Hengyi Petrochemical (000703) Third Quarterly Report Commentary: Results Meet Expected Profitability and Continuous Improvement

Hengyi Petrochemical (000703) Third Quarterly Report Commentary: Results Meet Expected Profitability and Continuous Improvement

Event: The company released the third quarter report of 2019, reporting that the combined company realized operating income of 622.

5.0 billion, down -6 every year.

37%; net profit attributable to mothers22.

1.4 billion, down 9 each year.

28%.

Investment points: single quarter profitability, the company’s third quarterly report is in line with expectations: the company’s cumulative net profit attributable to its mother in the third quarter of 201922.

14 billion, a decline of 9 per year.

28%; the company achieved net profit attributable to its mother in a single quarter9.

3.7 billion, a decrease of 15 per year.

13%, performance is in line with expectations.

The third quarter of the company’s quarter-to-quarter initial increase is a supplement to the PTA in the third quarter of 2018, a large wave of surge, the quarterly average price reached 7570 yuan, while in the third quarter of 2019, the average price of PTA was only 5,500 yuan, the difference was 2070 yuan,The highest drop was 27%; the gradual decrease, the complexity of internal expectations in the third quarter, the intensification of Sino-US trade frictions, and the sharp devaluation of the RMB have all affected the company’s performance to a certain extent.

But from the past alone, the company achieved net profit attributable to mothers in the third quarter of 20199.

3.7 billion, already the second highest profit in the company’s history in a single quarter, reflecting the company’s ability to resist risks and profitability from external shocks.

The first phase of the Brunei Refining & Chemical project has been transferred to a full test run and the industrial chain is integrated and upgraded: On September 6, the company announced the replacement of the first phase of the Brunei project.The company brings new performance increases.

The project has three advantages: 1.

Policy advantages (budget reductions); 2.

Business advantages (convenient import of crude oil, refined oil will be sold to Southeast Asian markets nearby, 西安耍耍网 and chemical products will be digested downstream); 3.

Technical advantages (latest flexible coking process, liquid-phase diesel hydrogenation technology, and self-produced steam for coal-fired power generation).

It is expected that the company’s industrial chain integration will be upgraded after the project is put into production.

Profit forecast and investment advice: It is estimated that the company’s net profit attributable to its mother in 19-21 will be 41.

07/51.

29/63.

6.3 billion, corresponding to an EPS of 1.

56/1.

95/2.

42, corresponding to PE.

01/8.

02/6.

46. Maintain the “overweight” rating.

Risk factors: Crude oil price breaks; downstream terminal demand is weak.