【Summary Description】Engineering companies such as Sinopec Refining Engineering (02386. HK, hereinafter referred to as "Sinopec Refining") and Wison Engineering (02236. HK) have successively released their first half financial reports. Unlike many chemical product manufacturers whose revenue has declined, the aforementioned companies have seen corresponding growth in revenue and profits. In the context of a sluggish refining business, the active coal chemical market has actually enhanced the transcripts of engineering enterprises.
Engineering companies such as Sinopec Refining Engineering (02386. HK, hereinafter referred to as "Sinopec Refining") and Wison Engineering (02236. HK) have successively released their first half financial reports. Unlike many chemical product manufacturers whose revenue has declined, the aforementioned companies have seen corresponding growth in revenue and profits. In the context of a sluggish refining business, the active coal chemical market has actually enhanced the transcripts of engineering enterprises.
Outstanding performance of coal chemical industry
Sinopec Refining and Chemical's revenue in the first half of the year was approximately 19.645 billion yuan, a year-on-year increase of 16.3%; The profit was approximately 2.214 billion yuan, a year-on-year increase of 10.8%. Due to its low base in the same period last year, Huisheng Engineering not only increased its revenue by 131.3% year-on-year to 1.993 billion yuan, but also saw a significant increase in net profit after tax of 1424% to 34.19 million yuan.
Behind the increase in net profit is the significant increase in the coal chemical business of the two companies. Sinopec's revenue from coal chemical industry increased by 65% to 3.7 billion yuan, surpassing the growth rate of refining and other petrochemical businesses. The coal chemical revenue of Huisheng Engineering reached 811.7 million yuan, a year-on-year increase of 56%, accounting for 41% of the total revenue in the first half of the year.
Sinopec Refining and Chemical Company stated that in the first half of the year, the EPC general contracting for projects such as the Yanchang Petroleum Jingbian Coal Chemical Project and the Shaanxi Yulin Methanol Acetic Acid Series Deep Processing Project entered the peak period of implementation this year. Cui Ying, Senior Vice President of Wison Engineering, stated that the Xukuang Baoji Methanol Project and the Ordos Guotai Chemical Coal to Methanol Project were all signed a few years ago, and the first half of the year coincided with the settlement period, which has helped improve the overall revenue of Wison Engineering.
Future orders or outbreaks
Each company needs to complete its previous coal chemical projects as soon as possible in order to receive larger and more orders, "a chemical industry researcher from a fund company told the First Financial Daily yesterday.
Since March this year, the National Development and Reform Commission has issued 10 coal chemical project "road strips" in one go, which is more than the total number of road strips issued in the past, igniting market enthusiasm.
Liu Mingjia, an analyst of Zhongyu Information, told the reporter that the 10 new projects were respectively the coal to natural gas projects of CPI Huocheng, Xinwen Mining, Guodian Xing'an League, four coal based olefin projects (two of Sinopec, one of middling coal Group, one of Gansu Huahong Huijin, etc.), and one of Lu'an Group's coal to oil projects.
The researcher from the aforementioned fund company stated that the emergence of 10 roadblocks means that the National Development and Reform Commission is limited in opening up this field, and it is estimated that new projects will be approved in the future. At the same time, the investment in large-scale coal chemical projects is extremely high, and there are no more than 10 companies in China that can truly undertake such projects. At present, well-known chemical construction companies in China include China Chemical, CNPC Huanqiu, Sinopec Refining and Chemical, and Wison Engineering.
According to statistics from Bank of China International, a total of 6 coal to natural gas projects have been approved, with the highest investment reaching 70 billion yuan and the lowest reaching 24.1 billion yuan; The equipment investment for coal to olefin projects is basically around 25 billion yuan; The total investment of three coal to liquid projects that have already established a road is also nearly 100 billion yuan.
In contrast, the refining business of chemical engineering enterprises is not ideal.
In the first half of the year, Sinopec Refining achieved a refining business revenue of 5.13 billion yuan, which remained unchanged year-on-year. This is because a batch of large domestic projects are in the final stage, while new projects such as the Atyrau refinery oil deep processing in Kazakhstan are still in the early stages of construction.
The revenue from the refining business of Wison Engineering decreased by 89.2% year-on-year to RMB 36 million. Cui Ying stated that the decrease in revenue is due to some large refining projects not yet under construction.
From the perspective of orders, the new oil refining orders of Wison Engineering decreased by 99.6% year-on-year to 23.6 million yuan, while none of the representative new order projects announced by Sinopec Refining and Chemical were actually oil refining projects.
Cui Ying analyzed to our reporter that although each 10 million ton refining project has an investment of tens of billions of yuan, there are not many large-scale new projects since the second half of last year, only CNPC Jieyang, CNOOC Huizhou Phase II, Sinopec Zhanjiang, etc. And this is completely opposite to the situation where coal chemical industry obtained 10 national roads at once.
On the other hand, the current surplus of refinery equipment in China may also be the reason for the decrease in refining engineering business. According to statistics from Zhongyu Information, the total refining capacity in China in 2012 was 654 million tons, and calculated based on the production of 600 million tons, it was ultimately converted into over 300 million tons of finished oil. But in 2012, China's apparent consumption of refined oil products was 277 million tons.
The operating rate of domestic refineries is not very high in the near future. Therefore, in this situation, adding new refining capacity will exacerbate the surplus. Therefore, the National Development and Reform Commission may also hold a cautious attitude in approving large-scale refining projects, which has significantly reduced the number of orders received by domestic engineering enterprises. "said a chemical researcher at the aforementioned fund company.