Year On Year Growth Of 196% - 221%! Rongsheng Petrochemical Half Year Net Profit Explosive Growth!

Since the beginning of 2020, due to the impact of the global epidemic, crude oil has dropped to a historic low price. We have even witnessed the emergence of negative oil prices, which was totally unthinkable a few months ago.

For the petrochemical industry, this is the worst time, but also the best time.

The so-called worst time, petrochemical industry monopoly two barrels of oil must have deep experience. According to the first quarter report of 2020, PetroChina and Sinopec, the monopoly leaders in the petrochemical industry, have respectively lost more than 10 billion yuan.

The so-called best moment is for the downstream refining and chemical enterprises.

On July 14, Rongsheng Petrochemical Co., Ltd. (hereinafter referred to as "Rongsheng petrochemical") issued a performance forecast, saying that in the first half of 2020, the company's net profit attributable to shareholders of listed companies was 3.1-3.36 billion yuan, with a year-on-year increase of 196% - 221%, and the basic earnings per share was 0.49 yuan / share ~ 0.53 yuan / share.

Rongsheng Petrochemical said in the announcement that the company's significant year-on-year performance growth was mainly due to the 40 million ton refining and chemical integration project of its holding subsidiary Zhejiang Petrochemical Co., Ltd. On the one hand, the commissioning of the project will help the company to build an integrated industrial chain of "crude oil aromatics (PX), olefin PTA, MEG polyester spinning texturing", realize high-quality and efficient large-scale production, reduce product costs, further enhance the company's profitability, enhance the company's overall strength and anti risk ability, and realize leapfrog development; on the other hand, it will be in a certain period of time To improve China's voice in aromatics and ethylene industry, promote the production, processing and sales of chemical products in the middle and lower reaches, and realize the economic and social benefits of the company.

According to the annual report, in 2019, the operating revenue will reach 82.5 billion yuan, 10% year-on-year; the net profit attributable to the parent company will be 2.209 billion yuan, + 37% year-on-year; and the non net profit will be 1.967 billion yuan, which will be + 34% year on year. In 2020, the revenue will reach 21052685495.07 yuan, with a year-on-year increase of 27.89%; the net profit attributable to shareholders of listed companies is 1225861703.85 yuan, with a year-on-year increase of 102.64%.

The company explained that refineries are divided into fuel refineries and chemical refineries, and Zhejiang Petrochemical phase I plant is a chemical refinery. Crude oil prices have a relatively close correlation with the prices of gasoline and refined oil, and there will be a certain lag for chemicals. The overall decline depth is not as deep as that of refined oil or crude oil, resulting in the widening of the whole processing price gap. The whole Rongsheng Petrochemical Company's factories earn the processing price difference between raw materials and products. Now the crude oil price is not only keeping a relatively low position in history, but at present, with the improvement of the epidemic situation, such an environment is expected to bring a big benefit to Rongsheng Petrochemical's performance this year.

So, what kind of impact has the historic low oil price brought to private petrochemical industry?

It should be said that the cost reduction is a very significant benefit. Moreover, due to its position in the middle and lower reaches, private petrochemical companies are actually oil consumers, which is most intuitive in terms of sales profit margin.

Taking Hengyi petrochemical as an example, the overall economy was stagnant due to the impact of the epidemic. In the first quarter, the revenue fell by 14%, but the net profit still increased by 82%. This was mainly due to the increase of gross profit. The gross profit margin of Hengyi petrochemical in the first quarter reached 8.69%, nearly double the 4.39% in the same period last year.

In contrast, Hengyi petrochemical, with a gross profit of 8.69%, is still a younger brother among the three private petrochemical enterprises. The other two companies are Hengli Petrochemical (22%) and Rongsheng Petrochemical (17.78%). They are much higher than the same period last year.

To tell you the truth, the expansion of the three private petrochemical companies is high debt expansion, and the asset liability ratio has reached the red line of nearly 80%, which is really worrying. However, the low oil price caused by the epidemic has brought high gross profit, which has made the expansion of the three private petrochemical companies bet on. This is like buying a continuous limit board with several times of leverage. As long as the low oil price lasts longer and the macro-economy does not decline significantly, the better life of private petrochemical will be longer.

Finally, we should get some enlightenment from the performance of private petrochemical enterprises

From the perspective of low oil price or low oil price, both investors should not participate in the low oil price competition because of their lack of professional knowledge.

Second, oil prices are so low, which companies that buy oil don't smell good? In fact, in the petrochemical industry chain, apart from two barrels of oil, a considerable number of companies actually benefit from low oil prices. In investment, we often say that it is hard to buy certainty for thousands of dollars; if you buy a company that benefits from low oil prices, you will get precious high certainty.