturing yarnWeaving fields(such as textile,garment and home textiles)Polyamide industry chain Bottle chip Film chip Indicate the future business PropylenePolypropyleneEngine
87、ering plastics Polyester filament yarn PolyethylenePolyamide industry chain 2019 Annual Report of Hengyi Petrochemical Co.,Ltd.19 Table 2 Characteristics and Application of the Companys Main Products Main products Product display Application POY Used for reprocessing and production of DTY and fiber
88、products with special styles and widely used for clothing and industry FDY Directly used for weaving as well as production of clothing and upholstery fabric.Widely used for clothing and industry and also used as isolation material(including protection suit)DTY Directly used for weaving and widely us
89、ed for clothing and industry,garment materials and lining CPL Mainly used to produce polyamide fabric,engineering plastics and plastic film as well as widely used for industry and civilian field Polyester staple fiber Widely used for spinning,nonwoven and filling.The non-woven fabrics can be used as
90、 raw material of producing the mask as well as also used for downstream disinfecting wipes and disposable protective equipment PET chip Widely used for indirect spinning as well as producing textile raw materials(such as filament yarn and short fiber)and plastics Polyester bottle chip Mainly used fo
91、r food packaging(including coke bottle,beverage bottle,water bottle and oil bottle)2.Overview of petrochemical+business (1)The petrochemical+finance business provides sustained profit for the Company The Companys financial assets mainly refer to equities of China Zheshang Bank 2019 Annual Report of
92、Hengyi Petrochemical Co.,Ltd.20(CZBank).Up to the disclosure date of the Report,the Company holds 748,069,283 stocks of CZBank(shareholding ratio:3.52%).The Companys controlling shareholder-Hengyi Group holds 494,655,630 stocks of CZBank,accounting for 2.33%of total stocks of CZBank.CZBank was estab
93、lished formally in 2004,is one of 12 national joint-stock commercial banks approved by China Banking and Insurance Regulatory Commission,had been listed in the main board market of The Stock Exchange of Hong Kong Ltd.on Mar.30,2016 and got listed at Shanghai Stock Exchange on Nov.26,2019 and then be
94、came an A+H listed bank.Now,CZBank develops into a high-class commercial bank with a solid foundation,good benefits,fast growth and perfect risk control.With the completion of A+H layout of CZBank,its future growth and development will be accelerated.The Company further optimizes its strategic layou
95、t and continuously creates value for shareholders by growth premium of CZBank.According to Annual Report 2019 issued by CZBank,CZBank realized the retained profits of RMB 12.925 billion belonging to shareholders in 2019,increasing by 12.48%in comparison to last year which was the highest annual perf
96、ormance growth rate of the past three years.The operation income is RMB 46.364 billion,increasing by 19.06%in comparison to last year;Up to the end of Dec.2019,the total assets of CZBank reached to RMB 1,800.786 billion,increasing by 9.36%in comparison to last year;CZBank makes a new breakthrough on
97、 the road of high-quality development whose competitive strength is continuously improved.(2)The petrochemical+trade business is in favor of improving product bargaining power With integration of the Companys industry chain and continuous perfection of balanced development,the management requirement
98、 against intermediate goods(such as oil raw materials,PX,PTA and CPL)and downstream products(including polyester fiber and polyester bottle chip)is continuously increased.The Company shall effectively manage the inventory and lower the risk of industry chain price fluctuation at the same time.The Co
99、mpany expands the sub-regional markets at home and abroad based on refining-chemical fiber production base and advantage,energetically explores the flexible personalized customization for production and favorable complementation of raw material procurement and product sale on the basis of traditiona
100、l spread trade,improves product bargaining power with many trading tools and actively gives full play to superiority of industry chain integration to lock the product difference in price and lower the product price 2019 Annual Report of Hengyi Petrochemical Co.,Ltd.21 fluctuation risk and the cost o
101、f production and operation of the Company.(3)The petrochemical+logistics business provides excellent supporting value-added services for main businesses of the Company Up to the disclosure date of the Report,the Companys logistics business provides full distribution of raw materials and products bas
102、ed on main business and trade business and realizes online and offline effective fusion in the premise of Hengyi WeChat mall and marketing supply chain system as the core online and logistics business as support offline because the stock right acquisition of Dongzhan Shipping Co.,Ltd.is completed.Wi
103、th the Hengyi(Brunei)PMB Petrochemical Project fully operating,the Company actively carries out the supporting shipping business of the Hengyi(Brunei)PMB Petrochemical Project to lower the logistics cost and accelerate the implementation of the Companys petrochemical+logistics industry layout.II.Mat
104、erial Changes to Major Assets 1.Major changes in main assets Major Assets Explanation of Material Changes Equity Assets Mainly refer to capital increase for the joint stock company and recognition of profit and loss on investments under the equity method Fixed Assets Mainly refer to the Hengyi(Brune
105、i)PMB Petrochemical Project going into operation within the reporting period Intangible Assets Mainly refer to the increase in intangible assets of the subsidiary-Hengyi Brunei within the reporting period Projects under Construction Mainly refer to the Hengyi(Brunei)PMB Petrochemical Project going i
106、nto operation within the reporting period 2.Major overseas assets Specific details of Cause Asset size Location Operation Control measures to guarantee the Earning Proportion of foreign assets If there is significant value 2019 Annual Report of Hengyi Petrochemical Co.,Ltd.22 assets mode security of
107、 assets position in the Company net assets impairment risk Holding subsidiaries Overseas investment USD 5.68772 billion Hong Kong/Brunei/Singapore Self-building Strengthening the management control of the parent company against overseas subsidiaries Good 170.64%No Other information No III.Core Compe
108、titiveness Analysis Whether the Company needs to comply with disclosure requirements of specific industry No 1.Adhere to the entity and highlight the pioneering advantages of the industrial strategy The Company takes the lead in entering such product fields as polyester melt direct spinning,PTA and
109、caprolactam and greatly improves industrial technology and competitiveness of above-mentioned fields by win-win cooperation in strict accordance with the strategic guideline-consolidate,highlight and optimize the main business competitiveness.The Company takes the lead in implementing Hengyi(Brunei)
110、PMB Petrochemical Project and seizes the development opportunity of the Southeast Asian market to achieve industrial internationalization and management pursuant to Belt and Road initiative;which has also contributed to its completion of vertical industry chain integration,solving raw material bottl
111、eneck issue and following the trend of supply-side structural reform.Furthermore,the Company achieves petrochemical and chemical fiber industry advantage grafting,expands the terminal capacity of chemical fiber industry and realizes high-quality development of chemical fiber through merge and acquis
112、ition.2.The advantage of complete industry chain featuring upstream and downstream equilibrious integration The company has developed into a world leading enterprise with industry chain integration between PX-polyester and benzene-polyamide and is building a columnar,balanced and integrated industri
113、al chain with crude oil-arene-PTA-polyester and crude 2019 Annual Report of Hengyi Petrochemical Co.,Ltd.23 oil-benzene-polyamide through the construction of overseas upstream refineries,the expansion of midstream and downstream businesses in China and the implementation of differentiated developmen
114、t modes including acquisition and reorganization.Now,the design annual crude oil processing capacity of the Company reaches 8 million tons,PTA 13.50 million tons,polyester 7.85 million tons and caprolactam 400 kts,which has guaranteed self-sufficiency of upstream,midstream and downstream raw materia
115、ls,thus achieving a balanced and coordinated development of the whole industry chain from the unique refining to PX,PTA and PET capacity matching with linkage operation at home and abroad to enhance the ability to withstand the risks of business fluctuations.Once Hengyi(Brunei)PMB Petrochemical Proj
116、ect Phase II is completed and goes into operation,the ethylene+propylene+polypropylene industry chain will be newly increased which will be conducive to enhancing the intensification,scale and integration level of the refining integration project in Brunei and greatly improve the competitiveness of
117、the Companys full industry chain.3.Scale advantage of high industrial concentration The product market share of the Companys PTA and polyester fiber ranks the top of the industry.The PTA capacity subject to participation and holding by the Company accounted for 27.56%of national effective capacity a
118、t the end of Dec.2019 and the polyester capacity subject to participation and holdings by the Company accounted for nearly 13.45%of national effective polyester capacity at the end of Dec.2019(data source:http:/).The company boasts high industrial concentration and prominent advantages of scale deve
119、lopment.The Company always boosts investment and application of large-scale devices and energy-saving and cost-reducing technologies.The advantages of scale development promotes the stability of operating production unit and product quality and the improvement of production efficiency and greatly lo
120、wers the unit investment cost and unit energy consumption.The product unit manufacturing cost has a significant advantage among enterprises in the same industry.Meanwhile,scale procurement also gives the Company a strong bargaining power,which allows it to have a more favorable price to save procure
121、ment cost and provide a strong guarantee for the profitability of the final product.4.Competitive advantages of the scientific research innovation The Company focuses on R&D and application of high-end product in the polyester fiber field for a long time and has accomplished diversification,serializ
122、ation,high quality and uniqueness of 2019 Annual Report of Hengyi Petrochemical Co.,Ltd.24 the product structure based on three university-enterprise platforms(including Zhejiang University-Hengyi Global Innovation Research Center,Joint Laboratory of Donghua University and Hengyi Petrochemical and J
123、oint Laboratory of Nanjing Tech University and Hengyi Petrochemical Co.,Ltd.).The Company will fully carry out research and development of new products and new technologies related to the full industrial chain and realize a full-process and flexible high-tech and new product(technology)development a
124、nd commercialization of research findings with leading technologies in domestic Chinese industry.The Company centers on green manufacturing of the polyester,pays close attention to the recycling of polyester throughout its life cycle,breaks through the technical difficulties,achieves high-quality po
125、lyester recycling and produces high-performance polyester materials with biology base as raw materials on the basis of an industrial structure of crude oil and polyester and polyamide.In chemical engineering,the Company is now developing various diol of the monomer necessary for the differentiated p
126、roduction of polyester for the sake of expanding the application scope of PTA.To lower the production cost,the Company also actively studies the development of three agents in current processes(including delustering agent,catalyst and additive).5.Technical advantages of digitalized intelligent manuf
127、acturing The Company establishes the information strategy of petrochemical+Industrial Internet to propel the deep integration of a new generation of information and communication technology and petrochemical manufacturing industry and promote digitalized,networking and intelligent development of the
128、 chemical fiber manufacturing industry.The Company builds the full-chain and system-wide informatization integrating R&D and design,logistics and purchase,production control,operation management,professional service and marketing,realizes intelligent production,networked collaboration,customized ser
129、vices and digital decision-making as well as accelerates the enterprise digitalized transformation process based on innovation driving,improvement of quality and efficiency and green development as basic principle through information application,advanced manufacturing,automation and enterprise manag
130、ement.In the information infrastructure field,the Company makes use of cloud computing,virtualization,5G,bastion host and other technologies to promote the construction of industrial networking,service cluster,information security,etc.and provide technical support and security guarantee for software
131、 application layer.2019 Annual Report of Hengyi Petrochemical Co.,Ltd.25 In the manufacturing field,the Company independently develops the single spindle data stream system successfully to realize efficient logistics operation and automatic quality control of products in the workshop warehouse as we
132、ll as process optimization,information sharing and efficiency improvement between production processes by network communications,IoT,mobile informatization,Microservice,real-time database and other technologies based on information interconnection between intelligent manufacturing device rooms(such
133、as automatic winding,automatic packaging,intelligent external inspection,AGV trolley,robot and stereoscopic storehouse).In the marketing service field,the Company establishes two software systems(including WeChat mall and marketing supply chain)to carry out management from the customer placing an or
134、der to the derivation of supporting supply chain financial services and from the full-process presentation of sales data to the provision of multidimensional portrait data services externally by Internet marketing and customer social experience as well as realize the data sharing of each business sy
135、stem,improve the efficiency of data interaction,remove barriers to the information circulation and form the closed-loop process of supply chain business(including sales,collection,arranging shipment,delivery,vehicle dispatching,shipping and invoicing)internally.6.Management advantage of professional
136、,young and international team helping the Company with continuous development In addition to providing employees with competitive compensation and incentive mechanism in the industry,the Company has implemented the two-period restricted stock incentive plan and three-period employee stock ownership
137、plan since 2015 which fully arouses the employees working enthusiasm and strongly promotes the attraction of top talents.The establishment of the long-term development shared mechanism effectively enhances the sense of belonging and cohesion of employees and provides the talent base for the Companys
138、 long-term development.The Company emphasizes the professional team management,has appointed young management talents cultivated internally and introduced senior management and technical personnel at home and abroad via various channels in recent years as well as has formed an international,speciali
139、zed and professional management and operation team,laying a foundation for sustainable and healthy development of the Companys industry.With the continuous expansion of the Company,the Company also continuously conducts organizational structure optimization,2019 Annual Report of Hengyi Petrochemical
140、 Co.,Ltd.26 continuously improves the Companys organizational management and operation efficiency and gives play to the scale synergy advantage by referring to advanced organization and management experience at home and abroad.2019 Annual Report of Hengyi Petrochemical Co.,Ltd.27 Section IV Discussi
141、on and Analysis on Business Circumstance I.Overview (I)Discussion and Analysis on Business Circumstance Hengyi Petrochemical(stock code:000703)operates in the petrochemical and chemical fiber industry with raw material from the petroleum or the corresponding chemical after petroleum cracking like PX
142、 and benzene.The product end demand is closely related to peoples daily necessities.In terms of the Companys crude oil,polyester and polyamide product layout,refined oil(such as gasoline,diesel and kerosene)mainly provides equipment with energy supply,such as fueling automobile,ship and aircraft;The
143、 polyester and the polyamide are mainly used as shell fabric or lining of the textile(such as clothing,beddings,curtain,sofa and tent).Therefore,key factors affecting the industry are crude oil price fluctuation,downstream demand,production capacity supply as well as matching between upstream and do
144、wnstream industry chains.1.The low oil prices oscillate in a narrow range,making for double growth of downstream polyester product demand and profit.In general,steady or moderate rise of the oil price is in favor of the improvement of petrochemical enterprises operating management and efficiency;On
145、the contrary,a high requirement against production and management is put forward as the oil price continues to decline.However,the low oil prices are beneficial to petrochemical enterprises after a dramatic decline in the oil price happens.On one hand,the low oil prices are conducive to the expansio
146、n of downstream product price difference and the low product price is in favor of stimulating the growth of terminal demand so as to promote the improvement of profits;on the other hand,the low oil prices are faced with the opportunity to rise and the rise of the oil price brings industry chain stoc
147、k appreciation and production load increase to stimulate demand growth.In 2019,the global economic growth slowed down and the price of Brent crude oil futures fluctuated in the interval of USD 52-76/bucket as per the open market quotation due to the effects of such factors as Sino-US trade friction,
148、reduction of output of OPEC and turmoil in the Middle East in partial stages.The price of the WTI crude oil futures changed within the range-USD 2019 Annual Report of Hengyi Petrochemical Co.,Ltd.28 44/bucket to USD 67/bucket.The overall oil price was in the relatively stable interval which made for
149、 production and operation of downstream petrochemical enterprise in 2019.The international oil price sharply declined to the lowest one in recent years,the Brent oil price declined to the lowest USD 22.06/bucket and the WTI oil price declined to the lowest USD 20.37/bucket due to the influences of g
150、lobal outbreak and reduction of output of OPEC not exceeding the expectation in the first quarter of 2020.The panic decline of the oil price incurred severe challenges to the downstream companies,but the petroleum still wound return to the fundamentals of supply and demand in the long term and the d
151、ownstream demand was expected to recover in the long run.According to the agreement about reduction of output of OPEC+on Apr.12,its predicted that the oil price will gradually rise when the downstream demand rises again in the second half of 2020.The current crude oil price fluctuated at a low level
152、.As for the downstream polyester fiber,the rigid downstream demand lasts for a long time and the cost reduction is in favor or stimulating demand growth;under the environment of fluctuations in prices of crude oil,the polyester fiber price doesnt fluctuate sharply and the current polyester fiber pri
153、ce is characterized by tenacity.2.The online consumption becomes the new normal of terminal consumption with continuous positive growth of the demand (1)The macro economy remains resilient and the domestic consumption continues to grow According to the data from National Bureau of Statistics,Chinas
154、GDP reached to RMB 99,086.5 billion with year-on-year growth of 6.1%which was ahead of the growth of the worlds major economies,the growth was in the interval of 6.0%-7.0%for consecutive 20 quarters,the expected goal of the growth was achieved and the per capita gross domestic product reached to RMB
155、 70,892 in 2019.The fundamental role of consumption in economic growth remains prominent.The total retail sales of consumer goods in 2019 reached to RMB 41,164.9 billion,increasing by 8.0%in comparison to last year nominally.The retail sales of consumer goods(except for automobile)reached to RMB 37,
156、226 billion,increasing by 9.0%;the year-on-year growth of clothing and shoes as well as knitwear and textile reached to 2.9%.Pursuant to the data from General Administration of Customs,P.R.China,the total exports of textile and clothing in 2019 reached to USD 280.7 billion and the export markets mai
157、nly included Southeast Asia(50%),EU(17.4%)and America(16.6%)2019 Annual Report of Hengyi Petrochemical Co.,Ltd.29(Data source:wind and Nanhua Futures).As per the market structure,the emerging market exports have outperformed traditional markets.In 2019,the year-on-year growth of the amount of countr
158、ies and regions along the The Belt and Road of China exporting textile clothing increased by 3.7%,while the export amount of America,Japan and EU increased by 6.6%,4.6%and 4.4%on year-on-year basis(data source:China National Textile And Apparel Council).With the implementation of a series of proacti
159、ve fiscal policies,such as slashing taxes and fees,superimposed e-commerce live economic stimulus and pulling effect by further expanding the domestic demand,its predicted that Chinas economy will remain resilient which will further promote the industry terminal demand to maintain a healthy growth i
160、n the future.(2)The online sale becomes the new normal of terminal consumption With online live broadcast and big data applied to the terminal consumption field and rapidly penetrated into urban and rural areas and the rise of consumption ability of third-tier and fourth-tier cities as well as count
161、ies and townships now,a new force of online live broadcast consumption suddenly rises which strongly supports the terminal consumption and drives the high growth of terminal demand.According to the data from National Bureau of Statistics,the retail turnover of commodities(such as clothing and shoes
162、and knitwear and textile)above the national limit reached to RMB 1351.7 billion with year-on-year growth of 2.9%in 2019.The year-on-year growth of value of retail sales of online wearing goods nationwide reached to 15.4%with double-digit good growth level continuously kept.3.There is still considera
163、ble room for growth in terms of domestic demand for polyester products and demand for refined oil products in Southeast Asia (1)Upgrading of household consumption and continuous rigid demand of polyester industry chain products In terms of downstream requirements,the polyester fiber is mainly used f
164、or clothing,home textiles and industrial emerging applications which are closely related to population growth and per capita disposable income.Based on the data from National Bureau of Statistics,the per capita disposable income of Chinese residents was RMB 30,733,increasing by 8.9%in comparison to
165、last year nominally in 2019 with actual increase by 5.8%after the price factor was excluded.Among them,per capita disposable income of urban residents was RMB 42,359,up 7.9%YoY.Besides the price factor,the actual increase was 5.0%.The rural per capita disposable income was RMB 16,021,2019 Annual Rep
166、ort of Hengyi Petrochemical Co.,Ltd.30 up 9.6%YoY.Besides the price factor,the actual increase was 6.2%.The national per capita consumption expenditure reached to RMB 21,559 in 2019.The per capita expenditure on clothing reached to RMB 1,338,increasing by 3.8%and accounting for 6.2%of per capita con
167、sumption expenditure.The quantity demanded of the chemical fiber products,especially medium and high grade manufactured goods will continue to expand and the per capita fiber consumption will continue to grow in the long run.Figure 2 Growth Chart for Apparent Consumption of Chinese Polyester Filamen
168、t Y arn(unit:0,000t)Source:China Chemical Fibers Association and http:/ In recent years,Chinese residents income level and nonproductive expenditure have increased steadily and the consumption upgrade has greatly increased the demand for polyester differentiated products.The apparent consumption of
169、the polyester fiber increased by 7.6%year on year in 2019 and the sales-output ratio of the polyester industry from Jan.2019 to Dec.2019 was 96.29%.Pursuant to national planning outline during the 13th Five-year Plan,the per capita income of urban and rural residents in China in 2020 will be doubled
170、 in comparison to 2010 which will be conducive to the increase in terminal consumption expenditure(including textile and garment and fashion industry).(2)The demand for refined oil products is strong in Southeast Asia and the project in Brunei has significant regional advantages 2,076 2,144 2,439 2,
171、685 2,888 5.43%3.28%13.76%10.09%7.56%0%2%4%6%8%10%12%14%16%0 500 1,000 1,500 2,000 2,500 3,000 3,500 2015 2016 2017 2018 2019 Polyester filament yarn YoY growth 2019 Annual Report of Hengyi Petrochemical Co.,Ltd.31 Compared to the surplus of refined oil products in China,the Southeast Asia refined o
172、il market gap is large.As per wind data,the petroleum refinery distillation capacity in Southeast Asian is about 0.3 billion tons and the capacity of refined oil products(such as gasoline,diesel and kerosene)is about 0.18 billion tons with yield of about 0.14 billion tons and gap of about 107 millio
173、n tons.The population of Southeast Asia reaches to 0.641 billion and there is a great potential for demand growth of refined oil products.Furthermore,Southeast Asia is close to Australia and Australia needs to import refined oil with import volume of gasoline,diesel and kerosene being about 26.5 mil
174、lion tons/year.As for products,Southeast Asia has a shortfall of about 49 million tons/year in terms of gasoline and mainly imports from Indonesia,Malaysia and Vietnam with exporters in the main areas being Singapore and Thailand.In terms of aviation kerosene,important importers in Southeast Asia in
175、clude Vietnam and other several countries without refinery plant(such as Brunei,Sri Lanka and Philippines)because every country is self-sufficient in aviation and takes trade flow as the principal thing.In terms of diesel,there is a big gap in Southeast Asia with annual gap of approximately above 47
176、 million tons and important importers cover Vietnam,Bangladesh,Philippines,Sri Lanka,Myanmar,Indonesia and Malaysia.The IMO new standard is implemented and demand for low sulfur fuel oil increases in 2020.Singapore is a major shipping base with import volume of more than 40 million tons,partial MGO(
177、marine diesel oil)needs to replace the bunker fuel oil and diesel imports from Southeast Asia will increase.In terms of refined oil product crack spread,the gasoline crack spread is USD 8/bucket-USD 13/bucket,the diesel crack spread is USD 13/bucket-USD 16/bucket as well as the aviation kerosene cra
178、ck spread is USD 12/bucket-USD 14/bucket which is in the interval of good crack spread for a long time.The refining project of the Company in Brunei is in the Southeast Asia refined oil demand market hinterland where the product sales market is vast,the transportation is convenient and the superiori
179、ty is obvious.2019 Annual Report of Hengyi Petrochemical Co.,Ltd.32 Figure 3 Chart of Difference in Price of Diesel Oil against Dubai in Recent Five Y ears Source:Internal arrangement of the Company-Hengyi Brunei.4.Industry chain reshaping and integrated competitiveness improvement of the industry c
180、hain (1)The single product shifts to the vertical integration competition of industry chain From 2019 to 2020,three private refineries(including the one of the Company)go into operation successively.With the release of PX production capacity of private refinery projects,the industry where the Compan
181、y is shifts to the new competition pattern of industry chain integration from single product competition in the past,the leading listed companies expand gradually based on the advantages of vertical integration and firmly grasp the new shares of the future market demand.Because old small and medium
182、capacity exits gradually,the market share of the leading enterprises will be further improved and the fluctuations in prices of products tends to moderate in comparison to the past.(2)The loose supply of upstream petrochemicals is in favor of industry chain profit transferring to the polyester The d
183、omestic PX production capacity in the global shares has increased significantly since 2019 which increased to 36.7%at the end of 2019 from 27.4%at the end of 2018.Considering although the Companys Hengyi(Brunei)PMB Petrochemical Project is classified as overseas production capacity,it still falls in
184、to Chinese investment,all the new capacities in the world are built by Chinese companies.With loose supply of PX,its predicted that the dependence on imports of PX in China will be greatly reduced in 2020.2019 Annual Report of Hengyi Petrochemical Co.,Ltd.33 A round of concentrated capacity release
185、will happen to PTA in 2020 and its predicted that the new capacity will reach to about 11 million tons.In 2020,the PTA output growth will exceed that of polyester and the PTA will also enter the loose supply pattern.Its predicted that the MEG will newly increase by 0.53 million tons and the domestic
186、 MEG supply growth will remain high at around 20%in China in 2020.In terms of polyester fiber,the productivity growth steadily decreased from 2017 and its predicted that the output growth will reduce to about 5%in 2020.(Data source:CCF Annual Report)The profit of industry chain will transfer from up
187、stream to polyester after the upstream raw material end supply chain continues to expand and the growth of the superimposed polyester capacity falls after rise.5.The polyester industry market concentration increases and the order of competition tends to be benign The polyester filament yarn industry
188、 concentration ratio CR6 occupancy increased to about 46.22%from 32%(data source:CCF)after integration for 10 years(from 2011 to the end of 2019)and its predicted that the CR6 market share will increase to above 60%in 2021 and the concentration ratio has been greatly increased.As per the investment
189、plan published,the major new capacity in the industry will come from listed companies,small and medium sized polyester factories will gradually withdraw from the industry competition due to lack of investment for production expansion and ability to innovate in technology and the market concentration
190、 of the polyester industry will be further improved in the future.With continuous improvement of leading enterprises own competitiveness,the backward production capacity clearance in the industry is accelerated.The end demand is stabilizing,the entry threshold of the industry chain in which the Comp
191、any operates is increasing,the concentration ratio of upstream,midstream and downstream industries maintains continuous improvement,the competitive order of the industries continues to improve and the development environment is becoming more benign.As one of the leading enterprises,the Company accel
192、erates production expansion and income increase of the downstream chemical fiber business and takes the lead in enjoying the profit improvement brought by the good prosperity of the industry.With the refining project of the Company going into operation smoothly,the vertically integrated layout of th
193、e industry chain has achieved initial success and the whole competitiveness rises to a new level.2019 Annual Report of Hengyi Petrochemical Co.,Ltd.34(II)Progress of the operating plan disclosed in the early stage in the reporting period Within the reporting period,Board of Directors,management and
194、all employees of the Company arduously strive with entrepreneurship to press ahead;with major project of Belt and Road initiative as the core,Hengyi(Brunei)PMB Petrochemical Project has entered full operation and overcome the last kilometer issue to achieve full industry chain integration;the Compan
195、y is carrying out production expansion and quality enhancement of the polyester project and potential digging and transformation of the PTA project with high-quality development as the main line to further enhance its competitive advantages as a leading enterprise;it has increased investment in prod
196、uct research and development,intelligent revolution and high-tech fiber to further increase the differential fiber ratio;it has implemented quality production to promote quality and brand,optimize trade and logistics and achieve further resource sharing and industrial synergy;it has been continuousl
197、y optimizing the organizational structure and improving corporate governance to unleash more endogenous driving forces.Within reporting period,the operating profit realized year-on-year growth of 92.75%by all members effort and shareholders value continuously improved.1.The net profit increases subs
198、tantially and the cash dividend return is actively performed In the reporting period,the Company realized the operating profit of RMB 4.789 billion with year-on-year growth of 92.75%and the net profit returned to parent company of RMB 3.201 billion with year-on-year growth of 70.97%.At the end of th
199、e reporting period,the Companys total assets reached to RMB 85.231 billion,increasing by 37.84%in comparison to the beginning of the year;The owners equity attributable to the shareholders of a listed company reached to RMB 23.253 billion,increasing by 26.63%in comparison to the beginning of the yea
200、r;The net asset value per share contributable to the shareholders of a listed company reached to RMB 8.18;The asset-liability ratio was 65.90%which was at a reasonably low level in the same industry.With the reporting period,the Company implemented the 2018 plan for participation in profit and the t
201、otal cash dividend reached to RMB 0.853 billion,accounting for 45.53%of the net profit attributable to the parent company of the Company in 2018.Moreover,the Companys Board of Directors deliberated and passed the 2019 plan for participation in profit(cash dividend of RMB 2019 Annual Report of Hengyi
202、 Petrochemical Co.,Ltd.35 4.00 per 10 shares(tax-inclusive),transferring 3 shares to all shareholders for every 10 shares with capital reserve and total cash dividend of RMB 1.137 billion,accounting for 35.51%of the net profit attributable to the parent company of the Company in 2019).2.The coordina
203、tion of production,supply and marketing is enhanced and the output and sales grow steadily The Companys product output and sales are excellent and grow steadily during the reporting period The output and sales of the refined oil products(holding subsidiaries-Hengyi Brunei)reached to 0.6071 million t
204、ons and 0.5493 million tons,respectively;The output and sales of chemicals reached to 0.1666 million tons and 0.1288 million tons,respectively.The output and sales of PTA products(holding subsidiary-Zhejiang Yisheng)reached to 5.0338 million tons and 5.0364 million tons,respectively;The output and s
205、ales of polyester products from the holding subsidiary reached to 5.6271 million tons and 5.5929 million tons,respectively.Figure 4 2019 Annual Business Indicators of Hengyi Petrochemical(unit:RMB 00,000,000)Table 3 Output and Sales Volume of Main Products of the Company in 2019 Main products Output
206、 Sales volume Sales in 2018 YoY growth Refined oil 60.71 54.93 Newly-added items in 2019 Chemicals 16.66 12.88 PTA 503.38 503.64 495.62 1.60%Polyester fiber 562.71 559.29 390.8 43.11%275 370 618 852 2016 2017 2018 2019 总资产 109 138 184 233 2016 2017 2018 2019 归母所有者权益 8.3 16.85 18.72 32.01 2016 2017 2
207、018 2019 归母净利润 0.44 0.69 0.76 1.13 2016 2017 2018 2019 基本每股收益 1 2 3 4 2016 2017 2018 2019 每10股现金分红 Total assets Owners equity attributable to the parent company Net profit attributable to the parent company Basic earnings per share Dividend amount over the years 2019 Annual Report of Hengyi Petroche
208、mical Co.,Ltd.36 3.The Hengyi(Brunei)PMB Petrochemical Project fully goes into operation and the international management advantage is prominent The Companys Hengyi(Brunei)PMB Petrochemical Project has realized the whole process connection and entered full operation on Nov.3,2019.The Company has ove
209、rcome the final kilometer issue to connect the industry chain and realize integrated operation of the whole industry chain from crude oil to polyester and polyamide,which ensures safe supply of midstream and downstream raw materials from the Companys domestic production bases and the highly coordina
210、ted development of upstream,midstream and downstream businesses based on the whole industry chain,thus greatly improved the Companys industrial collaboration ability and improved the earning quality and the anti-risk capability.Within the reporting period,the Companys Hengyi(Brunei)PMB Petrochemical
211、 Project boasts great international operation advantages with policy advantage,management advantage and technology advantage.(1)Strongly support from China and Brunei with policy advantages of a maximum 24 years tax preference Brunei enjoys a stable political environment and the project conforms to
212、Bruneis national development strategy of Vision 2035 which can promote economic growth for countries along the Belt and Road Initiative;There is no trade barrier restriction since the project is the ASEAN free trade zone area where the import and export of products are free of tariff;The overall tax
213、 savings are obvious and Brunei doesnt levy individual income tax,business tax,payroll tax,production taxes and export tax.The project can enjoy a maximum 24 years tax preference in terms of enterprise income tax;The project is in line with Chinas Belt and Road initiative which enables the project s
214、yndicated loans to be provided with national strategy support.(2)Significant operating advantages including convenient crude oil procurement and smooth marketing of refined oil products)As an oil producer,Brunei boasts a mild climate without natural disasters and rich oil and gas resources.The count
215、ry itself can provide part of crude oil to lower the logistics;There is great convenience in crude oil procurement and lower logistics cost since it is closer to crude oil supply and near the Singapore crude oil trading market;2019 Annual Report of Hengyi Petrochemical Co.,Ltd.37 The refined oil pro
216、ducts produced by the project are sold to Southeast Asia region where there is a strong demand arise.There is a lower logistics cost since the project location is closer to these places;All the chemicals are supplied to the downstream of its own industry chain to realize integrated operation of the
217、industry chain.(3)Technical advantages such as its supporting utilities and advanced technologies to lower the production cost The project is fully equipped with a coal-fired power plant,which achieves self-reliance in steam production,thus enjoying prominent cost advantages in utilities;The latest
218、advanced technologies are applied to main production units like hydrocracking CCR and Parex,which has lower operating cost and high product conversion rate and lower PX production cost;The project has applied low temperature thermal recovery technology with waste heat reused by seawater desalination
219、,lowering the operating cost for seawater desalination and the comprehensive energy consumption index for Parex;The latest flexicoking process has been applied to residual oil processing which is capable of continuous production and lowers the labor cost.The by-product fuel gas also lowers fuel cost
220、s.Comparing with traditional process,the closed production process is more environmentally friendly through harmless treatment of the residual oil;The liquid phase diesel hydrogenation technology has been applied which can meet 2020 new international diesel standards and lower investment and operati
221、ng energy consumption.Up to the end of the reporting period,the investment of Hengyi(Brunei)PMB Petrochemical Project totals USD 3.698 billion,of which the construction investment reaches USD 2.985 billion.Within the reporting period,the project achieves a net profit of USD 0.77 billion.4.Promote qu
222、ality improvement and efficiency of polyester and PTA based on high-quality development Within the reporting period,the Company promoted quality improvement and efficiency of polyester,PTA and CPL based on high-quality development and provided supporting services for the current midstream and downst
223、ream products in many ways(including purchase and new construction)to enhance the industry chain development and competitive advantage.Within the 2019 Annual Report of Hengyi Petrochemical Co.,Ltd.38 reporting period,the Company smoothly implemented production expansion and quality improvement of di
224、fferentiated and functional polyester products from Jiaxing Yipeng,Suqian Yida,Hangzhou Yijing and Fujian Yijin for the sake of differentiation and intellectualization on the basis of Haining new material factory,carried out construction of 6 million tons of PTA products of Zhejiang Yisheng New Mate
225、rials and realized caprolactam company 0.4 million tons/year caprolactam capacity expansion and renovation project completed and going into operation.Table 4 Progress of Main Projects of the Company in 2019 S/N Project name Investment/purchase amount (RMB 0,000)Product type Productivity (0,000t)Proj
226、ect progress 1 Construction project of Haining New Materials 636,000 POY,FDY,chip 100 The first production line(G line)(capacity:0.25 million tons/year)and relevant supporting engineering went into operation on Feb.23,2020 2 Jiaxing Yipeng differentiated functional fiber promotion and renovation pro
227、ject 227,220 FDY 50 Phase I of the project(0.25 million tons)went into operation on Apr.29,2019;Workshop D went into operation in Apr.2020 3 Suqian Yida 35,000 Short fiber and chip 40 Successful auctioning in Apr.2019 4 100%equities of Hangzhou Yijing 80,758 POY,FDY,chip,DTY 85 Acquisition completio
228、n in May 2019 5 0.4 million tons/year caprolactam capacity expansion and renovation project of Hengyi Caprolactam 247,885 Caprolactam 40 Having gone into operation on Aug.8,2019 6 Fujian Yijin project 158,770 FDY,short fiber 35 Under construction 7 PTA project of Yisheng New Materials 673,100 PTA 60
229、0 Under construction 5.Increase investment in scientific research and innovation and boost Hengyi products to be in the lead In 2019,the Company strengthened scientific and technological innovation as well as carried 2019 Annual Report of Hengyi Petrochemical Co.,Ltd.39 out strategic layout of scien
230、tific research,increased investment in research and development and introduction,training and reserve of high-level scientific research personnel for the sake of becoming an international first-class petrochemical technology enterprise.The Company actively explored new ideas concerning R&D and indus
231、trialization of new materials and new technologies,achieve some results in terms of new product R&D and industrialization,development platform construction,talent team building and external cooperation,established perfect process R&D framework and project management mechanism and formed the innovati
232、ve R&D system from basic research,engineering development and process optimization to product application R&D and sales promotion.The Company applied 60 patients(including 49 patents for invention and 11 utility models)in 2019.10 patents(including 5 patents for invention and 5 utility models)were au
233、thorized in 2019.In 2019,more than 100 science and technology development projects(including 2 national key research and development projects and 1 major international cooperation project of Zhejiang Province)were implemented.Up to the end of 2019,98 patients(including 50 patents for invention and 4
234、8 utility models)of Hengyi Petrochemical and its subsidiaries were authorized;194 patients(including 137 patents for invention and 57 utility models)were applied.Within the reporting period,the antimony-free environmentally friendly polyester-Yitaikang whose proprietary intellectual property right i
235、s held by the Company was rated as outstanding industrial product of Zhejiang Province in 2019.The antimony-free polyester melt direct spinning filament technology won the sixth China top ten textile technology award.Within the reporting period,the Company focused on the preparation of polyester mod
236、ified materials(such as degradable polyester)as well as researched and developed the high-performance polyester based on biology base as raw material(such as PEF and PTT)in terms of materials.In the meanwhile,the Company carried out in-depth research and development in the functional chemical fiber
237、field,successfully developed the functional fiber with such properties as flame retardant droplet resistance,hygroscopic and sweat releasing,antistativity and keeping warm and put such functional fiber on the market.In terms of chemical engineering,the Company is developing various diol of the monom
238、er necessary for polyester differentiated production now and researching the alternative of composite PTA based on biomass as raw material.To lower material and energy consumption in the production process,the Company develops related production process of caprolactam and hydrogen peroxide and carri
239、es out energy conservation and consumption reduction of the oil 2019 Annual Report of Hengyi Petrochemical Co.,Ltd.40 refining equipment,too.For the purpose of reducing process consumption and improving the material performance,the Company jointly establishes Zhejiang University-Hengyi Global Innova
240、tion Research Center,Joint Laboratory of Donghua University and Hengyi Petrochemical and Joint Laboratory of Nanjing Tech University and Hengyi Petrochemical Co.,Ltd.together with Zhejiang University,Donghua University and Nanjing Tech University,successively on the basis of great opportunities for
241、development brought by transformational disruptive technologies in such fields as function materials,industrial catalysis,synthetic biology and biomass conversion.At present,above-mentioned three university-enterprise platforms operate well.In 2019,they accumulatively signed 26 projects complying wi
242、th the requirements of the Companys overall objectives of the medium-and long-term research strategy and were built into international first-class new material research and development bases by both the university and the enterprise working together and deep combination involving production,teaching
243、 and research,gathering highlands of top professionals and management talents in the fields such as new material,new technology and new equipment,high-quality personnel training bases accurately serving new fiber materials of countries and regions along The Belt and Road as well as demonstration are
244、as of deep university discipline crossing and deep combination of production,teaching and research and system and mechanism innovation special zones.6.The application of intelligent technology is increased and the intelligent production and management rises a higher level Within the reporting period
245、,the Company continuously increased the application of intelligent technology and accelerated intelligent manufacturing unit and intelligent production line shifting to intelligent workshop and intelligent factory construction by investment and optimization of automation and informatization on the b
246、asis of current industry.All kinds of equipment and system realized connection,interaction and collaboration via effective integration and interconnection technologies.The intelligent manufacturing led new commercial activities(such as personalized customization,collaborative manufacturing and remot
247、e operation and maintenance)as well as promoted digital transformation of the enterprise and intelligent production and operation to step onto a higher level.Within the reporting period,the Company completed the supply chain integration project and 2019 Annual Report of Hengyi Petrochemical Co.,Ltd.
248、41 realized integrated management for full flow data of such service chains as WeChat mall,sales order management,logistics,park logistics,plastic tray as well as storage and delivery.As per the market demand and its development need,the Company duly conducts customized development of chemical fiber
249、 e-commerce platform-Hengyi WeChat mall which is mainly used for online line of polyester chemical fiber products and integrates supporting services(such as price inquiry,quick order placement,market information and intelligent logistics management platform(HTTMS)and financial service)whose main pur
250、pose is providing Hengyi downstream customers with new transaction service model to raise efficiency and lower cost.To solve warehousing problems and adapt to the requirements of the modern market,the Company officially develops the intelligent warehousing system which has been put into use.The ware
251、housing system realizes batch management and real-time dynamic management of the product inventory with bar code and provides the foundation for accurate data analysis of product inventory.The system also directly connects with enterprise SAP and provides multiple application scenario services(inclu
252、ding PC terminal,mobile phone APP and handheld PDA),greatly improving work efficiency and accuracy of the factory workshop.Moreover,the Company firstly pushes out the whole process intelligent logistics system in the industry and carries out direct series connection of doff,packaging and finished pr
253、oduct stereoscopic storehouse of the system via AGV transshipment,yarn box temporary storage stereoscopic storehouse and finished product conveying line,making for multi-process handling and information processing of the silk ingot.The whole process intelligent logistics line enables the product to
254、go to AGV transshipment external inspection area from automatic doffing,reach to the temporary warehouse of yarn box after passing the inspection and be invoked to the automatic packaging line for final packaging of the product after information confirmation in the temporary warehouse,the finished b
255、ag to enter the stereoscopic storehouse for storage after interactive confirmation of information and the final product to be sold by intelligent stereoscopic storehouse.The system realizes real automatic operation of the product whole process from getting off the production line to leaving factory.
256、The whole process intelligent workshop logistics system carries out real-time acquisition of such information as environment,energy and equipment in the production process by smart sensing technology and narrow band internet of things(NB-IoT)all over the factory,realizes interconnection and integrat
257、ion of people,machines and equipment,2019 Annual Report of Hengyi Petrochemical Co.,Ltd.42 promotes product process optimization and quality improvement and creates the lean manufacturing collaborative process of the smart factory.II.Main Business Analysis 1.Overview See I.Overview in Discussion and
258、 Analysis on Business Circumstance.2.Income and Costs(1)Operating income structure Unit:RMB 2019 2018 Year-on-year Increase or Decrease Amount Proportion in Operating Revenue Amount Proportion in Operating Revenue Total Revenue 79,620,543,631.74 100%88,065,815,535.96 100%-9.59%By Industries Petroche
259、mical 14,023,110,039.95 17.61%16,396,975,517.29 18.62%-14.48%Polyester 37,440,083,098.09 47.02%29,459,852,871.75 33.45%27.09%Trade 27,531,233,930.85 34.58%41,649,411,799.60 47.29%-33.90%Others 626,116,562.85 0.79%559,575,347.32 0.64%11.89%By Product Refined oil 2,207,888,637.18 2.77%Chemicals 336,00
260、1,420.95 0.42%PTA 11,479,219,981.82 14.42%16,396,975,517.29 18.62%-29.99%POY 13,805,634,857.67 17.34%10,157,644,279.73 11.53%35.91%FDY 9,812,224,123.84 12.32%6,984,218,045.50 7.93%40.49%DTY 4,173,158,372.83 5.24%3,528,655,405.80 4.01%18.26%Chip 4,750,854,728.28 5.97%5,664,878,117.28 6.43%-16.13%Shor
261、t fiber 4,898,211,015.47 6.15%3,124,457,023.44 3.55%56.77%2019 Annual Report of Hengyi Petrochemical Co.,Ltd.43 Trade 27,531,233,930.85 34.58%41,649,411,799.60 47.29%-33.90%Others 626,116,562.85 0.79%559,575,347.32 0.64%11.89%By Regions Domestic 65,683,827,085.40 82.50%77,110,276,463.08 87.56%-14.82
262、%Overseas 13,936,716,546.34 17.50%10,955,539,072.88 12.44%27.21%Remarks:The Companys operating income decreases by 9.59%mainly because the Companys Hengyi(Brunei)PMB Petrochemical Project fully goes into operation,the polyester capacity increases as well as the Companys trade volume and PTA export q
263、uantity decrease synchronously in the reporting period,of which the PTA sales revenue decreases by RMB 4.918 billion(year-on-year decrease:29.99%)and the trade income decreases by RMB 14.118 billion(year-on-year decrease:33.90%).(2)Industry,product,or region accounting for more than 10%of the Compan
264、ys operating revenue or profit.Whether the Company needs to comply with disclosure requirements of specific industry No Unit:RMB Operating income Operating costs Gross margin Increase/Decrease of operating Income Compared with the Same Period of Last Year Increase/Decrease of Operating Cost over the
265、 Same Period of Last Year Increase/Decrease of Gross Gross Profit Compared with the Period of Last Year By Industry Petrochemical 14,023,110,039.95 12,282,819,419.63 12.41%-14.48%-19.93%5.96%Polyester 37,440,083,098.09 34,045,358,344.72 9.07%27.09%25.57%1.10%Trade 27,531,233,930.85 27,188,124,954.14
266、 1.25%-33.90%-35.08%1.80%Others 626,116,562.85 478,530,994.44 23.57%11.89%11.57%0.22%By Product Refined oil 2,207,888,637.18 1,531,975,139.11 30.61%Chemicals 336,001,420.95 269,672,678.96 19.74%2019 Annual Report of Hengyi Petrochemical Co.,Ltd.44 PTA 11,479,219,981.82 10,481,171,601.56 8.69%-29.99%
267、-31.67%2.25%POY 13,805,634,857.67 12,423,294,338.96 10.01%35.91%34.06%1.25%FDY 9,812,224,123.84 9,044,311,118.48 7.83%40.49%42.39%-1.23%DTY 4,173,158,372.83 3,709,865,371.66 11.10%18.26%16.64%1.24%Chip 4,750,854,728.28 4,370,312,205.32 8.01%-16.13%-18.58%2.76%Short fiber 4,898,211,015.47 4,497,575,3
268、10.30 8.18%56.77%52.65%2.48%Trade 27,531,233,930.85 27,188,124,954.14 1.25%-33.90%-35.08%1.80%Others 626,116,562.85 478,530,994.44 23.57%11.89%11.57%0.22%By Region Domestic 65,683,827,085.40 61,033,078,676.64 7.08%-14.82%-17.48%3.00%Overseas 13,936,716,546.34 12,961,755,036.29 7.00%27.21%20.04%5.55%
269、In case of changes in the statistical caliber of principal business data in the reporting period,the Company will refer to the principal business data after adjustment in recent 1 year:Applicable Not applicable (3)Whether the Companys physical sales income greater than the labor income Reasons for o
270、ver 30%changes in related data on year-on-year basis As the Company completed the purchase of Shuangtu New Materials in Dec.2018,the polyester product of Shuangtu New Materials was increased in the reporting period and the new Industry Classification Item Unit 2019 2018 Year-on-year Increase or Decr
271、ease Refined oil Sales volume t 549,300 Production Output t 607,100 Inventory t 57,800 Chemicals Sales volume t 128,800 Production Output t 166,600 Inventory t 37,800 PTA Sales volume t 5,036,400 4,956,200 1.62%Production Output t 5,033,800 4,963,300 1.42%Inventory t 16,100 18,600-13.70%Polyester Sa
272、les volume t 5,592,900 3,908,000 43.11%Production Output t 5,627,100 4,000,900 40.65%Inventory t 178,900 144,700 23.62%2019 Annual Report of Hengyi Petrochemical Co.,Ltd.45 capacity of two polyester companies-Suqian Yida and Jiaxing Yipeng went into operation at the same time.The scale of Companys p
273、olyester capacity increases this year,so the polyester output,sales and stock rise sharply.(4)Performance of major sales contracts signed by the Company as of the reporting period Applicable Not applicable (5)Operating Cost Structure Industry category Unit:RMB Industry Classification Item 2019 2018
274、Year-on-year Increase or Decrease Amount Proportion to Operating Cost Amount Proportion to Operating Cost Refined oil Raw materials 1,267,816,583.44 82.76%Refined oil Energy 35,530,302.02 2.32%Refined oil Depreciation and others 228,628,253.65 14.92%Total 1,531,975,139.11 100%Chemicals Raw materials
275、 240,231,973.62 89.08%Chemicals Energy 17,443,129.52 6.47%Chemicals Depreciation and others 11,997,575.82 4.45%Total 269,672,678.96 100%PTA Raw materials 9,654,704,824.15 92.11%14,105,095,080.43 91.95%-31.55%PTA Energy 223,431,486.12 2.13%297,162,066.39 1.94%-24.81%PTA Depreciation and others 603,03
276、5,291.29 5.75%937,827,728.84 6.11%-35.70%Total 10,481,171,601.56 100%15,340,084,875.66 100%Polyester Raw materials 29,308,065,693.20 86.09%22,883,961,559.24 84.40%28.07%Polyester Energy 1,612,773,710.02 4.74%1,228,587,080.05 4.53%31.27%Polyester Depreciation and others 3,124,518,941.50 9.18%3,000,83
277、2,257.05 11.07%4.12%Total 34,045,358,344.72 100%27,113,380,896.34 100%(6)Has the scope of consolidation changed during the reporting period In the reporting period,34 subsidiaries of the Company were included into the consolidation scope,increasing by 5 in comparison to last year.Refer to Section XI
278、I Financial Report,Note VII 2019 Annual Report of Hengyi Petrochemical Co.,Ltd.46 Change in Consolidation Scope for the detail.(7)Major changes or adjustments to the Companys business,products,or services during the reporting period In the reporting period,the Company added the refining plate busine
279、ss as well as chemicals and refined oil products because the Hengyi(Brunei)PMB Petrochemical Project fully went into operation.After going into operation,the project will complete collaborative configuration of Company assets at home and abroad,really achieve the crude oil and polyester and polyamid
280、e strategic target of the Company as well as gradually form a good pattern with international linkage and up and down coordinated development.The business operated by the Company will extend to the more upstream PX,benzene and refining from the current midstream and downstream industries-PTA,polyest
281、er filament,polyester staple fiber,polyester bottle chip,PET chip and CPL and the Company will take the lead in realizing the balanced development model from crude oil refining to polyester and polyamide in the industry,making for integrated,globalized and balanced collaborative operation of Company
282、 industries,products and assets,enhancing the Companys sustained profitability and anti-risk capability,further consolidating,enhancing and optimizing the Companys core competitiveness,promoting the sustained and steady growth of shareholders interests and helping the Company to become a petrochemic
283、al enterprise with leading global comprehensive strength.(8)Major Clients and Suppliers The Companys Major Clients Total sales amount of top five customers(RMB)12,163,083,270.63 Proportion of the total sales amount of the top five customers to the total annual sales 15.27%Proportion of the total sal
284、es amount of the related parties in the top five customers to the total annual sales 0.00%Profiles of the Companys top five customers No.Name of Customer Sales Amount(RMB)Proportion to the Annual Sales 1 Company 1 3,992,534,820.03 5.01%2 Company 2 2,401,308,634.39 3.02%3 Company 3 2,176,481,556.13 2
285、.73%2019 Annual Report of Hengyi Petrochemical Co.,Ltd.47 No.Name of Customer Sales Amount(RMB)Proportion to the Annual Sales 4 Company 4 1,940,943,232.23 2.44%5 Company 5 1,651,815,027.85 2.07%Total -12,163,083,270.63 15.27%Other Information Notes for Major Clients Applicable Not applicable Major s
286、uppliers Total Purchase Amount of Top Five Suppliers(RMB)26,602,018,660.49 Proportion of the total purchase amount of top five suppliers to the total annual purchase amount 35.95%Proportion of the total purchase amount of the related parties in top five suppliers to the total annual purchase amount
287、5.06%Profiles of the Companys top five suppliers No.Supplier Name Purchase amount(RMB)Proportion to the total annual purchase amount 1 Company 1 14,079,875,588.08 19.03%2 Company 2 4,916,203,524.12 6.64%3 Company 3 3,992,526,588.85 5.40%4 Company 4 1,957,758,468.26 2.65%5 Company 5 1,655,654,491.18
288、2.24%Total-26,602,018,660.49 35.95%Other Information Notes for Major Suppliers Applicable Not applicable 3.Expenses Unit:RMB 2019 2018 Year-on-year Increase or Decrease Statement on significant changes Sales expenses 455,835,985.78 337,169,676.49 35.19%Mainly because of growth of operation scale and
289、 increases in transportation expenses and sales staff salary within the reporting period Administrative expenses 583,351,878.14 531,705,263.14 9.71%Financial 1,011,697,524.71 775,568,978.70 30.45%Mainly because of expansion of financing 2019 Annual Report of Hengyi Petrochemical Co.,Ltd.48 expenses
290、scale and interest expense increases of the Company during the reporting period Research and development expenses 492,740,271.96 279,482,471.96 76.30%Mainly because of increased investment in research and development within the reporting period 4.R&D Investment In the reporting period,the Company ac
291、tively explored new ideas about R&D and industrialization of new materials and new technologies,achieve some results in terms of R&D and industrialization of new products,R&D platform construction,talent team building and external cooperation,mainly focused on green production technology of polyeste
292、r and polyamide,manufacturing technology of specialty chemicals for the industry chain,functional fiber material and the next generation of bio-based polyester material.Related R&D projects go well now,the research projects based on the futures business innovation will increase in the future and its
293、 predicted that the research and development investment will increase to promote the sustainable development of various business of the Company.The Company applied 60 patients(including 49 patents for invention and 11 utility models)in 2019.10 patents(including 5 patents for invention and 5 utility
294、models)were authorized in 2019.In 2019,more than 100 science and technology development projects(including 2 national key research and development projects and 1 major international cooperation project of Zhejiang Province)were implemented.The antimony-free environmentally friendly polyester-Yitaika
295、ng whose proprietary intellectual property right is held by the Company was rated as outstanding industrial product of Zhejiang Province in 2019.The antimony-free polyester melt direct spinning filament technology won the sixth China top ten textile technology award.Companys R&D investment 2019 2018
296、 Change Ratio Number of R&D personnel(person)445 194 129.38%Proportion of R&D personnel 2.69%1.55%1.14%R&D investment(RMB)496,257,572.40 279,482,471.96 77.56%The proportion of R&D investment to operating income 0.62%0.32%0.30%Capitalized R&D investment 3,517,300.44 0.00 2019 Annual Report of Hengyi
297、Petrochemical Co.,Ltd.49 Proportion of capitalized R&D investment to R&D investment 0.71%0.00%0.71%The reason for the significant change in the proportion of the total amount of R&D investment to operating income compared with last year Applicable Not applicable Reasons and rational explanations on
298、the substantial change in capitalization rate of R&D investment Within the reporting period,the Companys R&D projects entered the development stage and the Company development expenditure increased with capitalization condition met.5.Cash flow Unit:RMB Item 2019 2018 Year-on-year Increase or Decreas
299、e Subtotal of cash inflows from operational activities 87,525,072,525.52 95,766,648,246.90-8.61%Subtotal of cash outflows from operational activities 87,637,154,253.68 94,159,569,638.67-6.93%Net cash flows generated by operating activities -112,081,728.16 1,607,078,608.23-106.97%Subtotal of cash inf
300、lows from investment activities 5,101,346,935.31 2,753,920,900.82 85.24%Subtotal of cash outflows from investment activities 17,590,548,942.04 15,432,947,165.06 13.98%Net amount of cash flow generated from investment activities -12,489,202,006.73-12,679,026,264.24-1.50%Subtotal of cash inflows from
301、financing activities 40,526,194,049.12 46,684,362,144.77-13.19%Subtotal of cash outflows from financing activities 30,045,808,537.64 32,830,273,699.14-8.48%Net cash flow generated by financing activities 10,480,385,511.48 13,854,088,445.63-24.35%Net additions to balance of equivalents -2,063,112,611
302、.03 2,989,225,898.60-169.02%Description of the main factors affecting the significant changes in related data over the same period of last year 1)Because the Companys Hengyi(Brunei)PMB Petrochemical Project went into operation at the end of 2019,the daily production expenditure increased,the product
303、 distribution was subject to L/C settlement and the L/C not expiring was included into receivables,the Companys receivables increased by RMB 4.5 billion,causing the net cash flow from the Companys operating activities 2019 Annual Report of Hengyi Petrochemical Co.,Ltd.50 decreased in comparison to t
304、hat of previous years.2)The cash inflow of investment activities increases compared to the same period last year mainly because the Company collects funds for cash management and taking back funds.3)The net increase of cash and cash equivalent decreases in comparison to last year mainly because the
305、Companys syndicated loan fund is used for external payment successively in the reporting period.Reasons for the significant difference between the net cash flow generated by the Companys operating activities in the reporting period and the net profit in the current year As for the reason why the sig
306、nificant variance between the cash flow of the Companys business activities within the reporting period and the net profits this year happens,refer to the supplementary information note of cash flow statement in the annual audit report of the Company.III.Non-main Business Analysis Unit:RMB Amount Pr
307、oportion in total profit Explanation for forming reason Sustainable or not Return on investment 1,504,670,646.53 31.54%Mainly because the income from investment of the joint stock company of the main business is calculated and withdrawn and the income from investment of the derivatives increases dur
308、ing the reporting period Yes Profits and losses from changes in fair value -58,842,982.82-1.23%Mainly because the fair value of the foreign exchange and commodity derivatives changes at the end of the reporting period No Assets impairment -20,345,690.78-0.43%Mainly because the Company calculates and
309、 withdraws the inventory falling price reserve No Non-operating income 11,699,859.55 0.25%Mainly because the indemnity and government subsidies unrelated to the daily operation activities,etc.are received within the reporting period No Non-operating expenses 29,743,281.16 0.62%Mainly because of non-
310、business expenditures(such as donation outlay)within the reporting period No 2019 Annual Report of Hengyi Petrochemical Co.,Ltd.51 IV.Analysis of Assets and Liabilities 1.Significant changes in assets composition The Company implemented the new financial instrument guidelines,new revenue criteria or
311、 new lease criteria for the first time and adjusted to execute related items of the Financial Statement at the beginning of that year from 2019 Applicable Not applicable Unit:RMB End of 2019 At the beginning of 2019 Proportion Increase and Decrease Statement on significant changes Amount Proportion
312、to total assets Amount Proportion to total assets Monetary capital 7,439,828,837.94 8.73%9,052,390,527.76 14.64%-5.91%Accounts receivable 5,890,241,538.78 6.91%1,378,211,622.25 2.23%4.68%Inventory 9,153,238,548.05 10.74%3,019,753,421.68 4.88%5.86%Long-term equity investments 9,260,247,813.26 10.86%7
313、,814,086,904.50 12.64%-1.78%Fixed assets 38,775,633,926.67 45.49%13,226,265,147.50 21.39%24.10%Projects under Construction 3,690,059,278.45 4.33%17,495,259,335.87 28.29%-23.96%Short-term loans 23,323,906,006.56 27.37%13,781,002,805.01 22.29%5.08%Long-term loans 12,733,302,561.13 14.94%9,714,442,000.
314、02 15.71%-0.77%2.Assets and liabilities measured at fair value Unit:RMB Item Name At the beginning of the reporting period At the end of the reporting period Financial assets Trading financial assets(excluding derivative financial assets)122,942,670.65 149,692,516.20 Derivative financial assets 0.00
315、 409,150,395.76 Investment in other equity instruments 0.00 600,000.00 Total 122,942,670.65 559,442,911.96 Financial liabilities 2019 Annual Report of Hengyi Petrochemical Co.,Ltd.52 Trading financial liabilities 10,209,921.02 1,399,903.27 Derivative financial liabilities 2,239,759.00 0.00 Total 12,
316、449,680.02 1,399,903.27 Are there any significant changes in the measurement attributes of the Companys main assets during the reporting period Yes No 3.Restrictions on asset rights as of the end of the reporting period Item Name Book value at the end of the Period Cause of Restrictions Monetary cap
317、ital 2,966,804,107.67 Security deposit Notes receivable and receivables financing 281,155,185.63 Pledging and opening of the acceptance bill Long-term equity investments 5,032,636,297.11 Mortgage loan Fixed assets 1,780,351,651.00 Leaseback finance lease Fixed assets 23,101,040,184.83 Mortgage loan
318、Intangible assets 674,889,765.60 Mortgage loan Total 33,836,877,191.84-V Investment analysis 1.Overview Investment in the Reporting Period(RMB)Investment over the Corresponding Period of Last Year Rate of Change 3,565,393,011.36 3,020,393,011.36 18.04%2019 Annual Report of Hengyi Petrochemical Co.,L
319、td.53 2.Significant equity investments acquired during the reporting period Unit:RMB 10,000 Name of invested company Main business Investment method Investment amount Shareholding ratio Source of funding Partner Investment duration Product type Progress up to the balance sheet date Anticipated incom
320、e Investment profit and loss in current period Whether involved in a lawsuit or not Disclosure date(if any)Disclosure index(if any)Yisheng New Materials Production and sales of petroleum products and chemical products Capital increase 54,500 50.00%Own funds Ningbo Zhongjin Petrochemical Co.,Ltd.Disp
321、osable Petroleum products and chemical products Completed 0.00 52.45 No Jul.17,2019 http:/ Total -54,500-0.00 52.45-3.Situation of on-going significant non-equity investment within the reporting period Unit:RMB 10,000 Project name Investment method Investment of fixed assets or not Industries involv
322、ed by investment projects Investment amount in the reporting period Cumulative actual investing amount by the end of reporting period Source of funding Project progress Anticipated income Incomes realized within the reporting period Reason for failing to reach design schedule and gain anticipated in
323、come Disclosure date(if any)Disclosure index(if any)2019 Annual Report of Hengyi Petrochemical Co.,Ltd.54 Brunei PX Project Phase I Self-building Yes Chemical raw material 1,067,486.10 2,579,949.32 Raising funds and self-raising 100.00%0.00 77,056.52 Not applicable Construction project of Haining Ne
324、w Materials Self-building Yes Polyester fiber 151,055.73 176,834.46 Self-finance 63.15%0.00 Not applicable Not applicable May 5,2018 http:/ Upgrading and reconstruction project of differential functional fiber with an annual output of 500,000 tons Self-building Yes Polyester fiber 129,352.98 159,822
325、.00 Raising funds and self-raising 70.34%0.00 Not applicable Not applicable Oct.16,2018 http:/ Total -1,347,894.81 2,916,605.78-0.00 77,056.52-2019 Annual Report of Hengyi Petrochemical Co.,Ltd.55 4.Financial assets at fair value(1)Conditions of the securities investment the Company involves no secu
326、rity investment in the reporting period.(2)Derivative investment Unit:RMB 10,000 Derivative investment type Initial investment amount for derivative investment Starting date Expiry date Investment amount at the end of the period Proportion of investment amount at the end of the reporting period in C
327、ompanys net assets at the end of the reporting period Actual profit and loss amount during the reporting period Forward foreign exchange contract 199,077 Nov.2,2018 Aug.14,2020 64,885 2.79%644 Commodity derivatives 10,014 Jan.1,2018 Dec.31,2020 58,161 2.50%34,536 Total 209,091 123,047 5.29%35,180 Ca
328、pital source of derivative investment The Companys self-owned funds Litigation-related situation(if applicable)No Disclosure date of the Board of Directors announcement regarding approval of derivative investment(if any)Jan.24,2019 Disclosure date of the Board of Shareholders Feb.15,2019 2019 Annual
329、 Report of Hengyi Petrochemical Co.,Ltd.56 announcement regarding approval of derivative investment(if any)Risk analysis and control measure explanation for derivative holding a position during the reporting period(including but not limited to market risk,liquidity risk,credit risk,operation risk an
330、d law risk)1.Market risk:When the market changes dramatically,the Company probably cant fully lock the raw material price or product price,resulting in impairments.2.Liquidity risks:As for the trading of commodity derivatives,the operational order can be given within the authority specified in the M
331、anagement System for the Trading of Commodity Derivatives of the Company.In case of excessive market volatility,actual impairments may arise from mandatory liquidation caused by failure in timely supplementing the cash deposit.3.Operational risks:Because futures and forward transaction are professio
332、nal with high complexity,accidental losses may be incurred due to defects of information system or internal control.4.Credit risks:When the drastic fluctuation which is bad for the counterparty occurs to the price,the counterparty may violate related provisions of the Contract or cancel the Contract
333、,incurring losses to the Company.5.Legal risks:Losses are incurred to the Company when the Contract cannot be executed properly likely because related legal systems change or the counterparty violates related counterpartys.Risk control actions adopted by the Company:The Board of Directors has deliberated and approved the Management System for the Trading Business of Foreign Exchange Derivatives an