Hengyi Petrochemical 2021 Annual Report
April 2022
Hengyi Petrochemical 2021 Annual Report
Chairman's Statement
In 2021, while China celebrated the 100th anniversary of the CPC and got the 14th Five-Year Plan off,
Hengyi Petrochemical made steady progress in the strategy of "refinery, polyester and polyamide
industries". However, we are still facing severe challenges in operation due to the Covid-19
resurgence and the complex and rapidly changing external environment. Only after polishing can a
piece of jade be finer. In this extraordinary year, we, all Hengyi staff, achieved a gratifying result
with joint efforts and full vigor.
Hitting a new high, we recorded both revenue and total assets exceeding RMB100 billion
In the year 2021, we continued to rise to various external challenges, with operating performance
reaching a new all-time high. The revenue was RMB128.98 billion, up 49.23% year on year; the total
assets amounted to RMB105.549 billion, up 13.88% year on year. With the revenue and total assets
both exceeding RMB100 billion, the Company has achieved its business objectives and development
goals, showing its strong growth momentum and vitality.
Releasing capacity, we unleash the growth potential
In the year 2021, our industrial chain planning which integrates upstream and downstream was
further refined. The Hengyi Brunei Phase I Project continuously operated at full capacity, and many
other projects were put into production, including the intelligent environmental and functional fiber
project of Haining New Materials, the new-type functional fiber project of Fujian Yijin and the
3-mtpa PTA project of Yisheng New Materials. With new capacity fully released, the Company's
capacity reached a new level. Accordingly, we have gained strong growth momentum and
consolidated our industry leader role.
With innovation, we empower our high-end intelligent developme nt
In the year 2021, following the transformation from "Made in China" to "Intelligent Manufacturing
in China", the Company further implemented the strategy of innovation-driven development. The
Company has made planning with foresight on long-term projects for high-end green products,
adding more to the highlights of high-quality development. The Company also has improved the
Hengyi Petrochemical 2021 Annual Report
integration of data and intelligence, building the first polyester factory with whole-process intelligent
storage and transportation system in China. Our AI full-detection prototype first applied in the
chemical fiber industry was selected as the Industrial Intelligent Pioneer Case at the Intelligent
Economy Summit 2021. By leveraging its supply chain, the Company has focused on building
"Hengyi Brain", an intelligent information platform, to empower the development of chemical fiber
industry and create more value.
Co-creating and sharing, we improve the talent incentive mechanism
In the year 2021, the Company continued to promote its employee stock ownership plan to benefit
those at grassroots level. We launched the special campaign of "ensuring frontline stable, solidifying
foundation" among all employees, which aimed to enable more Hengyi employees to better share our
development achievements. The establishment of the long-term development and sharing mechanism
has effectively enhanced the sense of belonging and cohesion of employees, increased our attraction
to high-level talents, and laid a solid foundation for our stable and sound long-term development.
Mountains do not reject fine dust, and rivers do not refuse to fill with water. It is the hard work of
every Hengyi employee and the support of leaders, investors and partners that make the Company
has the energy and courage to forge ahead. On behalf of the Company, I would like to express my
heartfelt thanks to you all!
With entering 2022, the ever-changing international community and the COVID-19 resurgence have
made the whole market under pressure. This era of challenges and opportunities also is a test for our
operation and management. As a multinational business, we will explore with a more global
perspective, give equal priority to exploring opportunities and preventing and controlling risks, and
plan ahead, keep innovating and make steady progress while seeking opportunities in changes.
Looking forward, as demanded by the high-quality development in the new era and the new pattern
of industrial development, we will continue to promote the construction of major strategic projects,
including the Brunei Phase II Project, the 1.2-mtpa Caprolactam-Polyamide Integration and
Supporting Project and Suqian Yida’s 1.1-mtpa New-type Differentiated Environmental Fiber Project,
and make further improvement in integrating the whole industry chain of "refinery, polyester and
polyamide industries". We will continue to consolidate the foundation of innovation and
development through high-intensity investment. With Hengyi Research Institute and platforms like
Hengyi Petrochemical 2021 Annual Report
joint laboratories co-built with top colleges and universities, we will continue to promote the
application and transformation of technological achievements, and improve the contribution of
scientific research and technological innovation to our main business to become a technology leader
in the whole industry.
We aim to build and operate a long-lasting company that ranks among the world’s top enterprises.
This is our mission and also original aspiration. With no fear for the long way ahead, we will work
hard and set off a new journey. We will stay true to our original value, make down-to-earth efforts,
and keep moving forward to embrace a bright future on our way to the high-quality development and
a century-old Hengyi.
Monday, April 25, 2022
Hengyi Petrochemical 2021 Annual Report
Section 1 Important Notes, Contents and Definitions
The Board of Directors (BOD), Board of Supervisors (BOS), directors,
supervisors and senior managers of the Company guarantee that the contents of
the 2021 Annual Report (hereinafter referred to as "the Report") are true,
accurate and complete, free of false records, misleading statements or major
omissions, and that they shall bear relevant individual and joint and several legal
liabilities.
The financial statements of the Report have been audited by Zhongxinghua
Certified Public Accountants LLP, and a standard unqualified audit report has
been issued.
Qiu Yibo, the head of the Company, Mao Ying, the person in charge of the
accounting work, and Yu Zhicheng, the head of the accounting body (accountant
in charge), declared that they would ensure the truthfulness, accuracy and
completeness of the financial statements in this Annual Report.
The Report has been deliberated and approved at the 17 th meeting of the 11 th
BOD of the Company. All directors have attended the Board meeting at which
this Report was considered.
The profit distribution plan approved by the BOD is as follows: a cash bonus of
RMB 2.00 (tax included) will be distributed to all shareholders for every 1 0
shares on the base of 3,666,280,014; no bonus shares will be distributed, and no
accumulation fund will be converted into share capital. If the Company’s total
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Hengyi Petrochemical 2021 Annual Report
share capital on the registration date of dividend-paying equity changes as a
result of additional issuance, share repurchase or conversion of convertible bonds
into additional capital stock prior to such date, the Company plans to maintain
the distribution ratio unchanged and adjust the total share capital. The 2021
Profit Distribution Plan shall also be submitted to the 2021 Annual General
Meeting of Shareholders of the Company for deliberation and approval.
Forward-looking statements such as future plans, development strategies,
industry discussions and prospects involved in this Report do not constitute the
substantive commitment of the Company to investors, and investors are advised
to pay attention to investment risks. For possible risks in the operation and
development of the Company, please refer to 3.11.2 "Possible Risks and
Countermeasures in the Future" of 3.11 "Prospects for the Future Development
of the Company" of "Section 3 Management Discussion and Analysis".
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Hengyi Petrochemical 2021 Annual Report
Contents
Section 1 Important Notes, Contents and Definitions..................................................................... 5
Section 2 Company Profile and Main Financial Indicators .......................................................... 11
Section 3 Management Discussion and Analysis.......................................................................... 18
Section 4 Corporate Governance ................................................................................................ 127
Section 5 Environmental and Social Responsibility ................................................................... 172
Section 6 Important Matters........................................................................................................ 186
Section 7 Changes in Shares and Shareholders .......................................................................... 212
Section 8 Preference Shares ........................................................................................................ 224
Section 9 Bonds .......................................................................................................................... 225
Section 10 Financial Report .......................................................................................................... 231
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Hengyi Petrochemical 2021 Annual Report
List of Documents for Reference
1. Accounting statements signed and stamped by the legal representative, the financial principal
and the head of the accounting body;
2. The original audit report stamped by the accounting firm and signed and stamped by the certified
public accountant;
3. All original documents and original announcements of the Company publicly disclosed on the
website designated by CSRC during current period.
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Hengyi Petrochemical 2021 Annual Report
Definitions
Item Refers to Definition
Hengyi
Petrochemical/Company/the Refers to Hengyi Petrochemical Co., Ltd.
Company
SZSE/the Exchange Refers to Shenzhen Stock Exchange
Hengyi Group Refers to Zhejiang Hengyi Group Co., Ltd.
Hengyi Limited Refers to Zhejiang Hengyi Petrochemical Co., Ltd.
Hengyi Brunei Refers to Hengyi Industries Sdn. Bhd.
Zhejiang Yisheng Refers to Zhejiang Yisheng Petrochemical Co., Ltd.
Yisheng New Materials Refers to Zhejiang Yisheng New Materials 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., Ltd.
Hengyi High-Tech Refers to Zhejiang Hengyi High-Tech Materials Co., Ltd.
Haining New Materials Refers to Haining Hengyi New Materials Co., Ltd.
Haining Thermal Power Refers to Haining Hengyi Thermal Power 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 to 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 New Materials Co., Ltd.
Ningbo Hengyi Trading Refers to Ningbo Hengyi Trading Co., Ltd.
Hong Kong Yisheng Refers to Hong Kong Yisheng Co., Ltd.
Hengyi Singapore Refers to Hengyi Industries International (Singapore) Co., Ltd.
Hangzhou Yijing Refers to Hangzhou Yijing Chemical Fiber Co., Ltd.
Hengyi Caprolactam Refers to Zhejiang Baling Hengyi Caprolactam Co., Ltd.
China Zheshang Bank Refers to China Zheshang Bank Co., Ltd.
Yisheng Investment Refers to Dalian Yisheng Investment Co., Ltd.
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 Co., Ltd.
Brunei Project, PMB The petrochemical project invested and constructed by
Refers to
Petrochemical Project the company in Brunei
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Hengyi Petrochemical 2021 Annual Report
Item Refers to Definition
Paraxylene, a colorless and transparent liquid. It is
PX Refers to
used to produce plastics, polyester fibers and films.
Purified terephthalic acid, mainly used to produce
PET, can also be made into engineering polyester
PTA Refers to
plastics, and be used as the raw material of plasticizer
and dye intermediate.
Isophthalic acid, mainly used in the production of
alkyd resin, unsaturated polyester resin and other
PIA Refers to polymers and plasticizers, as well as in the production
of film finishers, coatings, polyester fiber dyeing
modifiers and medicines.
Ethylene glycol, mainly used to produce polyester
MEG Refers to fiber, antifreeze, unsaturated polyester resin, lubricant,
plasticizers, nonionic surfactant and explosives, etc.
Polyethylene terephthalate. It is a fiber-forming
polymer made from PTA and MEG through direct
PET and polyester Refers to
esterification and continuous polycondensation
reaction.
POY Refers to Polyester pre-oriented yarn or partially oriented yarn
FDY Refers to Fully drawn yarn or polyester drawn yarn
Draw textured yarn, also known as polyester textured
DTY Refers to
yarn
Caprolactam, mainly used to produce polyamide fiber,
CPL Refers to engineering plastics, plastic film, etc. It is widely used
in industrial and civil fields.
A variety that is innovative in technology or
Differentiated yarn Refers to performance or has some characteristics different from
traditional yarns.
RMB and RMB 10,000 Refers to RMB and RMB 10,000
Reporting Period/during the
Reporting Period/this Refers to From January 1, 2021 to December 31, 2021
Reporting Period
End of Reporting Period/end
of the current Reporting Refers to As of December 31, 2021
Period
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Hengyi Petrochemical 2021 Annual Report
Section 2 Company Profile and Main Financial Indicators
2.1 Company profile
Stock abbreviation Hengyi Petrochemical Stock code 000703
Abbreviation of the changed
N/A
stock (if any)
Stock Exchange Shenzhen Stock Exchange
Chinese name 恒逸石化股份有限公司
Chinese abbreviation 恒逸石化
Name in foreign language (if any) HENGYI PETROCHEMICAL CO., LTD.
Abbreviation of name (if any) HYPC
Legal representative Qiu Yibo
No. G, 7/F, Haifu Building, No. 16 West Beihai Avenue, Beihai
Place of registration
City, Guangxi Zhuang Autonomous Region
Postal code of the registered
536000
address
Change history of the Company’s
No changes
registered address
Building 3, Hengyi Nan’an Mingzhu, No. 260 North Shixin
Office address
Road, Xiaoshan District, Hangzhou City, Zhejiang Province
Postal code of the office address 311215
Company website http://www.hengyishihua.com
E-mail hysh@hengyi.com
2.2 Contact person and contact information
Secretary of the Board Securities Representative
Name Zheng Xingang Chen Shasha
BOD Office, 16/F, Building 3, BOD Office, 16/F, Building 3, Nan’an
Contact address
Nan’an Mingzhu, No. 260 North Mingzhu, No. 260 North Shixin Road,
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Hengyi Petrochemical 2021 Annual Report
Shixin Road, Xiaoshan District, Xiaoshan District, Hangzhou City,
Hangzhou City, Zhejiang Province Zhejiang Province
Tel. (0571) 83871991 (0571)83871991
Fax. (0571) 83871992 (0571)83871992
E-mail hysh@hengyi.com hysh@hengyi.com
2.3 Information disclosure and place of preparation
The website of the Stock Exchange where the
Shenzhen Stock Exchange: http://www.szse.cn
Company discloses the Annual Report
China Securities Journal, Securities Times,
Name and website of the media through which
Shanghai Securities News and Securities Daily;
the Company discloses the Annual Report
CNINFO: http://www.cninfo.com.cn
Place where the Annual Report is prepared BOD Office of Hengyi Petrochemical Co., Ltd.
2.4 Registration changes
Organization code 9145050019822966X4
Changes in the Company’s main business since listing (if any) No changes
Previous changes of controlling shareholders (if any) No changes
2.5 Other relevant information
Accounting firm engaged by the Company
Name of accounting firm Zhongxinghua Certified Public Accountants LLP
20/F, Tower B, Lize SOHO, No. 20 Lize Road, Fengtai
Office address of accounting firm
District, Beijing
Name of signing accountants Liu Hongyue, Wang Guohai
Sponsor institution engaged by the Company to perform continuous supervision duties during
Reporting Period
Name of sponsor Office address of sponsor Name of sponsor Continuous
institution institution representative supervision period
CITIC Securities Co., Ltd. No. 48 Liangmaqiao Road, Mao Zongxuan, January 2021 -
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Hengyi Petrochemical 2021 Annual Report
Chaoyang District, Beijing Xu Rui December 2021
Financial consultants engaged by the Company to perform continuous supervision duties
during Reporting Period
□ Applicable √ Not applicable
2.6 Main accounting data and financial indicators
Does the Company need to retroactively adjust or restate the accounting data of previous
years?
√ Yes □ No
Reason for retrospective adjustment or restatement
Changes in accounting policies
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Hengyi Petrochemical 2021 Annual Report
Increase/decrease of this year over the
2020 2019
2021 previous year
Before adjustment After adjustment After adjustment Before adjustment After adjustment
Operating income (RMB ) 128,979,539,693.27 86,429,630,191.87 86,429,630,191.87 49.23% 79,620,543,631.74 79,620,543,631.74
Net profit attributable to shareholders of
3,408,043,143.47 3,071,998,839.75 3,071,998,839.75 10.94% 3,201,348,425.33 3,190,185,517.79
listed companies (RMB)
Net profit after deducting non-recurring
gains and losses attributable to shareholders 2,758,543,282.50 2,479,101,027.63 2,479,101,027.63 11.27% 2,725,438,479.51 2,725,438,479.51
of listed companies (RMB )
Net cash flow from operating activities
7,754,871,519.56 5,013,772,777.95 5,013,772,777.95 54.67% -112,081,728.16 -91,125,777.91
(RMB )
Basic earnings per share (RMB /share) 0.94 0.83 0.83 13.25% 1.13 1.13
Diluted earnings per share (RMB /share) 0.91 0.83 0.83 9.64% 1.13 1.13
Weighted average ROE 13.56% 12.56% 12.56% 1.00% 14.73% 14.54%
Increase/decrease at the end of this
End of 2020 End of 2019
End of 2021 year over the end of the previous year
Before adjustment After adjustment After adjustment Before adjustment After adjustment
Total assets (RMB ) 105,548,909,472.93 92,260,268,155.54 92,685,505,184.24 13.88% 85,230,757,616.78 85,763,292,709.24
Net assets attributable to shareholders of
25,896,860,136.22 24,006,633,612.78 24,006,633,612.78 7.87% 23,253,008,414.00 23,741,845,506.46
listed companies (RMB )
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Hengyi Petrochemical 2021 Annual Report
Main reasons for changes in accounting policies
On December 7, 2018, the Ministry of Finance issued a Notice on the Accounting Standards for
Business Enterprises No. 21 - Leases (2018 Revision) (CK[2018] No. 35) (hereinafter referred to as
"New Lease Standards"). It stipulates that the new standards take effect from January 1, 2019 for
enterprises listed both at home and abroad, as well as enterprises listed overseas and prepare
financial statements according to IFRS or ASBE, and come into force from January 1, 2021 for other
enterprises abiding by ASBE.
The net profits before and after deducting non-recurring gains and losses (whichever is less) of
the Company in the previous three fiscal years is negative, and the audit report of the previous
year shows that the Company’s going concern ability is uncertain.
□ Yes √ No
The lower of net profit before and after deducting non-recurring gains and losses is negative.
□ Yes √ No
2.7 Differences between accounting data under the domestic and foreign accounting standards
2.7.1 Differences in the net profit and net assets in the financial statements which are
presented concurrently in accordance with internationa l accounting standards and the
accounting standards of China
□ Applicable √ Not applicable
There are no differences in the net profit and net assets in the financial statements which are
presented concurrently in accordance with international accounting standards and the accounting
standards of China during the Reporting Period.
2.7.2 Differences in the net profit and net assets in the financial statements which are
presented concurrently in accordance with foreign accounting standards and the accounting
standards of China
□ Applicable √ Not applicable
There are no differences in the net profit and net assets in the financial statements which are
presented concurrently in accordance with foreign accounting standards and the accounting standards
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Hengyi Petrochemical 2021 Annual Report
of China during the Reporting Period.
2.8 Quarterly main financial indicators
Currency: RMB
First quarter Second quarter Third quarter Fourth quarter
Operating income 30,845,538,236.94 30,077,832,146.93 35,767,865,929.13 32,288,303,380.27
Net profit attributable to shareholders
1,212,734,962.38 1,021,756,838.87 848,284,552.74 325,266,789.48
of listed companies
Net profit after deducting
non-recurring gains and losses
1,228,382,021.90 816,937,257.00 813,551,002.26 -100,326,998.66
attributable to shareholders of listed
companies
Net cash flow from operating
-471,195,959.85 2,231,237,943.42 587,998,410.73 5,406,831,125.26
activities
Whether the aforesaid financial indicators or their sum are significantly different from the
financial indicators related to the quarterly and semi-annual reports disclosed by the Company
□ Yes √ No
2.9 Non-recurring gain and loss items and amounts
Currency: RMB
Amount in Amount in Amount in
Item Remarks
2021 2020 2019
Profit or loss from disposal of non-current assets
(including the write-off portion of asset impairment -12,534,455.04 -6,741,262.61 -1,811,565.51
provision)
Tax refund or exemption approved ultra vires or without
15,609,249.33 12,921,483.38 5,957,948.27
any formal approval
Government grants recorded into current profits and
losses (except for those that are closely related to the
normal business operation of the Company, in line with 277,839,245.44 318,607,292.74 420,716,519.76
national policies, and are continuously enjoyed on a
fixed quota or a quantitative basis)
Current net profit or loss from subsidiaries formed by
business merger under common control, from the 0.00 19,376,584.76 36,175,922.94
period-beginning to the merger date
Profit or loss from contingencies irrelevant to normal
0.00 0.00 -2,173,136.66
business operations of the Company
The gains or losses arising from the fair value changes of
480,727,659.11 487,752,983.95 301,297,013.33
held-for-trading financial assets and held-for-trading
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Hengyi Petrochemical 2021 Annual Report
financial liabilities, as well as investment gains received
from the disposal of held-for-trading financial assets,
held-for-trading financial liabilities and financial assets
available for sale, except for effective hedging
transactions that are related to the normal business
operations of the Company
Reversal of impairment provision for receivables that are
309,000.00 0.00 0.00
separately tested for impairment
Gains or losses from entrusted loans 49,567,383.65 41,586,615.56 29,136,336.48
Income from custodian fees obtained from entrusted
1,698,113.20 1,698,113.20 1,698,114.17
operation
Other non-operating income and expense in addition to
13,359,433.22 -6,299,334.89 -14,994,635.24
the above
Other profit or loss items that meet the definition of
0.00 2,595,730.83 -2,065,748.97
non-recurring profit and loss
Less: Influenced amount of income tax 38,805,031.16 215,685,156.22 139,947,035.37
Influenced amount of the minority shareholders’ equity
138,270,736.78 62,915,238.58 169,242,694.92
(after-tax)
Total 649,499,860.97 592,897,812.12 464,747,038.28 -
Details of other profit or loss ite ms that meet the definition of non-recurring profit and loss:
□ Applicable √ Not applicable
The Company does not have any other profit or loss items that meet the definition of non-recurring
profit and loss.
Cases of defining the non-recurring profit and loss items as recurring profit and loss items,
which are enume rated in the Explanatory Announce ment No. 1 on Information Disclosure of
Companies Offering Securities to the Public - Non-recurring Profits and Losses
□ Applicable √ Not applicable
There was no case of defining any non-recurring profit and loss items as recurring profit and loss
items, which are enumerated in the Explanatory Announcement No. 1 on Information Disclosure for
Companies Offering Securities to the Public - Non-recurring Profits and Losses.
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Hengyi Petrochemical 2021 Annual Report
Section 3 Management Discussion and Analysis
3.1 Main business of the Company and the industry in which the Company is engaged during
the Reporting Period
The Company shall comply with the disclosure require ments for petrochemical industry
specified in Guidelines No. 3 for Self-Regulation of Listed Companies of Shenzhen Stock
Exchange - Industry Information Disclosure
3.1.1 Overview
Committed to developing into a leading domestic and world-class
refining-petrochemical-chemical fiber industry group, Hengyi Petrochemical (stock code: 000703)
has made continuous efforts to enhance its comprehensive competitiveness through resource sharing
and industrial coordination. Under the guidance of the development strategy of "refinery, polyester
and polyamide industries", the Company, relying on the Brunei Project, has stepped up efforts in
internationalization, broke the "last kilometer" barrier of the whole industry chain from oil refining
to chemical fiber, and built an internally-highly-matched columnar-balanced integrated industry
chain in the upstream, midstream and downstream. By creating a unique "polyester + polyamide"
double-fiber driving mode among domestic counterparts, the Company has formed a "petrochemical
+" multi-level and three-dimensional industrial layout with petrochemical industry chain as the core
business, supply chain service business as the growth business, and differentiated fiber products and
application of industrial intelligent technology as the emerging business.
3.1.1.1 Overview of petrochemical che mical fiber business
3.1.1.1.1 One of the world’s leading groups in the integration of
“refining-petroche mical-che mical fiber” industry chain
During the Reporting Period, the Company's unique industrial layout of "refinery, polyester and
polyamide" continued to improve. While organizing the domestic and overseas staff to join hands in
scientific fight against the pandemic to avoid the Company's safe production and operation from
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Hengyi Petrochemical 2021 Annual Report
being significantly affected by the pandemic, the Company maintained stable operation throughout
the year and demonstrated strengths in expansion and quality improvement in polyester industry,
potential tapping and transformation in PTA industry, and full production in refining and
petrochemical industry. Besides, the Company uncovers the integrated, balanced and
internationalized operation mode of industry chain. Currently, the Company has developed into one
of the world's leading enterprises integrating the industry chains of "crude oil -PX-PTA-polyester"
and "crude oil-benzene-CPL-polyamide". Upholding the strategic development policy of
"consolidating, highlighting and enhancing the competitiveness of the main business", the Company
has not only focused on the main business, but also continuously increased investment in
technological innovation and industrial intelligent tec hnologies, and enhanced the comprehensive
competitive edge, thereby ranking in the forefront of the industry for many years.
During the Reporting Period, the Company has continuously extended its petrochemical
industry chain, enriched product categories and further improved its product structure, which
effectively consolidated the core competitiveness of the main business, strengthened the profitability
of products and improved the ability to resist market risks. The Company's main products include:
gasoline, diesel, jet fuel and other product oil; light petrochemical oil, liquefied petroleum gas (LPG),
p-xylene (PX), benzene, purified terephthalic acid (PTA), caprolactam (CPL) and other
petrochemical products; polyester bottle flakes and other packaging products, as well as polyester
preoriented yarn (POY), polyester drawn yarn (FDY), polyester textured yarn (DTY), polyester
staple fiber, polyester (PET) flakes and other polyester products. The products are widely used for
meeting the rigid needs related to national economy and people's livelihood, and meeting people's
yearning for a better life.
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Hengyi Petrochemical 2021 Annual Report
Figure 1 The petroche mical and chemical fiber industry chain in which the Company is
engaged
Petroleum Refining-chemical integration
Oil refining Product Oil Olefins Aromatics
Paraxylene
Gasoline Diesel Jet Fuel Propylene Ethylene Benzene
(PX)
Petrochemical
Ethylene Glycol Purified terephthalic
Polypropylene Polyethylene Caprolactam (CPL)
(MEG) acid (PTA)
industry chain
industry chain
Polyamide
Polyamide
Polyethylene terephthalate (PET)
Polyester
(PA)
Bottle flake Polyamide
chip
Chemical fiber
Polyester fully Polyester partially Polyester staple
drawn yarn (FDY) oriented yarn (POY) fiber
Polyester drawn
textured yarn (DTY)
Weaving fields (such as textiles,
garments and home textiles)
Business in China
Business in Brunei
Business in future
Downstream products
Note: Polyamide flakes are products currently operated by Hengyi Group, the controlling shareholder.
As of the disclosure date of this report, the Company's designed crude oil production capacity
was 8mtpa; the PTA production capacity of holding and share holding companies was 19mtpa; the
PIA production capacity was 300,000 t/a; the polymer production capacity of holding and
shareholding companies was 10.465 million tons, among which the production capacity of polyester
fiber was 7.765mtpa, that of polyester bottle flakes (including RPET bottle flakes) was 2.7mtpa, and
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Hengyi Petrochemical 2021 Annual Report
that of caprolactam (CPL) was 400,000 t/a, ranking forefront in the industry.
Table 1 Production Capacity of Main Products of the Company (10,000 t/a)
Product Capacity
Petrochemical products 265
Product oil 565
PTA 1,900
PIA 30
Polyester fiber products 776.5
PET bottle flakes(including RPET) 270
Caprolactam 40
Note: 1) Polyester fiber products include POY, FDY, DTY, staple fiber and flake products
2) This table lists the actual production capacity of the Company during the Reporting Period.
During the Reporting Period, the Company continued to attach importance to investment in
research and development of new products, actively responded to the “carbo n peaking and carbon
neutrality” strategy, and adhered to the guidance of "green manufacturing" and "circular economy".
In the polyester sector, the Company continued to carry out product development and achievement
transformation around the three major themes of environmental protection, function and bio-base.
Internally, the Company optimized the sales system, actively grasped market demand, and fully
tapped into and reasonably guided customer demands through the organic linkage of research and
development, production and sales. Externally, the Company, through cooperation with colleges and
universities, built an "industry-university-research" school-enterprise ecology and conducted
effective exploration in basic materials research support and cutting-edge key technologies.
During the Reporting Period, the Company adopted a multi-path, multi-echelon and
multi-scenario research and development system. Through technical research, the Company quickly
opened up the regenerated fine denier fiber market and was well received by customers. The
antimony-free and environment-friendly "Eticont" series products were also recognized by more and
more customers, and the sales volume continued to rise. The flame retardant fibers continued to
maintain a strong market share among domestic flame retardant products. The market popularity of
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antibacterial and anti-virus products continued to rise, and antibacterial and anti-virus fibers will
become a new profit growth point for differentiated products.
3.1.1.1.2 Products meeting the rigid needs related to the national economy and people's
livelihood
The Company's terminal sales products mainly include product oil products such as gasoline,
diesel and jet fuel, as well as polyester products such as polyester bottle flakes, polyester filament
and polyester staple fiber, which are widely used to meet the rigid needs related to national economy
and people's livelihood. Among the products, product oil products such as gasoline, diesel and jet
fuel provide energy for automobiles, ships, and aircraft and other vehicles and corresponding
equipment. Polyester filament includes POY、FDY、DTY and other products, which are used in
production of garment, home textile and decorative fabrics and linings, and can also be used for
industrial purposes such as webbing, zippers, tents, automobile interiors and ear threads of masks.
Among them, FDY products of the Company can be used as medical and other materials to meet the
increasing demand of downstream customers for raw materials of medical suppli es; polyester staple
fiber can be widely used in spinning, non-woven and filling fields, among which non-woven fabrics
can be used in health areas such as disinfectant wipes; PET bottle flakes are widely used in food
packaging and medical materials production. The demand for bottle grade PET in beverage, dairy,
edible oil, condiments and other livelihood industries keeps growing steadily, and the share in
emerging application fields such as wine, daily chemicals, electronic products and medical products
is rising rapidly.
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Table 2 Main Product Features and Application Fields
Products Application fields
A type of hydrocarbon, colorless transparent liquid. It can be used in many
PX fields. It is the main raw material for the production of PTA and is also used
to make synthetic plastics, drugs, pesticides etc.
Mainly used as fuel of various fuel-fired power equipment and heating
Product supply. Used as fuel for automobiles, motorcycles, speedboats, helicopters,
Oil agricultural and forestry aircraft, motor vehicles with diesel engine (including
trains), vessels and diesel boilers.
Mainly used for producing polyester products, and is widely used for all
national economy aspects, such as clothing, decoration, electronics and
PTA construction. 75% of PTA is used for polyester fiber, 20% for bottle grade
polyester and 5% for film polyester (mainly for civil use in the downstream).
PIA is a white crystalline powder or acicular crystal used to produce alkyd
resins, unsaturated polyester resins and other high polymers and plasticizers.
PIA It is also used to make film finishers, coatings, polyester fiber dyeing
modifiers and medicines.
Used for DTY and fiber products with special styles
POY reprocessing production. It is widely used in clothing and
industrial fields.
Directly used for weaving and for production of garment
and decorative fabrics. It is widely used in clothing and
FDY industrial fields, and also used as isolation material for
protective suits and other protective products.
It is directly used for weaving and is widely used in
DTY clothing and industrial fields, garment fabrics and lining
materials.
It is mainly used to produce polyamide fibers, engineering
CPL plastics and plastic films; widely used in industrial and
civil fields.
Mainly used to produce yarns, nonwovens and filling
materials. The non-woven fabric can be used as a raw
PET staple material for the production of face masks and the
fiber downstream disinfectant wipes and disposable protective
products.
Widely used for indirect spinning. They can be used to
produce textile materials such as filaments and staple
PET chips fibers, and also for strip casting to produce plastics and
other products.
PET bottle Mainly used for food packaging (including coke bottle,
flakes beverage bottle, water bottle and oil bottle).
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3.1.1.2 Overview of “petrochemical +” business
3.1.1.2.1 Supply chain service business is conducive to improving product operation
capability and enhancing the supporting value-added services
With the continuous improvement of the integrated and balanced development of the
Company’s industry chains, the Company has strengthened the supply chain service management
capacity, and innovated and promoted intelligent management and operation modes. Relying on
refining and chemical fiber production base, the Company developed domestic and overseas regional
markets and optimized product layout; strengthened the construction of digital plants and actively
explored flexible and personalized customization of production through big data means; adopted a
variety of tools to improve product operation capability, explored the complementary advantages of
raw material procurement and product sales, and gave full play to the strengths of industry chain
integration to create product price differences.
The Company actively carried out comprehensive distribution services for raw materials and
products, with Hengyi Micro Mall and marketing supply chain system as the core online, and
logistics business as the support offline, to realize effective integration of online and offline services.
The Company continued to: optimize the functional applications (including price inquiry, quick order
placing, market information, intelligent logistics management platform (HTTMS), financial services
and other supporting services) of Hengyi Micro Mall; improve the efficiency of marketing
closed-loop system, which sees a sustained explosive growth in transaction volume at present;
innovatively build a unique omni-channel logistics control system and a tripartite logistics
transportation platform.
With the commissioning and operation of the Brunei Project, the Company has actively
conducted supporting shipping business, accelerated the implementation of integrated management
of supply chain services, formed a plant-product-warehouse-logistics-customer intelligent supply
chain closed-loop system, and led the upgrading of intelligent supply chain services in the industry.
3.1.1.2.2 China Zheshang Bank's equity investment provides a stable source of profits for
the Company
China Zheshang Bank BANK CO., LTD, established in 2004, is one of the 12 national
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joint-stock commercial banks approved by the China Banking and Insurance Regulatory
Commission. The Bank was listed on the Main Board of the Stock Exchange of Hong Kong on
March 30, 2016 and on Shanghai Stock Exchange on November 26, 2019, becoming an "A+H" listed
bank. At present, the Bank has developed into a high-quality commercial bank featuring solid
foundation, excellent benefits, rapid growth and well-established risk control. With the completion of
the "A+H" layout, China Zheshang Bank will accelerate its future growth. The Company will further
optimize the strategic layout and continuously create value for shareholders through the growth
premium of China Zheshang Bank. According to the 2021 Annual Report issued by China Zheshang
Bank, in 2021, the Bank achieved an operating income of RMB54.471 billion and net profit
attributable to shareholders of RMB12.648 billion. As of the end of December 2021, the total assets
of China Zheshang Bank were RMB2,290 billion, representing an increase of 11.64% over the e nd of
the previous year. Guided by the vision of "to be a first-class commercial bank", and focusing on the
“two most” general goal and the management principle of “scale up, adjust structure, control risks,
create benefits”, China Zheshang Bank has created a new situation of five business segments (i.e. big
retail, big company, big investment bank, big asset management and big cross-border business)
advancing together to serve the real economy to a new stage.
3.1.2 Industries involved
Hengyi Petrochemical is engaged in the petrochemical and chemical fiber industry. Its raw
materials come from petroleum or corresponding chemicals cracked by petroleum. The downstream
demand for terminal products are closely related to the basic necessities of ordinary people.
Important factors affecting the industry mainly include crude oil price fluctuation, downstream
demand, capacity supply and matching of upstream and downstream industry chains.
3.1.2.1 Refining and petrochemical business: Relying on the competitive advantage of
China-Brunei location, the Company explored the refining and petroche mical market potential
in Southeast Asia
3.1.2.1.1 The gap between global crude oil supply and demand was wide ned; crude oil
prices fluctuated to the upside
In 2021, global crude oil prices rose sharply. Oil demand was growing as the global economy
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recovered, helped by economic stimulus policies worldwide. "Delta" and "Omicron" mutation virus
once triggered market panic, and oil prices plunged in the short term, but overall crude oil prices still
maintained a rising trend. At the macro policy level, western countries represented by the United
States adopted quantitative easing policies, which, combined with the weak DOLLAR index, has
played a significant role in supporting the crude oil market. The temporary mismatch between supply
and demand caused by the pandemic and loose liquidity pushed up global commodity prices, in
particular, the sharp rise in energy prices such as coal and natural gas further stimulated the rise in
crude oil prices. Geopolitical risk has also roiled oil prices since 2022, with conflicts between Russia
and Ukraine, attacks on petroleum installations in Saudi Arabia and the Suez Canal blockade all
exacerbating volatility in the oil market.
In terms of supply, OPEC+ began to gradually release production capacity from May 2021 as
global demand for crude oil increased. In July, OPEC+ agreed to increase production by 400,000
barrels/day from August 2021 and by two million barrels/day by the end of the year, including
254,000 barrels/day per month from OPEC members. Despite the gradual increase in output by
major producers, the actual crude oil production was below the promised increase, while the rate of
production release lagged behind that of recovery in demand. According to the IEA, by the end of
2022, the gap between OPEC+ projected production and actual deliveries could reach one billion
barrels.
In terms of demand, according to the IEA, global oil demand rose by 5.4 million barrels/day in
2021. Meanwhile, the IEA forecasts that global oil demand will increase by 3.2 million barrels/day in
2022. The recovery of supply from some OPEC producers was not as good as expected, and global
energy demand was still strong, so the crude oil market remained in a volatile upward trend.
3.1.2.1.2 The product oil market in Southeast Asia ushered in a super cycle, with a broad
prospect for future growth
Since 2022, as Indonesia, Malaysia, Singapore and other Southeast Asian countries eased their
epidemic control measures and actively resumed work and production, market demand has been
growing rapidly. In addition, after the recovery of the supply chain in Southeast Asia, some overseas
orders returned, and under the influence of the resonance of internal and external demand, the
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demand for product oil products in Southeast Asia has recovered strongly.
According to Platts, in terms of gasoline products, Southeast Asia imported about 40.92 million
tons in 2021. The main importing countries included Indonesia, Malaysia, Singapore, the Philippines,
Myanmar and other places, while the main exporting countries were Singapore and Thailand. In
terms of diesel, 36.96 million tons were imported in 2021. The main importing countries were
Vietnam, Bangladesh, the Philippines, Sri Lanka, Myanmar, Indonesia and Malaysia. In terms of jet
fuel, countries were almost self-sufficient and trade circulation was the main flow. The major
importers in Southeast Asia were Malaysia and several other countries with smaller refineries, such
as the Philippines and Sri Lanka. About 3.57 million tons were imported in 2021. In addition, with
the implementation of the new IMO standard in 2020, the demand for low-sulfur fuel oil has risen.
Singapore is a major shipping base. As some marine diesel (MGO) has been required to replace
marine fuel oil, the demand for diesel in Southeast Asia is expected to continue to increase.
Compared with the surplus supply of domestic product oil products, Southeast Asia's product oil
market has a large gap. As the only product oil net import market in the world, it has a product oil
demand with great growth potential. Besides, Australia also needs to import product oil.
In terms of supply, due to the early construction of some refineries in Southeast Asia, their
outdated technology, poor management, heavy burden of government subsidies and other reasons,
more production capacity has been shut down in the previous three years in Asia. The planned new
capacity in Asia has been concentrated in China and India, while Southeast Asia only saw a small
increase in production in Brunei, Indonesia and Vietnam.
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Figure 2 Crack Spread of Product oil Products in Southeast Asia in Recent Years
January 2019 January 2020 January 2021 January 2022
Gasoline
January 2019 January 2020 January 2021 January 2022
Diesel
January 2019 January 2020 January 2021 January 2022
Jet Fuel
Data source: Platts (as of the disclosure date of the Report)
As the profit vane of refineries in Southeast Asia, from the perspective of the crack spread of
product oil products since 2019, the crack spread of product oil products was at the lowest level in
history during the pandemic in 2020. With the alleviation of the pandemic in Southeast Asia in 2021,
market demand gradually picked up, and the crack spread of product oil products continued to
recover. Since 2022, under the influence of multiple factors, such as soaring crude oil prices,
increased demand due to the mitigation of the pandemic in Southeast Asia and shrinking product oil
supply, the crack spread of product oil products in Singapore has been on the rise.
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The Asian Development Bank (ADB) has released its latest economic forecast for Southeast
Asia in 2022, predicting that the region's GDP will grow by 5.1%, and its economic recovery will
continue to gain momentum. It is expected that Southeast Asia will continue to import product oil
products every year in a market pattern where refinery supply capacity decreases rather than
increases. As the impact of the pandemic gradually diminishes, the demand for product oil products
in Southeast Asia is expected to be supported, and the import volume of product oil products will
continue to maintain the growth trend. At the same time, with the continued improvement of the
crack spread, the new, market-driven refineries will see a rebound in profitability, and the Hengyi
Petrochemical Brunei Refinery is expected to benefit from the continued widening of the spread of
product oil.
3.1.2.2 PTA business: Sufficient supply of raw materials and stable industrial order
In 2021, the rise of crude oil prices drove up the prices of PX and PTA. PX prices rallied off the
bottom throughout the year. In the second quarter, with the production of PTA plants by many
companies, PX prices maintained growth. According to CCF data, as of December 31, 2021, the
domestic existing PTA capacity base was adjusted to 65.63 million tons, up 13.88% year on year.
Under the influence of the policy of “controlling total energy consumption and intensity”, plant
maintenance and backward capacity close-down, the annual PTA output increased by 3.25 million
tons, with a year-on-year growth of 6.5%, lower than the growth rate of new capacity, but still a
record high. Due to many unexpected maintenance of PTA plants in the United States and South
Korea, the operating rate abroad was insufficient, and the domestic PTA export volume increased
greatly. CCF data shows that in 2021, the total import volume of PTA in mainland China was 76,500
tons, and the total export volume in mainland China was 2,575,100 tons, with a year-on-year growth
of 204.1% compared with the export volume in 2020, which was 846,700 tons. Due to the reduction
of South Korea's PTA exports, it is expected that the domestic PTA exports will continue to increase
in 2022.
3.1.2.3 Polyester business: The terminal de mand maintained healthy growth, and leading
enterprises will be nefit from reshaping of the pattern of che mical fiber industry chain
3.1.2.3.1 The consumer de mand of residents increased, and the downstream de mand for
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textile and clothing was strong
From the perspective of downstream demand, polyester fiber is mainly used in clothing, home
textile and emerging application fields, which is closely related to residents' consumption willingness.
In 2021, the situation of pandemic prevention and control in China became stable, residents'
disposable income increased, and the consumption level continued to rise. The strategy of expanding
domestic demand and various policies to promote consumption was effective, and consumer groups'
demands for textile and apparel and clothing quality, as well as their consumption capacity also
increased.
According to the National Bureau of Statistics, China's per capita disposable income has been
on the rise since 2013. In 2021, the national per capita disposable income amounted to RMB35,128,
up 9.1% year-on-year in nominal terms. Meanwhile, the per capita consumption expenditure of urban
residents amounted to RMB30,307, up 12.2%. The per capita consumption expenditure of rural
residents was RMB15,916, up 16.1%. The improvement of residents' consumption capacity has
promoted the increase of terminal consumption expenditure in textile clothing and apparel industry.
As the pandemic situation enters the stage of normal prevention and control, residents' consumption
habits and consumption patterns have changed to a certain extent, and online consumption has
entered residents' daily life. According to data from the Ministry of Commerce, in 2021, China's
online retail sales reached RMB13,100 billion, of which the online retail sales of physical
commodities amounted to RMB10,800 billion, up 12.0% year on year, accounting for 24.5% of the
total retail sales of consumer goods, and residents' consumption continued to shift to online
consumption. According to Euromonitor statistics, online sales of domestic shoes and clothing
industry accounted for 35.4%, still maintaining a continuous growth trend. In addition to traditional
e-commerce, e-commerce live-streaming platform has become an important way of clothing sales.
Online live-streaming consumption has emerged as a new force to provide strong support for
terminal consumption, driving the high growth of terminal demand for textile and apparel. Online
consumption has bucked the trend, effectively boosted consumption and unleashed market potential.
Meanwhile, it also means that China has entered an important stage in which the upgrading of
consumption structure has been accelerated, the iteration of consumption pattern has been sped up,
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and the role of consumption in driving the economy has become significantly stronger.
3.1.2.3.2 Overseas demand for textile and clothing was strong, and exports maintaine d high
growth
In 2021, developed countries led by the United States implemented relatively loose monetary
policies to stimulate economic recovery, improve clothing consumption willingness, and promote the
significant growth of clothing consumption demand in developed countries. Meanwhile, the spread
of the pandemic in Southeast Asia affected the production of local textile enterprises. Many factories
stopped production or reduced output, and some orders were transferred to China. According to the
statistics from China National Textile and Apparel Council, in 2021, supported by the growth of
overseas consumption demand, return of some orders and other factors, China's textile and apparel
export reached USD315.50 billion, up 8.4% year on year, and achieved more-than-expected growth
from a relatively high trade base in 2020. The main driving force came from the substantial increase
of exports of apparel, textile yarns and fabrics, among which apparel made a significant contribution.
In 2021, apparel exports totaled USD170.28 billion, up 24.0% year on year and 16.0% compared to
pre-pandemic levels, the best record since 2015. Increase of external demand for textile and apparel
also led to growth of upstream demand for polyester.
3.1.2.3.3 In the polyester industry, market concentration was improved and competition
order was further optimized.
In 2021, polyester production capacity and output in China both achieved steady growth.
According to CCF data, domestically, the polyester production capacity increased by 3.57 million
tons in 2021, with a capacity growth rate of 5.76%. As of December 31, 2021, the total polyester
production capacity was 65.56 million tons. From 2021 to the future, the new polyester capacity will
continue to be centered on capacity expansion of leading enterprises. The backward polyester
factories with outdated equipment lack the ability of technological innovation and will gradually
withdraw from the industry competition. The liquidation of backward production capacity will be
accelerated, the access threshold for the Company's industry chain will be further increased, the
market concentration in the polyester industry will be further optimized, the competition order in the
industry will continue to improve, and the development environment will become healt hier. As one
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of the leading enterprises, the Company has accelerated the expansion of downstream chemical fiber
business through a variety of ways, and will take the lead in enjoying the profit improvement brought
by the prosperity of the industry.
3.1.2.3.4 The upgrading of domestic products contributed to the improve ment of bottle
flake prosperity
According to CCF data, as of December 31, 2021, the global bottle-grade PET production
capacity was 32.27 million tons, among which, China's bottle-grade PET production capacity
accounted for 40% of the total global capacity, ranking first in the world.
In the context of product upgrading, the demand for polyester bottle flakes was increasing. At
the same time, driven by the demand for environmental protection, the reclaimed polyester bottle
flake market was also growing rapidly. In 2021, the global bottle-grade PET apparent consumption
was estimated at 32.08 million tons, with a year-on-year growth rate of more than 12%. The
domestic demand was growing rapidly. The annual apparent consumption of bottle-grade PET was
7.05 million tons, up about 24% year on year. On the downstream demand side, the traditional soft
drink market was doing well. The pandemic also promoted the rapid development of bottle flakes in
fresh e-commerce, household disinfection and other daily chemical fields, as well as new application
areas such as environmentally friendly flooring and optical thin film, thus increasing the demand for
bottle flakes.
3.1.3 Position of each business segment of the Company
The petrochemical and chemical fiber industry in which the Company is engaged belongs to the
basic industry of the national economy and people's livelihood. The fluctuation of the industry is
mainly affected by factors such as upstream raw materials, product supply and downstream terminal
market. With the continuous advancement of refining and petrochemical projects, the self-sufficiency
rate of petrochemical products has gradually risen, and the global pricing power has increased.
During the Reporting Period, the market share was further improved.
3.1.3.1 Refining and petrochemical business
According to Platts (Platts Energy Information Platform), as of December 31, 2021, the refining
and petrochemical production capacity in Southeast Asia was about 270 million tons. In the past
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three years, refinery capacity in Southeast Asia increased by 28.75 million tons; 15.5 million tons of
capacity were withdrawn; the capacity had a net increase of 13.25 million tons, among which the
capacity of the Hengyi Brunei Project Phase I accounted for 60.38% of the net increase. In order to
enhance international competitiveness, the first phase of the Hengyi Brunei Project introduced the
world's largest single series aromatics complex and the sixth flexicoking process unit in the world,
which have lower production cost per unit of product, are cleaner and more environmentally friendly,
and boast obvious late-mover advantages. After the second phase of the Hengyi Brunei Refining and
Petrochemical Project is put into operation, the production capacity will be further expanded and the
Company's share in refining and petrochemical market will be further enhanced.
3.1.3.2 PTA business
According to CCF data, as of December 31, 2021, the existing domestic PTA capacity base was
adjusted to 65.63 million tons. As one of the leading enterprises in PTA industry, the Company has
strategically arranged four PTA bases in Dalian of Liaoning Province, Ningbo of Zhejiang Province
and Yangpu of Hainan Province along the coastline from north to south. The total PTA production
capacity of holding and shareholding companies was about 19mtpa, ranking the first in the world. In
addition, according to CCF data, as of December 31, 2021, the national PIA production capacity was
about 550,000 tons, and the Company's PIA production capacity was 300,000 tons, accounting for
about 54.55% of the national total.
3.1.3.3 Polyester
According to CCF data, most of the polyester production capacity is concentrated in the
Asia-Pacific region, and China has been the world's largest textile producer and exporter. As of
December 31, 2021, China's total polymer production capacity reached 65.56 million tons, with a
year-on-year growth of 5.76%, of which the production capacity of polyester filament yarn was
37.17 million tons, that of polyester staple fiber was 8.55 million tons and that of polyester bottle
flakes was 11.11 million tons. The polymer production capacity of holding and shareholding
companies was 10.465 million tons, among which the production capacity of polyester bottle flakes
(including RPET) was 2.7 million tons, and that of polyester fiber consisted of 6.145 million tons of
filament yarn, 880,000 tons of staple fiber and 740,000 tons of polyester flakes, ranking first in the
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world. In 2021, the capacity concentration was further improved. The Company has continuously
increased the proportion of differentiated fiber varieties and sped up the development of customized
products to meet differentiated and personalized needs of the market, and its products have enjoyed a
good reputation in the market for a long time.
3.2 Main business model, process flow and performance drivers of the company during the
Reporting Period
The Company shall comply with the disclosure requirements for chemical industry specified in
Guidelines No. 3 for Self-Regulation of Listed Companies of Shenzhen Stock Exchange -
Industry Information Disclosure
3.2.1 Business model
3.2.1.1 Procure ment model
The Company mainly purchases raw materials through direct negotiation with manufacturers or
traders. It selects competitive suppliers to establish long-term and stable cooperative relations, on the
basis of which it decides the transaction price according to market conditions.
The raw materials required for production of the Company are mainly purchased from major
petrochemical products and crude oil suppliers at home and abroad. When selecting raw material
suppliers, the Company first considers the quality of their products and the stability of supply. While
ensuring the above, the Company will also give priority to suppliers with competitive prices to
reduce production costs. The Company will sign annual supply contracts with major suppliers,
regarding the supply in the relevant year of their products to the Company in accordance with
international or domestic market prices at the time of actual supply as per the quantity agreed in the
contracts.
The main procurement process for auxiliary materials is basically the same as that for raw
materials.
3.2.1.2 Production model
For polyester products, the Company arranges production mainly according to the production
plan formulated in advance. In specific implementation, the annual production plan will be
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subdivided into monthly production plan, and then the Production Department will make necessary
adjustments to the monthly production plan according to the market feedback and change
information provided by the Sales Department before finalizing the monthly production plan and
arranging production.
The Company's product oil and chemical products (PX, benzene, etc.) are mainly produced by
Hengyi Brunei. Usually, it will adjust the process and parameters to control the output of specific
products, such as product oil and chemical products, according to the market demand.
The Company's PTA products are mainly produced by Zhejiang Yisheng. Usually, it will adjust
the load level of production unit to control PTA output according to the market demand.
3.2.1.3 Sales model
The Company’s product oil products are mainly sold to Brunei, other Southeast Asian countries
and Australia. PTA and polyester products are mainly sold in the domestic market, covering more
than 20 provinces and regions in China. Most products are sold directly to customers through the
Company's Sales Department, and only a small number of products are sold through distributors.
3.2.1.3.1 Sales model of product oil and chemical products (PX, benzene, etc.)
The Company's product oil and chemical products are mainly produced by Hengyi Brunei.
Among them, the main customers of chemical products are PTA manufacturers downstream of the
Company's industry chain, and the settlement mode usually adopts wire transfer and letter of credit,
etc. Product oil is mainly sold to Brunei, other Southeast Asian countries and Australia. When selling
to local enterprises in Brunei, the Company usually signs sales contracts directly and the settlement
mode is letter of credit. The Company's sales to other Southeast Asian countries and Australi a are
mainly through Singapore Commodity Exchange. Sales contracts are directly entered into with
customers and the settlement mode is letter of credit.
3.2.1.3.2 Sales model of PTA products
The Company’s PTA products are generally sold by direct sales, that is, the Company will
directly sign purchase and sale contracts with downstream polyester manufacturers or large traders,
agreeing on the purchase quantity and price within a certain period. After receiving the payment for
goods from customers, the products are delivered directly from the Company's warehouse. The
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Hengyi Petrochemical 2021 Annual Report
settlement mode for sales of PTA products is “payment before delivery”, or “collect on delivery”,
usually by wire transfer, acceptance draft or letter of credit.
3.2.1.3.3 Sales model of polyester fiber products
The main customers of the Company's polyester fiber products are textile enterprises, including
elastomer enterprises, garment fabric manufacturers, bag fabric manufacturers, home decoration
fabric manufacturers, etc. These customers are mainly concentrated in the areas of Jiangsu and
Zhejiang as well as Shanghai. The Company generally adopts direct sales, and directly concludes
sales contracts with customers. The settlement mode is usually “payment before delivery”, or
“collect on delivery”.
3.2.1.4 Business model of supply chain service business
The Company's supply chain service business mainly includes trade business and supporting
logistics related services.
3.2.1.4.1 Trade business
Petrochemical industry is a cyclical industry. On the one hand, the supply side of raw materials
is susceptible to factors such as upstream suppliers' capacity, operation stability of the plant and
start-up time of the new plant. On the demand side, especially in the downstream polyester segment,
sales have typical seasonal characteristics. Meanwhile, chemical raw materials and finished products
are very dependent on the stability of port facilities and international logistics transportation. On the
other hand, the prices of products in the petrochemical industry chain are affected by the price of
terminal crude oil, showing wide fluctuations. Therefore, in order to ensure production and operation,
strengthen supply chain stability and reduce the risk of price fluctuation, petrochemical enterprises
need to smooth supply and demand and hedge risks through trade business in procurement and sales.
Under the impact of COVID-19, capacity release in the industry is uncertain. The quarantine and
lockdown measures in various regions have led to the instability of logistics supply. In addition, the
sharp shock of oil prices has increased the uncertainty of supply and demand in the industry, which
further drives the urgent need of enterprises to hedge supply risks through trade management. In
trade business, the Company always adheres to the principle of “serving the main business”. The
trading varieties focus on the primary business and core products, mainly PTA and MEG. Among
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Hengyi Petrochemical 2021 Annual Report
them, PTA belongs to the finished products of the Company’s PTA business segment, and PTA and
MEG are also important raw materials of polyester segment, which shows that the Company uses its
trade business to stabilize supply chain and hedge against price volatility.
3.2.1.4.2 Supporting logistics related services
The Company’s logistics sector provides transportation services of raw materials and products
for upstream and downstream industries of Hengyi Petrochemical. Its business covers three aspects
of raw materials transportation, product transportation and foreign trade transportation. It is deeply
rooted in China and gradually going abroad, and the business scope involves international shipping
and land transportation. The main business model is as follows:
（1）Transportation of raw materials mainly serves the production plants within the Company
system, through the land transport of self-own vehicles and third-party land transport, inland river
shipping, etc.
（2）Transportation of products mainly used for the Company to sell the Company's business
orders and organize the third-party logistics company to transport the products. The transportation
business settlement is carried out by Hengyi Logistics.
（3）Foreign trade transportation mainly through Hengyi Logistics, under collaboration with the
sales company of the Company and cooperation with third-party shipping companies or freight
forwarding companies, to carry out container transportation business by means of bidding.
Transportation modes include sea-rail combined transport, sea-river combined transport, direct
transport, etc.
（4）International transportation mainly serves Brunei PMB Petrochemical Project, most of
which are operated by Hengyi Logistics and its overseas subsidiaries. The imported crude oil and
coal, exported product oil and benzene and other products of the PMB Project are transported by spot
chartering with the fleet capacity of a third-party ship-owner in the market. For the transportation of
chemical PX, due to the relatively stable ports and batch volume o f upstream and downstream routes,
MR chemical fleet will be rented for transportation during the self-construction period. For some
LPG gas products, a mixture of the above two modes is adopted to achieve the goal of safe
transportation.
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Hengyi Petrochemical 2021 Annual Report
3.2.2 Process flow charts of main products
3.2.2.1 Production flow of product oil/che mical products
The production flow of the Company’s product oil/chemical products includes atmospheric
distillation, vacuum distillation, hydrocracking, flexicoking, catalytic cracking and alkylation, etc.
Vacuum Distillation
Atmospheric Distillation Unit Vacuum
Overhead gas
Unit
residue
Kerosene
Naphtha
Atmospheric 4th line Vacuum gas oil
Diesel
Flexicoking
Coker gasoline and diesel
Light ends recovery Kerosene Diesel
Hydrotreating Hydrot reat ing
Coker gas oil
Coker liquefied
Sulfur-bearing
Hydrogen
liquefied gas
Hydrocracking
Naphtha
gas
Gas from low
PSA
naphtha
naphtha
Heavy
Light
pressure separator
Sour water
Reforming
Sour gas
Hydrogen
Product Pre- Refined naphtha
purification hydrogenation Reforming
Reforming liquefied gas
Reformate
Cracking liquefied gas
Liquefied refinery gas
Sulfur Recovery
Light naphtha
Complex
Raffinate
Gas Light Naphtha oil Aromatics
fractionation Isomerization complex
LPG
Petroleum Gas
Liquefied
Aviation kerosene
Heavy aromatics
component C7+
Methylbenzene
isomerized oil
non-aromatic
Iso-butane
Propylene
component
component
isopentane
P
Gasoline
Gasoline
Gasoline
Sulfur (solid Flexible gas
Benzene
gasoline
Diesel
X & liquid) (fuel gas)
3.2.2.2 PTA preparation process
The specific PTA process flow can be divided into oxidation unit and refining unit:
3.2.2.2.1 Oxidation unit
The specific flow chart of oxidation unit is as follows:
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Hengyi Petrochemical 2021 Annual Report
Steam turbine Air compressor Expander
Steam
By-product
steam
PX
Oxidation Level-4 High pressure
Feed mixture
reactor condensation absorber
Co，Mn
Supplementing Post oxidation reactor Condenser Tail gas drying
acetic acid
Acetic acid
storage
PTA pressure
filter mother
liquor Solvent recovery
Primary crystallizer
and dehydration
Acetic acid
storage Residue
Second crystallizer Condenser Recovery and
evaporator hydrolysis of
Wastewater
treatment
methyl acetate
Mother Catalyst
Vacuum filter recovery
liquor
CTA dryer
TA bin
3.2.2.2.2 Refining unit
The flow chart of refining unit is as follows:
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Hengyi Petrochemical 2021 Annual Report
CTA bin PTA batch bin PTA bin
Desalted
water
Packaging
Slurry
PTA drying
preparation
Solvent
tank
Booster pump Vacuum filter
Recycling
solvent
Desalted
water
Sundyne pump Re-beating
Flash-off steam Pressure
Preheater
filtering
Hydrogenation Level-5 Mother liquor
reactor crystallization flashing
To mother-liquor
solid recovery
H2
Hydrogen
compression
3.2.2.3 Polyester esterification polycondensation process
In the process of polyester esterification, the raw material PTA, ethylene glycol and catalyst solution
are continuously sent into the slurry preparation tank according to the specified proportion. After
they enter the esterification reactor, the esterification rate can reach about 95%-96% by controlling
the reaction temperature at an appropriate level. By means of gear pump discharging and
pressurization, the polyester melt produced from esterified materials after prepolycondensation and
final polycondensation is filtered by melt filter, and is distributed through a specially designed melt
distribution system. Part of it is sent to the spinning device for melt direct spinning, and the other
part is sent to the flake production system for ribbon casting and pelletizing.
The specific flow chart of polyester esterification, polycondensation and other reactions is as
follows:
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Hengyi Petrochemical 2021 Annual Report
PTA store
Ethylene glycol
exhaust gas
Dust Feed EG tank
Ethylene glycol Ethylene glycol/
Catalyst Slurry allocation tank exhaust gas acetaldehyde exhaust gas Exhaust gas is burned in a
Condens thermal furnace
Stripping Sewage
er
tower treatment station
First esterification reactor Esterification
fractionating
Condensate
Process
column
collecting tank wastewater
Second esterification reactor
Heavy component
Prepolycondensation reactor Condenser
Ethylene glycol
liquid seal trough Oligomer residue
Residue Prepolymer filter EG EG jet pump Exhaust gas is incinerated in
a heat medium furnace
Liquid ring pump Recycle EG to slurry allocation tank
Final polycondensation reactor Condenser
Residue Melt filtering and conveying
Directly to spinning Ribbon Underwater
workshop casting Chip drying Packaging
pelletizing
PET caput-heels and waste chips
3.2.2.4 Production flow of POY/FDY
The production process of POY and that of FDY are basically the same. The polyester melt is
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Hengyi Petrochemical 2021 Annual Report
connected and transported to the device from the outlet of the melt distribution valve of the polyester
device, and then is divided into two systems through the melt three-way valve. On the way, it is
pressurized by the melt booster pump, and then sent to the melt distribution valve after cooling-down
by the melt cooler. The polyester melt from the melt distribution system enters the spinning chamber
insulated by steam phase heat medium at a certain temperature and is delivered to the spinning
assembly after metering by a metering pump. The melt pipe is equipped with a freezing valve to
ensure that the spinning position can be independently started and stopped. After the melt is filtered
and pressed by the filter layer again in the spinning assembly, it is ejected from the spinneret in a thin
stream and solidified into filaments under the condition of constant temperature and humidity. The
filament is oiled by the tanker, and then through the network nozzles, it is rolled into a filament tube
in the winding machine. POY and FDY products were prepared under high speed winding ranging
from 2,500m/min to 5,100m/min.
Booster Melt distribution Spinning
Melt cooler Static mixer Metering pump
Polyester melt pump valve assembly
Oil + water Blending Oil
Draw-off Packaging
POY winding Delivery
godet check
Cooling (ring
Oiling Spinning Network
blowing, side
device channel nozzle Heating
blowing) FDY winding Dyeing
roller
Oil dripping fluid
Oil exhaust gas Oil exhaust gas
3.2.2.5 Production flow of DTY
The POY filament on the filament tube rack is wound into a DTY filament tube and becomes a
finished product after it passes through yarn guide, feeding roller, texturing heater, cooling, drafting,
false twister, feeding roller in the middle, network, heater, delivery roller and oil roller.
POY Original Upper roller Upper heater Drafting and
(texturing heater)
Cooling Middle roller
filament filament rack feeding false twisting
Oil exhaust gas
Lower heater Winding and Grading and
Network Lower roller Oiling Delivery
(setting heater) forming packaging
DTY oil Waste yarn
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Hengyi Petrochemical 2021 Annual Report
3.2.2.6 Production flow of staple fiber
Polyester staple fiber is a kind of fiber that is transported to the spinning machine through melt, spun
into shape, cut into fibers of different lengths after drafting, crimping and heat setting, and then
packed into individual packages. The main process includes melt conveying, spinning, cooling,
winding, tube falling, bundling, drafting, tension heat setting, folding, crimping, cutting and
packaging.
Polyester melt Booster pump Melt cooler Static mixer
Metering pump
Spinning assembly Cutting off Packaging
Air cooling Drag tension machine Polyester staple fiber
Spinning oil Yarn guide
Spinning oil Dragger Feeding machine Relaxation heat setting
Reciprocating
Fiber-spreading machine
engine
Second drafter Draft bath First drafter Impregnating tank Yarn guide bundling Crimping machine
Folding
Steam heater Tension heat setting Spray oiling Third drafter Tension machine Steam preheater
machine
3.2.2.7 Production flow of bottle flakes
The production process of bottle flakes, i.e. bottle grade flakes, is composed of two parts: melt
polymerization + solid phase polymerization. The main process of melt polymerization consists of
pulping, esterification, polycondensation, and dicing, and is basically the same as that of fi ber
polymerization. The difference lies in that IPA, stabilizer and toner are added in the formula of bottle
flakes. The main process of solid phase polymerization is crystallization, preheating, reaction, and
cooling.
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Hengyi Petrochemical 2021 Annual Report
Nitrogen
Product Solid phase
packaging Chip cooling polycondensation reaction Preheating Crystallization
Auxiliary
Demineralized water Basic chip conveying
solution
PTA Slurry Esterification
preparation reaction Polycondensation reaction Cropping Drying
IPA
EG
distillation Vacuum system Water filtration
3.2.3 Main performance drivers
3.2.3.1 The Company adheres to scientific research and innovation to meet the high-end and
differentiated needs of the market
The Company has always been committed to improving the ability of independent innovation,
focusing on the R&D and application of high-end products and green products in the field of
polyester fiber. Relying on the university-enterprise platform, the Company has established a product
portfolio featuring "diversification, serialization, quality and uniqueness and plays a leading role in
China in terms of technology. The proportion of high-end products of the Company has continued to
increase. The Company's independently developed antimony-free green polyester product, Eticont, is
widely used in infant clothing, facial masks and other fields, and the added value is much higher than
that of conventional products. The diversity of flame retardant products is gradually increasing, and
the final test of recycled flame retardant polyester has successfully completed. These products have
been accepted by more and more customers. Meanwhile, the industrialization of antibacterial and
antiviral fibers has also been completed rapidly. As their excellent antibacterial and antiviral
properties have been unanimously recognized by customers, they will become a new profit growth
point among the differentiated products.
3.2.3.2 With unique advantage of integrated supply chain management, the Company can
independently control the product cost, which enhances the market competitivene ss of our
products
The Company keeps strengthening our supply chain management capability, and innovating and
promoting our intelligent management and operation models. The Company uses its own tankers for
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Hengyi Petrochemical 2021 Annual Report
transportation to ensure the supply of raw materials, improve transportation efficiency and reduce
logistics costs. The Company maintains a leading position in the industry in the proportion of
independent transportation. The supply chain business has effectively improved the Company's
sensitivity to product costs and selling prices, and enhanced our cost control ability and profitability.
With the commissioning and operation of the Brunei project, the Company has stepped in the
shipping sector to strengthen the integrated management of overseas supply chain service. The
Company has gradually built its own fleet to increase our shipping strength, effectively address the
inadequate shipping capacity and the increasing shipping costs, and ensure timely delivery of
shipments.
3.2.3.3 With major strategic projects being put into operation one after another, the Company
has improved the effect of economies of scale
In 2021, Yisheng New Materials’ 3-mtpa PTA Production Line 1, the plants of Haining Hengyi
New Materials Co., Ltd.'s "1-mtpa Differentiated Environmental Functional Fiber Project", and
Fujian Yijin Chemical Fiber Co., Ltd.'s "566,000 t/a new functional fiber project” were put into
operation in succession. In addition, Yisheng New Materials’ 3-mtpa PTA Production Line 2 was
officially put into operation in January 2022. The scale of the Company’s PTA and polyester fiber
business has continued to grow, and the Company’s production capacity risen to a new level,
consolidating our leading position in the industry. The release of new production capacity has
continued to provide incremental contributions to the Company and drive the Company's
performance growth.
3.2.3.4 The Company has adjusted the product structure to cater to market needs,
maintaining a sound gross margin
The Company's end products mainly include product oil, polyester bottle flakes and polyester
fibers, covering a wide range of varieties. In 2021, the domestic and international economies
recovered gradually, and consumer demand for textiles and clothing, home textiles, packaging, etc.
kept growing. Combined with the contraction of overseas supply chains, international orders returned
to China, and the downstream demand for the Company's products rebounded steadily. The
Company seized the growth opportunity of the strong market demand for bottle flakes to further
45
Hengyi Petrochemical 2021 Annual Report
expand the market share and maximize profits. As an industry leader, the Company has an annual
production capacity of 2.7 million tons of PET bottle flakes (including RPET).
The first phase of the Hengyi Brunei Project stands out with its low cost of new plants and
flexible adjustment of product mix. Due to the best performance of diesel in terms of Singapore
product oil crack spread, the Company continued to convert jet fuel into diesel in 2021, reduce the
output of jet fuel, and ensure full-load production, securing the optimal profitability of the project.
During the Reporting Period, with the continuous recovery of the crack spread of product oil in
Singapore, the gross margin of each product was maintained at a high level.
In addition, in order to improve profitability, the Company actively and flexibly converted some
PTA capacity to PIA capacity, which effectively improved the capacity utilization and added value of
products.
Procure ment mode of main raw materials
Currency: RMB
Proportion of Whether the Average
Average price
Main raw purchase settlement method price in the
Procurement model in the first half
materials amount in total has changed second half
of the year
Purchases significantly of the year
Crude oil Purchasing inquiry 24.05% No 3,294.04 3,932.96
PX Purchasing inquiry 13.65% No 5,184.90 5,898.87
MEG Purchasing inquiry 8.18% No 4,370.89 4,693.46
Reasons for major changes in raw material prices from the previous Reporting Period
During the Reporting Period, there were major changes in the Company's raw material prices
compared with the previous Reporting Period, the main reasons were that the global economy
gradually recovered against the backdrop of quantitative easing policy while the release of crude oil
production capacity lagged behind the rebound of demand and the recovery of crude oil supply was
less than expected. Therefore, prices of energy resources such as coal and natural gas have also risen
sharply, boosting the upward trend of crude oil price. Under the combined influence of various
factors, the crude oil price generally rose all the way in 2021. According to CCF data, in 2021, the
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Hengyi Petrochemical 2021 Annual Report
growth rate of the price of both WTI crude oil and Brent crude oil are 57.94% and 52.24%,
respectively. At the same time, the rise in crude oil price also lifted the prices of downstream
products in the industrial chain such as PX.
The purchase price of energy accounts for more than 30% of the total production cost
□ Applicable √ Not applicable
Reasons for significant changes in major energy types
□ Applicable √ Not applicable
Main production technologies
Stage of Core
Patented
Main products production technical Advantage in product R&D
technology
technology personnel
Introduction Advanced equipment and technology, high production
Mass Multiple
Gasoline and capacity, low costs of raw materials and transportation, and
production persons
innovation high level of eco-friendliness
Introduction Advanced equipment and technology, high production
Mass Multiple
Diesel and capacity, low costs of raw materials and transportation, and
production persons
innovation high level of eco-friendliness
Introduction Advanced equipment and technology, high production
Mass Multiple
Kerosene and capacity, low costs of raw materials and transportation, and
production persons
innovation high level of eco-friendliness
Introduction Advanced equipment and technology, high production
Mass Multiple
Paraxylene and capacity, low costs of raw materials and transportation, high
production persons
innovation product purity, and long operating cycle of the plant
Introduction Advanced equipment and technology, high production
Mass Multiple
Benzene and capacity, low costs of raw materials and transportation, high
production persons
innovation product purity, and long operating cycle of the plant
Purified Mass Multiple Introduction High production capacity, low investment, low energy
terephthalic production persons and consumption, convenient transportation and high level of
47
Hengyi Petrochemical 2021 Annual Report
Stage of Core
Patented
Main products production technical Advantage in product R&D
technology
technology personnel
acid innovation eco-friendliness
Introduction
Mass Multiple Short process, high production capacity, low consumption of
Polyester and
production persons raw materials and public works, etc.
innovation
The third and fourth monomers are added into the
polymerization reaction system, and a special equipment
structure is adopted. Through esterification,
pre-polycondensation, and final polycondensation,
Introduction
Mass Multiple low-temperature dyeable cationic polyester is prepared,
Polyester and
production persons lowering the cost of subsequent dyeing and reducing
innovation
environmental pollution. Additives such as compound
stabilizers are used to increase the melting point and improve
the heat resistance of melts, while increasing the whiteness and
improving the hue and heat resistance of the products.
Introduction No dulling agent is added in the polymerization process to
Mass Multiple
Polyester and produce super bright polyester products to meet the needs of
production persons
innovation different customers with low production costs.
By adding dulling agents in the polymerization process to
Introduction
Mass Multiple produce full dull polyester products, the problem of low filter
Polyester and
production persons life due to the increase of dulling agents is solved and energy
innovation
consumption is reduced.
By optimizing the design of the reactor structure and adding
Wide range Introduction
Multiple titanium-based catalysts instead of antimony-based catalysts,
Polyester of and
persons the catalyst is uniformly dispersed in the material, and an
applications innovation
environmentally friendly antimony-free polyester product is
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Hengyi Petrochemical 2021 Annual Report
Stage of Core
Patented
Main products production technical Advantage in product R&D
technology
technology personnel
produced, realizing a high level of eco-friendliness.
The master-batch preparation process has been improved, the
types and proportions of silver-based antibacterial agent, PBT
Introduction
Mass Multiple powder mixture and dispersant have been studied, and the
Polyester and
production persons optimal proportions of the three have been determined. The
innovation
antibacterial master-batch has been prepared by melt blending
and extrusion with outstanding features.
Wide range Introduction
Multiple Maximum output, highest conversion rate and lowest energy
Polyester of and
persons consumption are realized
applications innovation
Wide range Introduction By tapping the potential of equipment, the effect of increasing
Multiple
Polyester of and production and efficiency has been achieved without
persons
applications innovation increasing investment
Through recycling, energy waste is reduced and energy
Wide range Introduction
Multiple utilization rate is improved; by continuously introducing
Polyester of and
persons energy-saving technologies, production costs have been
applications innovation
reduced
Wide range Introduction It extends the filter service life, reduces labor waste, and saves
Multiple
Polyester of and packaging costs, bringing considerable economic benefits to
persons
applications innovation the Company
Through modification during the polymerization reaction, the
Wide range Introduction fluidity and ductility of the polyester melt are improved. With
Multiple
Polyester of and the same polymerization residence time, the intrinsic viscosity
persons
applications innovation of the product is higher than that of the conventional polyester,
and the processing performance of the melt is also improved. A
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Hengyi Petrochemical 2021 Annual Report
Stage of Core
Patented
Main products production technical Advantage in product R&D
technology
technology personnel
utility model patent has been granted for this technology. The
patent number is ZL 201120209233.4
Through independent R&D, the Company has successfully
Wide range Introduction
Multiple developed and produced titanium dioxide for nylon, and
Polymerization of and
persons completed independent production and supply of auxiliary
applications innovation
materials to replace imports.
Through independent R&D, the Company has successfully
Wide range Introduction
Multiple developed and produced titanium dioxide for nylon, and
Polymerization of and
persons completed independent production and supply of auxiliary
applications innovation
materials to replace imports.
Using advanced AI technology, the Company can
Wide range Introduction automatically monitor the spinning process, and detect and
Multiple
Spinning of and deal with abnormalities in a timely manner, thereby improving
persons
applications innovation the product quality and production efficiency and reducing the
cost
Using advanced AI technology, the Company can
Wide range Introduction
Multiple automatically inspect the appearance defects of filament rolls,
Spinning of and
persons thereby improving the production efficiency and reducing the
applications innovation
cost
Using advanced automation technology, the Company realizes
Wide range Introduction
Multiple the automation of the production process, greatly reducing
Spinning of and
persons manual operations, improving the production efficiency and
applications innovation
reducing the cost
Mass Multiple Introduction Using advanced technology, the Company shortens the process
Spinning
production persons and flow and increases the production capacity and degree of
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Hengyi Petrochemical 2021 Annual Report
Stage of Core
Patented
Main products production technical Advantage in product R&D
technology
technology personnel
innovation differentiation, maintaining stable product quality with low
utility costs
Using the melt direct spinning POY→DTY process route, the
melt is ejected from the independently designed
Introduction
Mass Multiple "straight-line"-shaped spinneret hole, and then cooled, oiled,
Spinning and
production persons rolled and spun into flat special-shaped POY yarns. POY yarns
innovation
are then textured into flat DTY polyester filaments, which
feature lower bulk density, lighter weight and softer fabric feel.
Using the melt direct spinning POY→DTY process route, the
melt is ejected from the independently designed
Introduction "cross"-shaped spinneret hole, and then cooled, oiled, rolled
Mass Multiple
Spinning and and spun into cross-shaped POY yarns. POY yarns are then
production persons
innovation textured into cross DTY polyester filaments, which feature
lower bulk density, lighter weight, better air permeability and
softer fabric feel.
Using the melt direct spinning PDY process route, the melt is
ejected from the independently designed "tree"- or
Introduction "star"-shaped and other special-shaped spinneret holes, and
Mass Multiple
Spinning and then cooled, oiled, rolled and spun into "tree"- or "star"-shaped
production persons
innovation and other special-shaped FDY yarns. This type of polyester
filament features lower bulk density, lighter weight, special
luster, and softer fabric feel.
Introduction The functional self-heating master-batch is added to produce
Mass Multiple
Spinning and the functional hollow polyester fiber. With double heat
production persons
innovation retaining effects, it can be used as the "core layer" of the heat
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Hengyi Petrochemical 2021 Annual Report
Stage of Core
Patented
Main products production technical Advantage in product R&D
technology
technology personnel
retaining and comfortable composite fiber. A utility model
patent has been granted for this technology. The patent number
is ZL201410481816.0
Wide range Introduction With the use of advanced equipment and process technology,
Multiple
Spinning of and short process, high degree of automation, and low
persons
applications innovation manufacturing cost are achieved.
Wide range Introduction Through technical improvement, the manual operation cycle is
Multiple
Spinning of and extended, the product quality stability is improved, and the
persons
applications innovation resource consumption and cost are reduced
By installing in-line addition equipment, dynamic and static
mixing equipment, oil nozzles, winders, etc. on the melt direct
spinning line, the existing equipment has been transformed and
Wide range Introduction upgraded, enabling the polyester melt direct spinning line to
Multiple
Spinning of and produce differentiated and high-end products. It solves the
persons
applications innovation challenge of using the large-capacity polyester plant to produce
functional differentiated fibers of multiple varieties in small
batches. Functional modified fibers are produced, including
colored, flame retardant, antibacterial and full dull fibers
The Company's own technology is applied to the production of
Wide range Introduction flame retardant polyester. Single-component spinning or
Multiple
Spinning of and composite spinning technology is used to produce
persons
applications innovation single-component or two-component sheath-core composite
flame-retardant and anti-dripping POY-DTY yarns
Wide range Multiple Introduction Through independent R&D, the Company produces polyester
Spinning
of persons and and polyamide, SPH, sea-island, cationic dyed polyester and
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Hengyi Petrochemical 2021 Annual Report
Stage of Core
Patented
Main products production technical Advantage in product R&D
technology
technology personnel
applications innovation other composite filaments to meet the high-end market demand
Through independent R&D, the Company produces
Wide range Introduction
Multiple differentiated and functional products such as HOY and
Spinning of and
persons medium-strength yarns for segment markets, meeting the needs
applications innovation
of specific users
In the spinning process, the non-contact heating method is
adopted to reduce the friction and heating of the filaments
during processing to avoid the production of broken filaments.
Low-temperature stretching deformation-high-temperature
Wide range Introduction
Multiple setting are adopted and appropriate tangle jets are used to
Spinning of and
persons reasonably control the tangle air pressure bundling
applications innovation
performance and other production processes to produce ideal
fully-drawn yarns (FDY) similar to the products of parallel
drafting machines. A utility model patent has been granted for
this technology. The patent number is ZL200810059725.2
Through independent R&D, the Company produces oils
Wide range
Multiple Independent suitable for the spinning process to improve the processing
Spinning of
persons R&D performance of the product, so that the weaving process can
applications
proceed smoothly and the product quality is excellent.
By using the programmable controller (PLC), the composite
yarn is stretched in multiple stages, and the order of the
Wide range Introduction
Multiple stretching ratio of each stage can be changed as needed within
Spinning of and
persons the range, so that the composite yarn has different structural
applications innovation
densities, resulting in the difference in color absorption and
dyeing rates, and realizing multiple colors after dyeing. It has
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Hengyi Petrochemical 2021 Annual Report
Stage of Core
Patented
Main products production technical Advantage in product R&D
technology
technology personnel
brought significant economic and social benefits. A utility
model patent has been granted for this technology. The patent
number is ZL200710070581.6
The graphene master-batch and polyester flakes are blended
and spun into yarns. A spinneret with a 4C aperture is used to
prepare hollow graphene polyester fiber POY, and the fluffy
Wide range Introduction
Multiple curl of the polyester fiber is further improved in the subsequent
Spinning of and
persons texturing process. This gives the polyester fiber the features of
applications innovation
heat retaining and light weight in addition to the functionality
of graphene, expanding its application prospect of graphene in
the field of textiles.
The antimony-free polyester melt is produced by adding a
Wide range Introduction titanium-based catalyst to polyester to instead of
Multiple
Spinning of and antimony-based catalysis, and then antimony-free staple fibers
persons
applications innovation and filaments are produced through a spinning process,
featuring high environment-friendliness.
By spinning and winding a bunch of POY and a bunch of FDY,
Wide range Introduction a new type of polyester/polyester composite yarn is made, and
Multiple
Spinning of and it can be used for weaving high-grade artificial silk clothing
persons
applications innovation fabrics and home textile fabrics, which has the advantages of
rich hand feel, anti-wrinkle property and good drapability.
Wide range Introduction
Multiple Through independent R&D, the spinning oil for FDY has been
Spinning of and
persons successfully prepared to replace imported oils.
applications innovation
Spinning Wide range Multiple Introduction The antimony-free polyester melt is produced by adding a
54
Hengyi Petrochemical 2021 Annual Report
Stage of Core
Patented
Main products production technical Advantage in product R&D
technology
technology personnel
of persons and titanium-based catalyst to polyester to instead of
applications innovation antimony-based catalysis, and then antimony-free staple fibers
and filaments are produced through a spinning process,
featuring high environment-friendliness.
By spinning and winding a bunch of POY and a bunch of FDY,
Wide range Introduction a new type of polyester/polyester composite yarn is made, and
Multiple
Spinning of and it can be used for weaving high-grade artificial silk clothing
persons
applications innovation fabrics and home textile fabrics, which has the advantages of
rich hand feel, anti-wrinkle property and good drapability.
Wide range Introduction
Multiple Through independent R&D, the spinning oil for FDY has been
Spinning of and
persons successfully prepared to replace imported oils.
applications innovation
Introduction By controlling the temperature of false twist deformation, the
Mass Multiple
Texturing and linen type is achieved, which not only has the style of natural
production persons
innovation linen fibers, but also has the stiffness of artificial linen fibers.
The airflow through the tangle jet is closed intermittently, and
a variety of polyester POY yarns of different colors are
composited through false twist deformation to produce a fancy
composite polyester yarn interleaved with fluffy
Introduction
Mass Multiple non-intermingled low-stretch fiber and intermingled blended
Texturing and
production persons fiber. Colored polyester POY is used to produce the colored
innovation
composite yarn directly by texturing, eliminating the
complicated downstream dyeing process, reducing the cost of
the product, simplifying the process and lessening the pollution
to the environment
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Hengyi Petrochemical 2021 Annual Report
Stage of Core
Patented
Main products production technical Advantage in product R&D
technology
technology personnel
A double-solenoid valve opening and closing logic design is
adopted. The two solenoid valves arranged in parallel or series
are designed with a reasonable opening and closing logic to
Introduction jointly control them to realize intermittent switching of the
Mass Multiple
Texturing and tangle jet airflow and the intelligent design of polyester fancy
production persons
innovation composite yarn tangling points. At the same time, it reduces
the frequency of use of a single solenoid valve to prevent
overheating damage to a single solenoid valve, effectively
improving the efficiency of texturing.
The Company has a more mature technology for producing
products with a monofilament fineness of 0.5-1.0dpf, which
provides technical support and experience accumulation for the
development of finer products. Through the supporting of pre-
Introduction
Mass Multiple and post-spinning equipment, the Company realizes
Texturing and
production persons independent R&D. At present, the Company's production
innovation
technology of ultra-fine fibers of less than 0.5dpf is mature, the
quality is stable, and relevant production conditions are
available. They are mainly used for producing high-grade
fabrics and decorative fabrics.
In pre-spinning, the third monomer is introduced into the
Introduction reaction system to prepare low-temperature dyeable cationic
Mass Multiple
Texturing and POY, which is matched with post-spinning and texturing to
production persons
innovation prepare DTY products, thereby reducing the cost of subsequent
dyeing and environmental pollution.
Texturing Mass Multiple Introduction The technology is independently researched and developed by
56
Hengyi Petrochemical 2021 Annual Report
Stage of Core
Patented
Main products production technical Advantage in product R&D
technology
technology personnel
production persons and the Company. Nubby products are produced under special
innovation process conditions such as stretching temperature and
stretching ratio. With the characteristics of cotton and linen
fabrics, they are widely used in summer cotton and linen
fabrics and popular in the market.
Composite yarns are made by processing two or more fibers.
The processed products have the characteristics of various
Introduction fibers, such as fabric cotton feel, softness and breathability, and
Mass Multiple
Texturing and different patterns of dyeing. Examples include FDY-DTY
production persons
innovation composite yarn, high- and low-viscosity composite yarn,
cationic dyed polyester compound, etc. This product is widely
used in high-end fabrics, and the market demand is great
The special-shaped section of the spinning spinneret produces
polyester fibers with different sections, which improves the
Introduction capillary effect of the fibers in the fabric, so that sweat can
Mass Multiple
Texturing and quickly migrate to the surface of the fabric and disperse due to
production persons
innovation the effects of wicking, diffusion and transmission, achieving
the purpose of moisture conductivity and fast drying, and
improving the moisture permeability of polyester fabrics
By producing the S+Z products on a twin-strand machine, the
torques of the two filaments cancel each other after stranding,
Introduction
Mass Multiple resulting in a torque-free product. This technology has the
Texturing and
production persons advantages of flat surface, easy weaving, rich hand feel, and
innovation
even dyeing. In particular, it shows good effect in oxford
fabric, so it is very suitable for high-end decorative fabrics
57
Hengyi Petrochemical 2021 Annual Report
Stage of Core
Patented
Main products production technical Advantage in product R&D
technology
technology personnel
Using the production technology of wool-like fibers, POY
yarns are drawn and false twisted on the DTY machine, and
then compounded with DTY of the PTT component. The PTT
Wide range Introduction fiber floats on the surface of the yarn and exerts its excellent
Multiple
Texturing of and wearing performance. The high-shrinkage modified PET fiber
persons
applications innovation is placed in the inner layer of the yarn to exert its rigid
supporting effect and bring out a stronger sense of uprightness.
A utility model patent has been granted for this technology.
The patent number is ZL201010174972.4
The false-twist texturing technology is used to produce
Wide range Introduction
Multiple polyester fiber filaments with good hollowness and clear
Texturing of and
persons profiled outline, and high requirements for conformal
applications innovation
properties such as profile degree and hollowness
The technology is independently developed by the Company
Wide range Introduction and is used to process DTY of various colors such as black,
Multiple
Texturing of and red, gray, and yellow. The color is uniform and not easy to fade
persons
applications innovation in daily use. No dyeing is required after weaving, and the yarn
is mostly used for making special-purpose fabrics.
The core technology of this product is the current international
Multifunctional Introduction advanced high-temperature crystallization and solid-phase
Leading in Multiple
polyester bottle and polycondensation process with short process and low energy
China persons
flakes innovation consumption. The comprehensive energy consumption per unit
of product has reached the leading level in China
Production capacity of main products
Please refer to 3.1 “Major businesses engaged in by the Company during the Reporting Period” of
58
Hengyi Petrochemical 2021 Annual Report
Section 3, “Business Summary of the Company”.
Product categories of major che mical parks
Major che mical parks Main product categories
PMB Industrial Park Gasoline, diesel, jet fuel, PX, benzene
Linjiang High-tech Industrial Park Flake, staple fiber, POY, FDY
Haining Economic Development Zone (Jianshan New
Flake, POY, FDY, DTY
District)
Suqian High-tech Industrial Development Zone Flakes, staple fiber
Jiaxing Xiuzhou High-tech Industrial Development Zone Flake, POY, FDY
Shaxi Town Industrial Park Flake, POY
Ningbo Petrochemical Economic and Technological
PTA
Development Zone
Dalian Economic and Technological Development Zone PTA, bottle flake
Yangpu Economic Development Zone PTA, bottle flake
EIA approvals being applied for or newly obtaine d during the Reporting Period
Approval Qualification/permit Validity
S/N Approval issuer
holder name period
Haining New
1 Emission Permit Jiaxing Ecology and Environment Bureau 07/27/2023
Materials
Haining New
2 Emission Permit Jiaxing Ecology and Environment Bureau 07/22/2025
Materials
3 Jiaxing Yipeng Emission Permit Jiaxing Ecology and Environment Bureau 12/01/2022
Port Operations Permit of Jiaxing Municipal Port and Shipping
4 Jiaxing Yipeng 03/11/2023
People's Republic of China Administration
Jiaxing Inland Port
Jiaxing Municipal Port and Shipping
5 Jiaxing Yipeng Shoreline Use Registration 03/11/2054
Administration
Certificate
59
Hengyi Petrochemical 2021 Annual Report
Suzhou Municipal Ecology and
6 Taicang Yifeng Emission Permit 12/30/2022
Environment Bureau
Quanzhou Municipal Ecology and
7 Fujian Yijin Emission Permit 04/07/2026
Environment Bureau
Hangzhou Municipal Ecology and
8 Hengyi Limited Emission Permit 08/27/2023
Environment Bureau
Hengyi Xiaoshan District Environmental Protection
9 Emission Permit 11/02/2026
Polymer Bureau
Hangzhou Xiaoshan District Environmental Protection
10 Emission Permit 11/04/2026
Yijing Bureau
Hengyi Dajiangdong Industrial Cluster Area
11 Emission Permit 11/25/2026
High-Tech Environmental Protection Bureau
Shuangtu New Dajiangdong Industrial Cluster Area
12 Emission Permit 11/26/2026
Materials Environmental Protection Bureau
Qiantang New District Branch of Hangzhou
Hengyi
13 Emission Permit Municipal Ecology and Environment 06/22/2025
Caprolactam
Bureau
Zhejiang Provincial Registration Center for
Hengyi Hazardous Chemical Hazardous Chemicals, Registration Center
14 12/19/2022
Caprolactam Registration Certificate for Chemicals of Ministry of Emergency
Management
Hengyi Department of Emergency Management of
15 Production Safety Permit 12/05/2022
Caprolactam Zhejiang Province
Unusual suspension of production of the listed company during the Reporting Period
□ Applicable √ Not applicable
Relevant approvals, permits, qualifications and validity periods
Including: production safety permit, emission permit, and cargo transportation permit; engaged in
60
Hengyi Petrochemical 2021 Annual Report
petroleum processing and petroleum trading.
Validity
S/N Holder Certificate name Certificate No. Issuer
period
Beilun Branch of
Zhejiang 91330200744973411W00 Ningbo Municipal
1 Emission Permit 12/15/2026
Yisheng 1W Bureau of Ecology and
Environment
Department of Ecology
Zhejiang Radiation Safety
2 ZHFZ No. B2005 and Environment of 11/17/2024
Yisheng Permit
Zhejiang Province
Department of
Zhejiang Production Safety (ZJ) WHAXZZ [2019]
3 Emergency Management 01/03/2025
Yisheng Permit No. B-1448
of Zhejiang Province
Hangzhou Municipal
Hengyi 91330000765215943G00
4 Emission Permit Ecology and 08/27/2023
Limited 1Y
Environment Bureau
Hangzhou Municipal
Hengyi 91330100668003340600
5 Emission Permit Ecology and 11/25/2026
High-Tech 1Q
Environment Bureau
Zhejiang Provincial
Hengyi Radiation Safety Department of
6 ZHFZ No. A2292 05/10/2022
High-Tech Permit Environmental
Protection
Hangzhou Municipal
Hengyi 91330109724528388000
7 Emission Permit Ecology and 11/02/2026
Polymer 1P
Environment Bureau
Department of Ecology
Hengyi Radiation Safety
8 ZHFZ No. A2255 and Environment of 09/19/2024
Polymer Permit
Zhejiang Province
Jiaxing 91330411MA28BLMY3 Jiaxing Ecology and
9 Emission Permit 12/01/2022
Yipeng 0001V Environment Bureau
Port Operations Jiaxing Municipal Port
Jiaxing
10 Permit of People's (ZJNH) GJZ No. 1265 and Shipping 03/11/2023
Yipeng
Republic of China Administration
Jiaxing Inland
Jiaxing Municipal Port
Jiaxing Port Shoreline
11 JNHAZ No. 1265 and Shipping 03/11/2054
Yipeng Use Registration
Administration
Certificate
Xiuzhou District
Jiaxing QS (JXNS) Z [2019] No.
12 Water Use Permit Agriculture, Rural 11/12/2023
Yipeng 007
Affairs and Water
61
Hengyi Petrochemical 2021 Annual Report
Validity
S/N Holder Certificate name Certificate No. Issuer
period
Resources Bureau of
Jiaxing City
Suzhou Municipal
Taicang 91320585MA1P1GPBX
13 Emission Permit Ecology and 12/30/2022
Yifeng M001V
Environment Bureau
Shuangtu Hangzhou Municipal
91330100566050736P00
14 New Emission Permit Ecology and 11/26/2026
1Y
Materials Environment Bureau
Shuangtu Department of Ecology
Radiation Safety
15 New ZHFZ No. A3048 and Environment of 12/26/2023
Permit
Materials Zhejiang Province
Quanzhou Municipal
Fujian 91350582MA31G07Q8C
16 Emission Permit Ecology and 04/07/2026
Yijin 001V
Environment Bureau
Suqian 91321311MA1UXUC8X Suqian Ecology and
17 Emission Permit 07/18/2026
Yida J001R Environment Bureau
Suqian Radiation Safety Suqian Environmental
18 SHFZ No. 0199 01/12/2027
Yida Permit Protection Bureau
Haining
91330481MA29HXML3 Jiaxing Ecology and
19 Thermal Emission Permit 07/22/2025
4001R Environment Bureau
Power
Zhejiang Special
Zhejiang Provincial
Hengyi Equipment
20 TS3833335-2024 Administration for 04/01/2024
Engineeri Production
Market Regulation
ng License
Zhejiang Construction
Hangzhou Urban and
Hengyi Enterprise
21 D333903322 Rural Construction 12/31/2022
Engineeri Qualification
Committee
ng Certificate
Road Transport
Zhejiang Hangzhou Municipal
Operations Permit ZJYGXKHZ No.
22 Hengyi Bureau of 08/31/2025
of People's 330109186475
Logistics Transportation
Republic of China
Ningbo Hazardous Beilun District Branch
23 Hengyi Chemicals YLAJ [2021] No. 0085 of Bureau of Emergency 11/25/2024
Trading Operations Permit Management of Ningbo
Hangzhou Municipal
Hangzhou 91330109MA28M4DD8
24 Emission Permit Ecology and 11/04/2026
Yijing Y001P
Environment Bureau
25 Hangzhou Radiation Safety ZHFZ No. A2259 Zhejiang Provincial 06/18/2022
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Hengyi Petrochemical 2021 Annual Report
Validity
S/N Holder Certificate name Certificate No. Issuer
period
Yijing Permit Department of
Environmental
Protection
Road Transport
Shaoxing Shaoxing Keqiao
Operations Permit ZJYGXKSZ No.
26 Hengyi District Bureau of 04/12/2031
of People's 330621104701
Logistics Transportation
Republic of China
Haining
91330481MA29HRX724 Jiaxing Ecology and
27 New Emission Permit 07/27/2023
001V Environment Bureau
Materials
Hengyi Department of
Production Safety (ZJ) WHAXZZ
28 Caprolacta Emergency Management 12/05/2022
Permit [2019]No. A-2191
m of Zhejiang Province
Work Safety
Hangzhou Municipal
Hengyi Standardization HZ AQBFZ III
29 Bureau of Emergency 2023.01
High-Tech Level-3 Enterprise 201900974
Management
(Textile)
Work Safety
Hangzhou Municipal
Hangzhou Standardization Zhejiang AQBFZ II
30 Bureau of Emergency 01/01/2023
Yijing Level-3 Enterprise 201900987
Management
(Textile)
Work Safety
Hengyi Standardization Department of
Zhejiang AQBWH II
31 Caprolacta Level-2 Enterprise Emergency Management 2023.06
202000002
m (Hazardous of Zhejiang Province
Chemicals)
Work Safety
Hangzhou Municipal
Hengyi Standardization Hangzhou AQBFZ III
32 Bureau of Emergency 2023.08
Limited Level-3 Enterprise 202000807
Management
(Textile)
Work Safety
Shuangtu Hangzhou Municipal
Standardization Hangzhou AQBFZ III
33 New Bureau of Emergency 2023.10
Level-3 Enterprise 202001128
Materials Management
(Textile)
Work Safety
Hangzhou Municipal
Hengyi Standardization Hangzhou AQBFZ III
34 Bureau of Emergency 04/01/2023
Polymer Level-3 Enterprise 202000038
Management
(Textile)
Hengyi Work Safety Ministry of Transport of
35 2018-01-101490 01/09/2024
Logistics Standardization the People's Republic of
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Hengyi Petrochemical 2021 Annual Report
Validity
S/N Holder Certificate name Certificate No. Issuer
period
Level-1 Enterprise China
(Road Transport)
Engaged in petroleum processing and petroleum trading
√ Yes □ No
Engaged in fertilizer industry
□ Yes √ No
Engaged in pesticide industry
□ Yes √ No
Engaged in chlor-alkali and soda ash industry
□ Yes √ No
Engaged in che mical fiber industry
√ Yes □ No
Engaged in plastic and rubber industry
□ Yes √ No
3.3 Analysis of core competitiveness
3.3.1 Leading international industrial strategy by adhering to industrial business and
highlighting main business
Focusing on the strategic policy of "consolidating, highlighting and optimizing the
competitiveness of main business", the Company takes the lead in applying polyester melt direct
spinning technology, large-scale PTA technology and high-end green caprolactam technology, and
optimizes and expands the terminal capacity of chemical fiber industry through mergers and
acquisitions to realize the grafting of its advantages in petrochemical and chemical fiber industry;
and substantially improves the technology level and competitiveness in the above-mentioned fields
of industry to boost the high-quality development of petrochemical and chemical fiber industry. In
addition, the Company also took the lead in deploying the Brunei Project overseas to respond to the
“Belt & Road” Initiative, adapt to the requirements of high-quality development in the new era, seize
the development opportunities in the Southeast Asian market, realize the international business
64
Hengyi Petrochemical 2021 Annual Report
deployment and operation, help the Company to complete vertical industry chain integration, solve
the bottleneck of raw materials and draw a blueprint of international industrial development.
3.3.2 Technological advantage by focusing on high-end scientific research and innovation
The Company has long been focusing on R&D and application of high-end technologies and
products in the field of petrochemical and chemical fibers. Relying on the university-enterprise
platform, the Company has established its leading position in technology and a product portfolio
featuring "diversification, serialization, quality, and uniqueness". Through comprehensive R&D of
new products and technologies related to the whole industry chain, the Company realizes full -process,
flexible development of high-tech products (technologies) and transformation of scientific and
technological achievements, and the technology level is industry-leading.
The Company closely focuses on the industrial structure of "refinery, polyester and polyamide".
In terms of materials, the Company focuses on the green manufacturing of polyester and the
recycling of polyester throughout its life cycle, breaking through existing technical difficulties,
achieving high quality recycling of polyester, and producing high performance polyester materials
from bio-based raw materials. In the chemical industry, to expand the application scope of PTA, the
Company is currently developing various types of diols required for the differential production of
polyester. Meanwhile, to reduce production costs, the Company actively researches and develops
three agents in the existing process, such as dulling agents, catalysts, and additives.
In terms of green development, the Company adheres to the concept of green and
environment-friendly development and the recycling of polyester throughout its life cycle, breaking
through existing technical difficulties and realizing high-quality recycling of polyester. Through
independent project establishment and R&D, the Company has produced safe, high-quality and
environment-friendly green polyester products, launched the self-developed antimony-free green
polyester product "Eticont", and prepared high-performance polyester from bio-based materials. By
promoting green manufacturing, the environmental pollution caused by production has been
effectively reduced, and the green loop of textile life cycle has been realized.
3.3.3 Large-scale whole industry chain with balanced and integrated upstream and
downstream enterprises
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Hengyi Petrochemical 2021 Annual Report
The Company has developed into a global leader in the integration of the "PX-Polyester" and
"Benzene-Polyamide" industry chains. Through the construction of upstream refineries overseas, the
expansion of midstream and downstream enterprises in China, the implementation of mergers and
acquisitions and restructuring and other differentiated development models, the Company has built a
balanced and integrated industry chain covering "crude oil - aromatics - PTA - polyester" and "crude
oil - benzene - CPL - polyamide". The Company's existing refining and chemical design capacity is 8
million tons, PTA capacity is 19 million tons (accounting for 28.95% of the national effective PTA
capacity), and polymerization and caprolactam capacities are 10.465 million tons and 400,000 tons
respectively. The polymerization capacity controlled and shared by the Company accounts for 15.96%
of the national effective polymerization capacity. In this highly concentrated industry, the Company
has an obviously advantage in scale. The Company is self-sufficient in upstream, mid-stream and
downstream raw materials, and has achieved balanced and coordinated development of the entire
industry chain from unique large-scale refining to supporting PX, PTA, and polyester (PET)
productions.
The Company continuously upgrades and optimizes the industrial model, consolidates and
expands the production capacity advantages of each link, advances the quantitative change of the
Company's operation scale and the qualitative change of the business structure, and promotes the
investment and application of large-scale equipment and energy-saving and consumption-reducing
technologies. The Company's advantage in scale promotes the stability of production plant operation,
improves product quality and production efficiency, and greatly reduces the unit investment cost and
unit energy consumption, giving the Company a significant advantage in unit manufacturing cost in
the industry. At the same time, the large-scale procurement enables the Company to form strong
operational capabilities and obtain advantageous prices, saving procurement costs and providing a
strong guarantee for the profitability of final products.
After the second phase of the Brunei Project is completed and put into operation, a new
"olefin-polyolefin" industry chain will be formed. It will improve the intensification, large-scale
operation and integration level of the Brunei Refining and Petrochemical Project. It is conducive to
the integrated, globalized and balanced synergistic operation of the Company's products, equipment
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Hengyi Petrochemical 2021 Annual Report
and utilities, and will help enhance the Company's sustainable profitability and anti-risk ability.
3.3.4 Industrial Internet enabling digital intelligent manufacturing and coordinated
operation of the whole industry chain
The Company has established the "Petrochemical + Industrial Internet" information strategy to
promote the deep integration of new-gen information and communication technologies and the
petrochemical manufacturing industry, diving the digitalization, networking and intelligent
development of the chemical fiber manufacturing industry. As one of the industry leaders, the
Company actively embraces the new era of Internet, big data and artificial intelligence, strengthens
the construction of digital infrastructure, and promotes information interconnection among intelligent
manufacturing facilities such as automatic winding, automatic packaging, intelligent external
inspection, AGVs, robots, and high-rise warehouses. The Company has built the first polyester plant
equipped with a full-process intelligent storage and transportation system in China, and creates the
first full-life product quality traceability system and smart sales supply chain system in the industry.
The first AI full-detection prototype applied in the chemical fiber industry by the Company was
selected as an Industrial Intelligent Pioneer Case at the Intelligent Economy Summit 2021. By using
network communication, Internet of Things, mobility, micro-services, real-time database and other
technologies, the Company has developed its own single-spindle data flow system and Yunbiao
finished product storage system to realize efficient logistics operation and automatic quality control
of products in the workshop warehouse, promote process optimization, information sharing and
efficiency improvement among production processes, and create digital workshops and smart
factories.
At the same time, keeping in mind the aim of being a leader in the Internet of chemical fiber
industry, the Company gives full play to its own supply chain supporting strength, actively builds an
industry ecosystem, and strives to create a "Hengyi Brain" that integrates and visualizes "online
trading + online finance + warehousing and logistics" to provide various digital solutions such as
digital management, intelligent manufacturing, online trading, logistics services, market analysis,
production, supply and marketing synergy, and supply chain finance and create more value that
empowers the development of global chemical fiber industry.
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Hengyi Petrochemical 2021 Annual Report
The Company has built an innovative customer service ecosystem and a chemical fiber supply
chain platform integrating micro-mall, supply chain finance, warehousing and logistics. Externally, it
combines Internet marketing and customer social experience management, providing various
services including independent order placement, supply chain support, data display through the
whole process of sales, and multi-dimensional portraits; internally, it realizes data sharing among
various business systems, improves the efficiency of data interaction, eliminates barriers to
information flow, and forms a closed-loop process for supply chain operations such as sales,
collection, scheduling, delivery, dispatching, shipment, and invoicing.
3.3.5 A young, professional and international manage ment team rooted in China with global
vision
The Company emphasizes management by professional team, and introduces senior executives
and technical talents at home and abroad through various channels. While introducing external
talents, the Company attaches great importance to the cultivation of internal talents, and actively
arranges young management talents cultivated internally to provide employees with good career
development channels.
At present, the Company has established an international, specialized and professional
management and operation team, laying a foundation for the sustainable and healthy development of
the Company. Meanwhile, with the continuous expansion of the Company's scale, by drawing on
advanced domestic and foreign organizational management experience, the Company has established
a sound internal system, to further optimize its organizational structure, continuously improve its
organizational management and operation efficiency, and bring into play the advantages of scale
synergy.
In order to promote the long-term sustainable development of the Company's talent team and
share the fruits of the Company's development with employees, on top of competitive remuneration
and incentive mechanisms in the industry, the Company has implemented two phases of restricted
stock incentive plans, four phases of employee stock ownership plans and two phases of share
repurchase plans to reserve for the subsequent employee stock ownership plans or stock incentive
plans since 2015, which has fully mobilized the enthusiasm of employees and effectively attracted
68
Hengyi Petrochemical 2021 Annual Report
more high-caliber talents. Through the establishment of the long-term development sharing
mechanism, the sense of belonging and cohesion of employees is effectively enhanced, which lays
the talent foundation for the Company's long-term development.
3.4 Analysis of main business
3.4.1 Overview
During the Reporting Period, the Company continued the improvement of the unique industrial
layout of "refinery, polyester and polyamide", and the integrated, balanced and internationalized
industrial chain business model became more prominent. All employees of the Company were united
to promote development and improve efficiency, and achieved safe and stable progress in production
and operation. At the end of the Reporting Period, the Company achieved an operating income of
RMB 128,979,539,700, up 49.23% year-on-year. The net profit attributable to shareholders of the
listed company was RMB 3,408,043,100, up 10.94% year-on-year; the Company's total assets valued
RMB 105.549 billion, up 13.88% compared with the beginning of the year; the owner's equity
attributable to shareholders of the listed company was RMB 25.897 billion, up 7.87% compared with
the beginning of the year; the net assets per share attributable to shareholders of the listed company
was RMB 7.06; the gearing ratio was 68.79%, which is at reasonably low compared with others in
the same industry.
During the Reporting Period, the Company implemented the dividend distribution plan for 2020,
distributing cash dividends totaling RMB 1.104 billion, which accounted for 35.95% of the
Company's net profit attributable to the parent company in 2020; in addition, the BOD of the
Company reviewed and approved the dividend plan for 2021, according to which RMB 2 (tax
included) will be distributed for every 10 shares and the total amount will be RMB 733 million,
accounting for 21.52% of the Company's net profits attributable to the parent Company in 2021.
3.4.1.1 The first phase of the Brunei Project was operating efficiently, with the operation level
continuously improving
During the Reporting Period, with the steady rebound of market demand in Southeast Asia, the
crack spread in the product oil market of the Hengyi Brunei Refining and Petrochemical Project
69
Hengyi Petrochemical 2021 Annual Report
continued to improve. The Company firmly grasped the market opportunities of the Hengyi Brunei
Refining and Petrochemical Project, leveraged the Company's advantages in scale production and
technology flexibility, actively optimized the product mix and continuously improved the
profitability of each unit of product. During the Reporting Period, the Hengyi Brunei Refining and
Petrochemical Project had been operating efficiently. It produces mainly product oil products such as
diesel, gasoline, chemical light oil, and liquefied gas, and chemicals such as PX and benzene. The
outputs of the two categories were 5,871,700 tons and 2,083,800 tons, the sales volumes were
5,897,800 tons and 2,113,700 tons, and the sales revenues (sales amounts) were RMB 24.082 billion
and RMB 4.553 billion respectively. The products further promoted the global popularity of the
"Hengyi" brand, and the improvement of vertical industrial chain integration enhanced the
Company's competitive advantage.
As of the disclosure date of this Report, the advantages of international operations of the Hengyi
Brunei Project are more prominent, including:
(1) active demand for product oil products in Southeast Asia. With the recovery of downstream
demand, the price spreads of the Company's related products continue to expand, and the business
environment in Brunei has significantly improved.
(2) powerful support of China and Brunei. The project enjoys long-term tax incentives and other
favorable policies.
Brunei has a stable political situation and the project meets Brunei's 2035 Vision and
promotes the economic growth of the Belt and Road Initiative countries;
The project is not restricted by trade barriers and belongs to the ASEAN Free Trade Area;
the import and export of products are duty-free;
The overall tax burden is obviously reduced. Brunei does not levy personal income tax,
business tax, payroll tax, production tax and export tax. The project has a local pioneer
enterprise certificate and an export enterprise certificate, and can enjoy a long-term
enterprise income tax relief;
The project is in line with the "Belt and Road Initiative" strategy, and the syndicated loans
are of national strategic support.
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Hengyi Petrochemical 2021 Annual Report
(3) The plant is stable, operates at high load, and the industrial chain is integrated and stable.
The project is closer to the crude oil supply place and Singapore's crude oil trade market,
boasting convenient crude oil procurement and lower logistics cost;
The product oil produced by the project is sold to Southeast Asia, which has strong demand;
Brunei Project has a short sales radius and low logistics cost;
All chemical products are digested downstream of the own industrial chain to realize the
integrated operation of the industrial chain.
(4) The cost advantage is significant, and the cost of energy transportation is reduced.
The project is fully equipped with coal-fired power generation and self-produced steam, and
the cost advantage of utilities is evident;
The main production plants, such as Hydrocracking, Reforming and PX units, adopt the
latest advanced technology, which has the technical characteristics of low operating cost,
high product conversion rate, etc., thus reducing the production cost of PX;
The low-temperature heat reuse technology is adopted with waste heat used for seawater
desalination, which reduces the operation cost of seawater desalination and the
comprehensive energy consumption index of PX production;
Residual oil is treated with the latest flexicoking process, which can be continuously
produced and reduce labor cost; by-product fuel gas reduces fuel cost; compared with the
traditional process, closed production of the plant is more environmentally friendly and
harmless treatment of residual oil is realized;
The diesel liquid phase hydrogenation technology can meet the new international diesel
standard in 2020, and at the same time reduce the unit investment and operation energy
consumption.
Brunei has a mild climate all year round and no natural disasters. As a rich oil -producing
country, Brunei has abundant oil and gas resources, which can provide some crude oil and
reduce the logistics cost of crude oil.
During the Reporting Period, the Brunei Project operated stably, and the benefits gradually
improved. The Hengyi PMB Petrochemical Project successively won the 2020-2021 National
71
Hengyi Petrochemical 2021 Annual Report
Prime-quality Project and the 2020-2021 China Construction Engineering Luban Prize (Overseas
Project). The Company's strength was widely recognized by all circles. While ensuring the stable
production and operation of the first phase of the project, based on the requirements of high-quality
development in the new era and the new pattern of industrial development, the Company fully
promoted the construction of the second phase of the Brunei Project, proposing a strategic
development plan that positions itself as an international first-class integrated
refining-chemical-chemical fiber service provider and systematically builds up
upstream-downstream synergy, domestic-overseas linkage, and comprehensive software-hardware
supporting competitiveness. After the Brunei Project is put into operation, the competitive advantage
of the Project will be greatly strengthened, the Company's industrial chain will be further expanded
and improved, and the international competitiveness will be significantly enhanced.
3.4.1.2 The leading position in PTA industry has been consolidated and the cost advantage
enhanced
During the Reporting Period, Yisheng New Materials’ 3-mtpa PTA Production Line 1 was put
into production, and the 3-mtpa PTA Production Line 2 was completed and put into production in
January 2022. The PTA production capacity of the Company reached a new level, and the leading
position of PTA was continuously consolidated.
As one of the leading enterprises in the PTA industry, the Company stre ngthened the production
technology management and optimized the operational capabilities of the PTA business during the
Reporting Period. Zhejiang Yisheng, a subsidiary held by the Company, achieved an output of
4,511,900 tons and a sales volume of 4,503,900 tons. In 2021, the consolidated gross margin of the
PTA business was 4.61%, remaining on a leading level in the industry. The Company fully leveraged
our leading position in the PTA industry and the advantages in industry chain integration to increase
the production capacity and output of PTA, achieving a steady increase in revenue.
3.4.1.3 By continuously enriching high-end differentiated products, the Company’s leadership
effect in polyester industry became increasingly prominent
During the Reporting Period, the plants of Haining Hengyi New Materials Co., Ltd.'s "1-mtpa
Differentiated Environmental Functional Fiber Project" and Fujian Yijin Chemical Fiber Co., Ltd.'s
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Hengyi Petrochemical 2021 Annual Report
"566,000 t/a new functional fiber project” were put into operation in succession. Both of them are the
Company's subsidiaries. The Company's polyester fiber business scale continued to grow, and most
of the new production capacity was contributed by advanced manufacturing plants with high added
value, high quality and differentiated production capability. As of the disclosure date of this Report,
the total polyester capacity controlled and shared by the Company reached 7.765 million tons.
In addition, with the improvement of downstream market demand and the steady upward
support of raw material prices, the Company's product prices have risen. Compared with the same
period of the previous year, the sales volume and prices of the Company's polyester products
(including filament yarns, staple fibers, and flakes) both increased, and the annual operating results
also rose significantly year-on-year. At the same time, the concentration of the polyester industry
increased, the competition pattern was optimized, and the quality of products was gradually
improved. During the Reporting Period, the production volume and sales volume of the Company's
chemical fiber products (including filaments, staple fibers, and flakes) maintained a growth trend,
achieving 7,233,800 and 7,406,900 tons respectively, up 11.24% and 22.31% year-on-year.
3.4.1.4 The Company continuously increased investment in R&D and adhered to
technological innovation to enhance the comprehensive competitiveness of products
During the Reporting Period, the Company's R&D investment was RMB 691,226,800,
representing a year-on-year increase of 92.22%. As of December 31, 2021, the Company has applied
for 586 patents, and obtained 233 validly granted patents and 108 validly granted invention patents.
During the Reporting Period, the Company attached great importance to the technological
innovation strategy and the transformation of achievements, and formulated and implemented a
technological innovation strategy in line with the current development trend based on our own
advantages. The Hengyi Research Institute, a subsidiary of the Company, is commi tted to the R&D
of green chemicals and advanced materials, actively enhances the Company’s ability to lead
innovation, and takes the initiative to assume the main responsibility for the transformation of
scientific and technological achievements, the launc h of new products on the market, and the
realization of economic benefits to accelerate the implementation of technological achievements.
During the Reporting Period, the Company continuously increased investment in R&D and
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Hengyi Petrochemical 2021 Annual Report
improved the construction of scientific and technological innovation platforms. Through
strengthening the construction of technological innovation capability, the Company established a
multi-level petrochemical technological innovation organization, strengthened the construction of
scientific research institutions that focus on the R&D of independent innovative technologies and
industry common key technologies directly facing the market, and built a high-level R&D team that
combines basic research and experimental development, industrial application research, common key
technology research in the industry, and differentiated fiber product development to actively explore
the development trend and industrialization process of related technologies in the fields of chemical,
polyester fiber, and textile, solve major scientific and technological problems including optimization
of special and key process technologies, quickly realize the transformation of scientific and
technological achievements and the improvement of new product industrialization capabilities, and
form independent intellectual property rights. At the same time, the Company has formed a complete
scientific and technological innovation mechanism combining "production, learning, research and
application" through cooperation with many well-known universities, research institutions, and
well-known enterprises at home and abroad, which can effectively share technological innovation
resources and complement each other. In addition, the Company's technological innovation strength,
scientific research level and market response capabilities have been rapidly improved.
During the Reporting Period, the Company's polyester segment focused on the deployment of
projects such as industrialization of polyester POY and FDY spinning oil, as well as the R&D of
cutting-edge processes and technologies in the fields of caprolactam and nylon, and the layout of
medium and long term projects such as biodegradable polyester, bio-based polyester and foamed
polyester. During the Reporting Period, the "Key Technology and Industrialization Project of
Antimony-free Environmentally-friendly Polyester Melt Direct Spinning" independently developed
and implemented by the Company won the first prize of Science and Technology Progress Award
granted by the China National Textile and Apparel Council in 2021. The promotion and application
polyester POY and FDY spinning oils independently researched and developed by the Company in
various production lines were intensified, and progress was made in the development of polye ster
foam special materials. Meanwhile, the Company established a scientific oil analysis method, and the
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Hengyi Petrochemical 2021 Annual Report
promotion and trial of the FDY oil developed by the Company were realized.
3.4.1.5 The employee stock ownership plan attracted outstanding talents and shaped a culture
of strivers to create and share achievements together
In order to improve the incentive and innovation mechanism, the Company launched the fourth
employee stock ownership plan to actively retain and attract outstanding talents, implement the
multi-dimensional and diversified incentive mechanism of "value creation and benefit sharing", and
stimulate the vitality of the team. The employee stock ownership plan was available to the directors,
supervisors, senior managers, and regular employees of the Company and the controlled subsidiaries
of the Company. The total number of employees covered did not exceed 4,011. As of September 28,
2021, purchase of shares under the fourth employee stock ownership plan was completed. A total of
113,754,600 shares were purchased, accounting for 3.10% of the Company's total share capital.
Meanwhile, by establishing and continuously improving the construction of management and
innovation systems such as R&D investment mechanism, talent incentive mechanism, restraint
mechanism and intellectual property management, the Company identified the production factors
such as labor, capital, technology, management, etc. According to their contribution, participation
and distribution, the value of knowledge and talents was fully reflected. To a large extent, it
mobilized and stimulated the initiative and enthusiasm of scientific and technological personnel for
technological innovation work, and effectively promoted the technological innovation capability of
the Company.
3.4.2 Income and cost
3.4.2.1 Composition of operating income
Currency: RMB
2021 2020
Year-on-year
Percentage in Percentage in
increase/decr
Amount operating Amount operating
ease
income income
Total operating income 128,979,539,693.27 100% 86,429,630,191.87 100% 49.23%
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Hengyi Petrochemical 2021 Annual Report
By industry
Petrochemical industry 36,094,837,257.96 27.98% 23,788,931,297.46 27.52% 51.73%
Chemical fiber industry 45,127,708,071.51 34.99% 24,934,786,768.51 28.85% 80.98%
Supply chain services 47,756,994,363.80 37.03% 37,705,912,125.90 43.63% 26.66%
By product
Refinery products 24,081,670,289.03 18.67% 14,458,642,505.91 16.73% 66.56%
Chemical products 4,553,199,820.35 3.53% 4,286,129,273.42 4.96% 6.23%
PTA 6,388,792,085.43 4.95% 4,759,627,567.43 5.51% 34.23%
PIA 1,071,175,063.15 0.83% 284,531,950.70 0.32% 276.47%
Polyester yarn 40,786,520,388.82 31.62% 21,978,130,175.76 25.43% 85.58%
Flake 4,341,187,682.69 3.37% 2,956,656,592.75 3.42% 46.83%
Supply chain services 47,756,994,363.80 37.03% 37,705,912,125.90 43.63% 26.66%
By region
Domestic 95,697,078,324.23 74.20% 63,753,435,093.36 73.76% 50.10%
Overseas 33,282,461,369.04 25.80% 22,676,195,098.51 26.24% 46.77%
By sales model
Direct sales 127,275,211,211.48 98.68% 85,385,894,135.62 98.79% 49.06%
Distribution 1,704,328,481.79 1.32% 1,043,736,056.25 1.21% 63.29%
3.4.2.2 Industries, products, regions, and sales models that account for more than 10% of the
Company's operating income or profit
The Company shall comply with the disclosure requirements for chemical industry specified in
Shenzhen Stock Exchange Self-Regulatory Guidelines for Listed Companies No. 3 - Industry
Information Disclosure
Currency: RMB
Increase or Increase or Increase or
Gross
Operating income Operating cost decrease in decrease in decrease in
margin
operating operating cost gross margin
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Hengyi Petrochemical 2021 Annual Report
income compared compared
compared with with the same with the same
the same period period of the period of
of the previous previous year previous year
year
By industry
Petrochemical
36,094,837,257.96 33,635,007,453.04 6.81% 51.73% 54.93% -1.93%
industry
Chemical
45,127,708,071.51 40,968,485,460.65 9.22% 80.98% 87.70% -3.24%
fiber industry
Supply chain
47,756,994,363.80 47,004,538,385.40 1.58% 26.66% 27.34% -0.52%
services
By product
Refinery
24,081,670,289.03 23,211,693,487.84 3.61% 66.56% 67.08% -0.31%
products
Chemical
4,553,199,820.35 3,525,147,961.98 22.58% 6.23% 4.56% 1.24%
products
PTA 6,388,792,085.43 6,094,385,121.09 4.61% 34.23% 43.88% -6.39%
PIA 1,071,175,063.15 803,780,882.13 24.96% 276.47% 281.95% -1.08%
Polyester yarn 40,786,520,388.82 36,861,844,311.13 9.62% 85.58% 91.73% -2.90%
Flake 4,341,187,682.69 4,106,641,149.52 5.40% 46.83% 57.90% -6.64%
Supply chain
47,756,994,363.80 47,004,538,385.40 1.58% 26.66% 27.34% -0.52%
services
By region
Domestic 95,697,078,324.23 90,386,186,932.42 5.55% 50.10% 52.22% -1.31%
Overseas 33,282,461,369.04 31,221,844,366.67 6.19% 46.77% 48.18% -0.89%
Where the statistical scope of the Company's main business data was adjusted during the
Reporting Period, the Company's main business data according to the adjustment of the scope
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Hengyi Petrochemical 2021 Annual Report
at the end of the Reporting Period.
□ Applicable √Not applicable
Currency: RMB
Average Average
Production Sales Year-o
selling price selling price
Product volume volume Income n-year
in the first in the Reason for changes
name (10,000 (10,000 realized change
half of the second half
tons) tons) s
year of the year
Refinery 24,081,670, During the Reporting Period,
587.17 589.78 3,615.14 4,468.26 62.25%
products 289.03 the Company's raw material
prices rose, which drove the
prices of downstream
Polyester 40,786,520,
645.30 658.89 6,656.95 6,483.76 36.71% products in the downstream
yarn 388.82
industry chain to varying
extents.
Note: The products that account for more than 10% of the Company's operating income or net profit
are disclosed separately, including the output, sales volume and realized income of the products, the
average selling price of the products for each half-year and the year-on-year changes, with the
reasons for the changes analyzed.
Overseas business of which the operating income or net profit generated accounts for more
than 10% of the audited operating income or net profit of the Company in the previous fiscal
year
Name of overseas Operatio Impact of tax policies on overseas business during the
Company's response
business n status Reporting Period
Stable The overall tax burden during the Reporting Period was Both China and Brunei
operation low, because Brunei does not levy personal income tax, provided powerful
Brunei Project
under business tax, salary tax, production tax and export tax. A support. The project
high load local pioneer enterprise certificate and an export enterprise enjoyed long-term tax
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Hengyi Petrochemical 2021 Annual Report
certificate have been issued for the project, so it can enjoy a incentives and other
long-term corporate income tax exemptions favorable policies.
3.4.2.3 Whether the Company's income from product sales is greater than its income from
labor services
Year-on-year
Industry Item Unit 2021 2020
increase/decrease
Sales volume 10,000 tons 589.78 583.81 1.02%
Refinery
production volume 10,000 tons 587.17 592.24 -0.86%
products
Inventory 10,000 tons 11.60 14.21 -18.37%
Sales volume 10,000 tons 211.37 219.17 -3.56%
Chemical
production volume 10,000 tons 208.38 226.58 -8.03%
products
Inventory 10,000 tons 8.20 11.19 -26.72%
Sales volume 10,000 tons 450.39 484.32 -7.01%
PTA production volume 10,000 tons 451.19 485.02 -6.97%
Inventory 10,000 tons 3.11 2.31 34.20%
Sales volume 10,000 tons 15.67 5.51 184.39%
PIA production volume 10,000 tons 13.56 8.67 56.40%
Inventory 10,000 tons 1.05 3.16 -66.77%
Sales volume 10,000 tons 740.69 605.60 22.31%
Polyester
production volume 10,000 tons 723.38 650.27 11.24%
products
Inventory 10,000 tons 45.25 62.56 -27.67%
Explanation of the reasons for the year-on-year change of more than 30% in relevant data
During the Reporting Period, the Company's PIA production volume and sales volume increased
significantly compared with the same period of the previous year, mainly because the Company
began to produce PIA products in July of FY2020.
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Hengyi Petrochemical 2021 Annual Report
3.4.2.4 Performance of the major sales contracts and major purchase contracts entered into
by the Company as of the Reporting Date
□ Applicable √Not applicable
3.4.2.5 Composition of operating cost
By industry and product
By industry of Hengyi Brunei
Currency: RMB
2021 2020 Year-on-year
Industry Item Percentage in Percentage in increase/decr
Amount Amount
operating cost operating cost ease
Raw
22,068,840,115.45 95.08% 12,585,308,784.97 90.59% 75.35%
materials
Refinery Energy 435,640,277.36 1.88% 272,669,717.70 1.96% 59.77%
products Depreciation
707,213,095.03 3.04% 1,034,575,302.10 7.45% -31.64%
and others
Total 23,211,693,487.84 100.00% 13,892,553,804.77 100.00% 67.08%
Raw
3,229,472,939.74 91.61% 3,043,593,007.52 90.28% 6.11%
materials
Chemical Energy 162,281,960.64 4.60% 165,221,931.47 4.90% -1.78%
products Depreciation
133,393,061.60 3.79% 162,620,688.08 4.82% -17.97%
and others
Total 3,525,147,961.98 100.00% 3,371,435,627.07 100.00% 4.56%
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Hengyi Petrochemical 2021 Annual Report
By domestic industry and product
Currency: RMB
2021 2020 Year-on-year
Product Item Percentage in Percentage in increase/decrea
Amount Amount
operating cost operating cost se
Raw materials 589,219,138.02 73.31% 142,735,702.53 67.83% 312.80%
Energy 64,929,361.11 8.08% 27,026,909.89 12.84% 140.24%
PIA
Depreciation
products 149,632,383.00 18.61% 40,679,442.69 19.33% 267.83%
and others
Total 803,780,882.13 100.00% 210,442,055.12 100.00% 281.95%
Raw materials 5,337,995,524.43 87.59% 3,750,955,081.22 88.55% 42.31%
Energy 207,810,074.87 3.41% 138,178,717.94 3.26% 50.39%
PTA
Depreciation
products 548,579,521.79 9.00% 346,745,378.67 8.19% 58.21%
and others
Total 6,094,385,121.09 100.00% 4,235,879,177.83 100.00% 43.88%
Raw materials 33,303,019,280.35 81.29% 17,480,962,763.20 80.09% 90.51%
Energy 2,557,920,885.36 6.24% 1,410,863,173.13 6.46% 81.30%
Polyester
Depreciation
products 5,107,545,294.93 12.47% 2,935,144,069.73 13.45% 74.01%
and others
Total 40,968,485,460.65 100.00% 21,826,970,006.07 100.00% 87.70%
Note:
3.4.2.6 Whether there was any change in the scope of consolidation during the Reporting
Period
A total of 44 subsidiaries were included in the scope of consolidation in FY2021. For details, please
refer to Note 8 "Equities in Other Entities” in Section 10 "Financial Report". Compared with the
previous year, three subsidiaries were included in and three excluded from the Company's
consolidation scope in this fiscal year. For details, please refer to Note 7 "Changes in the Scope of
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Hengyi Petrochemical 2021 Annual Report
Consolidation” in Section 10 "Financial Report".
3.4.2.7 Significant changes or adjustments in the Company's business, products or services
during the Reporting Period
□ Applicable √Not applicable
3.4.2.8 Major customers and suppliers
Major customers
Total sales amount of the top five customers (RMB ) 20,843,304,169.02
Percentage of the total sales amount of the top five customers in total annual
16.16%
sales amount
Percentage of sales amount of related parties among the top five customer in 0.00%
total annual sales amount
Top 5 customers
S/N Customer name Sales amount (RMB ) Percentage in total annual sales amount
1 Customer 1 8,753,951,423.37 6.79%
2 Customer 2 3,534,752,460.31 2.74%
3 Customer 3 3,383,786,669.98 2.62%
4 Customer 4 2,629,666,448.59 2.04%
5 Customer 5 2,541,147,166.77 1.97%
Total - 20,843,304,169.02 16.16%
Other information about major customers
□ Applicable √Not applicable
Major suppliers
Total purchase amount of top five suppliers (RMB ) 30,073,048,425.01
Percentage of the total purchase amount of the top five suppliers in the total 24.73%
annual purchase amount
Percentage of purchase amount of related parties among the top five suppliers 3.62%
in total annual sales amount
Top 5 suppliers
Percentage in total annual purchase
S/N Supplier name Purchase amount (RMB )
amount
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Hengyi Petrochemical 2021 Annual Report
1 Supplier 1 11,263,369,434.33 9.26%
2 Supplier 2 6,773,289,347.79 5.57%
3 Supplier 3 4,398,340,883.38 3.62%
4 Supplier 4 4,230,806,486.44 3.48%
5 Supplier 5 3,407,242,273.07 2.80%
Total - 30,073,048,425.01 24.73%
Other information about major suppliers
□ Applicable √ Not applicable
3.4.3 Expenses
Currency: RMB
Year-on-year
2021 2020 increase/decre Explanation of major changes
ase
Selling
228,081,384.04 218,109,801.14 4.57% /
expenses
Administrati
1,087,267,658.53 970,153,607.89 12.07% /
on expenses
Financial
2,133,576,548.94 2,004,150,317.61 6.46% /
expenses
Changes were generated mainly
R&D because the Company attached great
686,980,217.98 351,969,307.93 95.18%
expenses importance to product R&D and
increased investment in R&D
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Hengyi Petrochemical 2021 Annual Report
3.4.4 R&D investment
Name of major R&D Expected impact on the future
Project purpose Project progress Intended goal
projects development of the Company
To improve and optimize the preparation
process of titanium-based polyester To meet the standards of
By further optimizing the catalyst
R&D of preparation catalyst to produce titanium-based high-quality polyester flakes and
preparation process and polymerization
technology of polyester polyester flakes with excellent Completed and fibers produced by large-scale
process to improve product quality, the
titanium-based performance and good hue, and then industrialized production lines with the polyester
project has high value of eco-friendliness
polycondensation catalyst conduct spinning and post-processing as flakes produced with the
and social significance.
needed to produce heavy metal-free titanium-based catalyst developed.
titanium-based polyester products.
To form a complete set of key
To break the monopoly of foreign
Research and application preparation technologies for the The project has high application value and
enterprises, reduce the raw material cost
development of bio-based Completed and development and production of prospects, and will greatly reduce
of downstream textile enterprises, and
PTT elastic shape industrialized PTT and composite filaments, and production costs and improve the
facilitate the promotion and application of
memory fiber series establish stable mass production of competitive advantage in the market.
bio-based PTT textile materials.
bio-based PTT flake series
The nano zinc-oxide antibacterial To study the effect of zinc oxide
R&D of zinc oxide polyester fiber features particle size and content on the The project will expand the market of
Completed and
antibacterial polyester environment-friendliness, safety and mechanical properties and functional fiber products and enhance the
industrialized
fiber health. With the change of people's antibacterial properties of fibers, competitiveness of the Company.
consumption concept and rise of health develop antibacterial
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Hengyi Petrochemical 2021 Annual Report
Name of major R&D Expected impact on the future
Project purpose Project progress Intended goal
projects development of the Company
awareness, it will be favored by more master-batches or antibacterial
consumers in the fields of household polyester flakes to meet production
items, medical and health care, military needs, and melt-spin them into
clothing, etc., and the demand for antibacterial polyester fibers.
zinc-based antibacterial textiles will also
increase.
To solve the problems that the current
Low-melting-point
R&D of low-melting polyester produced has a low It will greatly improve the flame
polyester flakes have To form a mature technology for
low-melting-point melting point, resulting in no crystallinity retardancy of flakes, and is of great
been produced and producing and processing
polyester flake or low crystallinity of polymers, and it is significance to expansion of the market of
samples sent to low-melting-point polyester flakes
preparation process difficult to achieve industrialized mass the Company's differentiated products.
customers for trial
production.
To solve the problems of high price, Antistatic modified
To form a mature technology for The project will produce antistatic staple
R&D of key technology limited specification options, and great polyester staple fibers
producing and processing fibers, expand the market of the
of antistatic modified susceptibility to environmental humidity have been produced and
antistatic modified polyester staple Company's product, and enhance the
polyester staple fiber on the antistatic polyester products on the samples sent to
fibers Company's competitiveness
market. customers for trial
R&D of highly To complete the polymer modification by Related technologies To form a mature technology for The project will expand the market of the
hygroscopic and dyeable adding cellulose microcrystalline slurry in have been extended to producing and processing highly Company's products and is of great
microcrystalline cellulose situ, so that the modified polyester fiber mass production to hygroscopic and dyeable significance to the development of the
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Hengyi Petrochemical 2021 Annual Report
Name of major R&D Expected impact on the future
Project purpose Project progress Intended goal
projects development of the Company
modified polyester fiber has moisture wicking and anti-static realize the microcrystalline cellulose chemical fiber industry.
effects. industrialization of modified polyester fibers.
products.
To produce a hydrophilic polyester fiber
Related technologies
through secondary esterification by
have been extended to To form a mature technology for The project will expand the market of the
endcapping sorbitol, followed by
R&D of hydrophilic and mass production to producing and processing Company's products and is of great
polycondensation and melt spinning,
dyeable polyester fiber realize the hydrophilic and dyeable polyester significance to the development of the
which can effectively improve the
industrialization of fibers. polyester industry.
hydrophilicity and flammability of the
products.
polyester fiber.
To develop the product by adding a new
composite flame retardant during the
The project will improve the hygroscopic
spinning process. Various properties of The project has passed To form a mature technology for
effect of fiber, improve the wearing
R&D of melt-spun flame the new composite flame retardant will the pilot test and is producing and processing flame
performance of polyester fiber, greatly
retardant polyester fiber bring many excellent properties to the transferred for retardant polyester fibers that can
improve the coloring performance, reduce
flame retardant polyester fiber compared industrialization test. be directly spun.
the dyeing temperature and save energy.
with conventional flame retardant
polyester fiber.
R&D of polyester To solve the problem that the heat Related technologies To explore and master the core The development of heat retaining and
elastomeric yarn retention and self-heating effects of fibers have been extended to technology for the preparation of self-heating fibers will enrich our range of
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Hengyi Petrochemical 2021 Annual Report
Name of major R&D Expected impact on the future
Project purpose Project progress Intended goal
projects development of the Company
integrating heat retention on the current market cannot be mass production to heat retaining and self-heating differentiated fibers, enhance the
and self-heating effects integrated, and propose a process for realize the polyester elastomeric yarn through competitive advantage of our products,
producing heat retaining and self-heating industrialization of a series of R&D work, enable the improve our Company's reputation in the
fibers. products. relevant functional indicators of industry, and also help promote the
the prepared heat retaining and development of the entire sector of
self-heating fibers to meet the functional fiber.
testing standards, and realize the
transformation of the project
results.
To carry out systematic chemical The implementation of this project will
engineering basic research on three key realize the industrialization of bio-based
aspects of the industrial preparation furandicarboxylic acid monomer, provide
R&D and industrial
technology of high-purity FDCA: fructose To form a complete industrial necessary monomer raw materials for
demonstration of efficient
dehydration, HMF oxidation and FDCA The project has been preparation technology for producing high-performance bio-based
preparation technology of
refining; to screen efficient "catalytic + established and is under producing polymer-grade FDCA polyamide and polyester materials, help
polymer-grade
solvent" system for dehydration reaction implementation through the R&D and industrial promote the development of renewable
2,5-furandicarboxylic
to find the technical key to HMF implementation of this project. resources and technologies in China, and
acid
preparation with high selectivity; to provide an alternative technological route
optimize HMF oxidation process for China's "carbon peaking and carbon
conditions, hydrogenation catalyst carriers neutrality". It is of great significance for
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Hengyi Petrochemical 2021 Annual Report
Name of major R&D Expected impact on the future
Project purpose Project progress Intended goal
projects development of the Company
and catalytically active components, and cultivating strategic emerging
break through the core technology of bio-industries and breaking the bottleneck
FDCA refining; to establish a constraints of resources and environment
mathematical model through in economic development.
determination of basic data, carry out
process simulation calculation, propose
process flow, and compile process
package and industrial design to obtain an
industrially implementable polymer-grade
FDCA preparation technology.
The project adopts fiber-forming polymer To complete all the development
grafting technology. By adding plan tasks under the project, and
aluminum-doped zinc oxide (AZO) form a mature technology for The development and enrichment of the
conductive powder and hydrophilic producing and processing Company's differentiated polyester fiber
R&D of key technology The project has been
molecular segments (PEE) to PET antistatic modified polyester staple product range will broaden the market of
of antistatic modified established and is under
polyester, more water in the environment fiber; to make full use of the the Company's products, and will be of
polyester staple fiber implementation
can be absorbed, causing a reduction in Company's existing equipment, great significance to the development of
electrostatic charge accumulation on the technologies and related the polyester fiber industry.
polymer surface, effectively achieving supporting conditions to
uniform dispersion and grafting of AZO successfully realize the
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Hengyi Petrochemical 2021 Annual Report
Name of major R&D Expected impact on the future
Project purpose Project progress Intended goal
projects development of the Company
and hydrophilic PEE segments, and transformation of the project's
improving the antistatic properties of the achievements and industrial
co-polyester. production.
To complete all the planned tasks
under the project, and form a
mature technology for producing
This is to develop a two-color wool-like
The project has passed and processing cationic dyed
polyester fiber. After the fabric woven
the pilot test and is polyester two-color composite The development of the Company's
R&D of cationic dyed with the composite fiber is processed and
transferred for wool-like polyester fiber; to make differentiated polyester fiber product
polyester two-color dyed, it will not only have obvious
industrialization test. The full use of the Company's existing range will broaden the market and
composite wool-like contraction effect, but also show two
series of products of this equipment, technologies and improved the Company's economic
polyester fiber colors prominently. After the fabric is
project are promoted and related supporting conditions to benefits.
sanded, the fibers are not easy to fall, and
applied in the market. successfully realize the
feel thicker and plump like real wool.
transformation of the project's
achievements and industrial
production.
Independent R&D is carried out
To improve the beauty and comfort of Industrialization and The development of the Company's
R&D of in-line addition for this project. Dull black
clothing, further raise the grade of stable mass production master-batches are added to the differentiated polyester fiber product
full dull rabbit hair-like
polyester products, and enhance product are achieved. The Company's existing semi-dull range will broaden the market and
fiber polyester flakes for melt spinning.
competitiveness and the Company's products are promoted improved the Company's economic
The technical focus is on the
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Hengyi Petrochemical 2021 Annual Report
Name of major R&D Expected impact on the future
Project purpose Project progress Intended goal
projects development of the Company
profitability; to reduce pollutant and applied in the design and manufacture of benefits.
special-shaped spinnerets, the
emissions in the downstream dyeing and market.
precise control of dull black
finishing process, improve the level of master-batch addition amount and
the development of spinning and
eco-friendliness, and achieve economic
drawing process for full dull rabbit
benefits for the Company and the society. hair-like black silk.
Highly oriented yarn (HOY) is also
known as fully oriented yarn. One-step
To complete all the planned tasks
high-speed spinning process is adopted.
under the project, and form a
Compared with FDY and DT
mature technology for producing
technologies, this technology eliminates
To develop a hollow curly wool-like fiber Industrialization and and processing HOY hollow curly
the need for drafting components or
based on HOY yarn, with comfortable stable mass production wool-like fiber. to make full use of
drafting equipment. After the polymer is
R&D of HOY hollow wool feel, warmth and breathability, to be are achieved. The the Company's existing equipment,
melt-sprayed, cooled and cured and oiled,
curly wool-like fiber used for making Altai, small teddy velvet, products are promoted technologies and related
it can be wound into polyester filament
big teddy velvet, wheat ear, granular and applied in the supporting conditions to
yarn directly used for weaving. Therefore,
cashmere, etc. market. successfully realize the
the total equipment cost is low. HOY
transformation of the project's
production features high efficiency,
achievements and industrial
simple process, low energy consumption
production.
and equipment investment. Meanwhile,
the product is dyeable, the fiber feels soft,
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Hengyi Petrochemical 2021 Annual Report
Name of major R&D Expected impact on the future
Project purpose Project progress Intended goal
projects development of the Company
and the velvet made is desirable. It can be
used to make various high-grade clothing
fabrics and decorative fabrics, showing
good prospects for development in the
field of chemical fiber.
To determine a technical scheme
for producing flame retardant
In view of the future development
cationic polyester and flame
direction and market demand of flame
retardant high-shrinkage polyester,
retardant polyester fibers and based on the
The project has passed and prepare flame retardant
R&D and production of flame retardant
the pilot test and is cationic polyester flakes and flame
polyester fibers, this project is The project will enrich the Company's
transferred for retardant high-shrinkage polyester
R&D of flame retardant implemented to study the feasibility of differentiated product range, increase the
industrialization test to flakes; to research and confirm the
cationic polyester fiber producing flame retardant high-shrinkage market share, and achieve better
achieve stable mass spinning process and produce
fiber, flame retardant cationic dyeable economic benefits
production and flame retardant cationic polyester
fiber and other composite functional
promotion flakes and flame retardant
polyester fibers, and launch high-quality
high-shrinkage polyester flakes
functional composite flame retardant
that meet customer needs. The
polyester fibers
technology is owned by the
Company, and our Company's
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Hengyi Petrochemical 2021 Annual Report
Name of major R&D Expected impact on the future
Project purpose Project progress Intended goal
projects development of the Company
existing equipment, technology
and related supporting conditions
are fully used. The Company has
completed the lab test and pilot
test and will provide technical
support for industrialization
To solve the various problems that occur To complete all the planned tasks
in the post-processing and finishing of
of the project, and form a
negative ion fiber, the ultra-dispersed
negative ion powder preparation process technology for producing hollow
The project has passed
is adopted, and special micro-modified self-heating & heat retaining
polyester raw materials and two modified the pilot test and is
polyester fiber to make full use of The project will enrich the Company's
R&D of hollow monomers of triciritol and isopentyl transferred for
glycol are used to prepare the product. It the Company's existing equipment, differentiated product range, increase the
self-heating & heat can improve the dyeing, hygroscopic and industrialization test to
technologies and related market share, and achieve better
retaining polyester fiber skin-friendly properties of negative ion achieve stable mass
polyester fibers. By adding tourmaline to production supporting conditions to economic benefits
and
polyester, polyester master-batch with successfully realize the
self-heating, far infrared and negative ion promotion
transformation of the project's
functions is prepared, and then hollow
self-heating & heat retaining polyester achievements and industrial
fiber can be produced. production.
The low-melting-point polyester
R&D of environmentally To study the flake crystallization ability, The project has passed To complete all the planned tasks
sheath-core composite fiber will partially
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Hengyi Petrochemical 2021 Annual Report
Name of major R&D Expected impact on the future
Project purpose Project progress Intended goal
projects development of the Company
friendly antimony-free drying process, sheath-core composite the pilot test and is under the project, and form a melt and bond with other materials. It
features environment-friendliness, safety,
low-melting-point plate design, composite spinning process, transferred for mature technology for producing
and high bonding strength, and has broad
polyester sheath-core etc. by screening out antimony-free industrialization test to and processing antimony-free development prospects. The
implementation of this project and
composite fiber low-melting-point polyester flakes that achieve stable mass low-melting-point polyester
product promotion will further increase
meet the spinning requirements, form a production and sheath-core composite fiber; to the market share of differentiated
complete technology for producing promotion make full use of the Company's polyester fibers, thereby enhancing the
Company's economic benefits
antimony-free low-melting-point existing equipment, technologies
polyester sheath-core composite fiber, and and related supporting conditions
successfully realize the transformation to successfully realize the
and industrial production of the project transformation of the project's
achievements and industrial
production.
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Hengyi Petrochemical 2021 Annual Report
R&D personnel
2021 2020 Change ratio
Number of R&D staff (person) 643 597 7.71%
Percentage of R&D personnel 3.82% 3.29% 0.53%
Educational background of R&D personnel —— —— ——
PhD 33 23 43.48%
Master 52 35 48.57%
Bachelor 149 108 37.96%
Junior college degree 192 199 -3.52%
High school and below 217 232 -6.47%
Age of R&D personnel —— —— ——
Under 30 YO 241 225 7.11%
30~40 YO 247 216 14.35%
40~50 YO 117 114 2.63%
50~60 YO 36 41 -12.20%
60 YO or above 2 1 100.00%
R&D investment
2021 2020 Change ratio
R&D investment amount (RMB ) 691,226,781.85 359,600,062.80 92.22%
R&D investment as a percentage of operating income 0.54% 0.42% 0.12%
Capitalized R&D investment (RMB ) 4,246,563.87 7,630,754.87 -44.35%
Capitalized R&D investment as a percentage of R&D investment 0.61% 2.12% -1.51%
Reasons for and effects of significant changes in the composition of R&D personnel
□ Applicable √ Not applicable
Reasons for the significant changes in the percentage of total R&D investment in operating
income compared with the previous year
□ Applicable √ Not applicable
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Hengyi Petrochemical 2021 Annual Report
Reasons for the substantial changes in the capitalization rate of R&D investment and
explanation of their reasonableness
□ Applicable √ Not applicable
3.4.5 Cash flow
Currency: RMB
Year-on-year
Item 2021 2020
increase/decrease
Subtotal of cash inflows from operating activities 137,163,552,808.24 97,642,317,743.64 40.48%
Subtotal of cash outflows from operating activities 129,408,681,288.68 92,628,544,965.69 39.71%
Net cash flow from operating activities 7,754,871,519.56 5,013,772,777.95 54.67%
Subtotal of cash inflows from investing activities 2,597,646,523.70 1,994,495,592.71 30.24%
Subtotal of cash outflows from investing activities 10,149,350,833.73 9,946,968,313.72 2.03%
Net cash flows from investing activities -7,551,704,310.03 -7,952,472,721.01 5.04%
Subtotal of cash inflows from financing activities 47,569,372,668.77 40,896,350,951.42 16.32%
Subtotal of cash outflows from financing activities 44,628,796,599.91 34,988,971,122.60 27.55%
Net cash flows from financing activities 2,940,576,068.86 5,907,379,828.82 -50.22%
Net increase in cash and cash equivalents 3,058,411,003.67 2,713,245,267.65 12.72%
Explanation of the main factors influencing significant year-on-year changes in relevant data
(1) The increase in net cash flow from operating activities was mainly due to the Company's reserve
of working capital in advance in the fourth quarter in response to the increase in raw material prices
and the increase in inventory during the Spring Festival in the first quarter. We appli ed for
documentary bills to delay payment when the L/Cs used by the Brunei company to purchase and pay
to suppliers expired, and applied for negotiating discount for early collection of L/Cs received from
sales. At the same time, we also applied for discounted early collection of bank acceptance bills
received by domestic polyester companies from customers. The combined effect of these factors
achieved a significant year-on-year increase in cash inflow from operating activities.
(2) The decrease in net cash flow from financing activities was mainly due to the significant
95
Hengyi Petrochemical 2021 Annual Report
year-on-year increase in net cash inflows from operating activities during the Reporting Period. With
the amount of the Company’s external investment remaining stable, financing from conventional
financing channels was reduced, resulting in a significant year-on-year decrease in net cash flows
from financing activities.
Explanation of the reasons for the significant difference between the net cash flows generated
by the Company's operating activities and the net profit of the year during the Reporting
Period
For details, please refer to the supplementary information in the cash flow statement in the
Company's annual audit report.
3.5 Analysis of non-main business
Currency: RMB
Percentage of Sustainable
Amount Reasons
total profit or not
It was mainly attributable to the provision of
the investment income of subsidiaries from the
Investment income 1,069,400,148.61 24.85% Yes
main business, and the income from hedging
investment during the Reporting Period.
Gains and losses It was mainly attributable to changes in fair
from changes in fair 42,971,667.68 1.00% value of foreign exchange and commodity No
value hedging at the end of the Reporting Period
It was mainly attributable to the Company's
Asset impairment -146,977,289.85 -3.42% provision of inventory depreciation reserve and No
asset impairment reserve
It was mainly attributable to the income from
Non-operating
32,027,224.27 0.74% current accounts, indemnities and fines that do No
income
not need to be paid during the Reporting Period
Non-operating 19,712,097.61 0.46% It was mainly attributable to external donations No
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Hengyi Petrochemical 2021 Annual Report
Percentage of Sustainable
Amount Reasons
total profit or not
expenses during the Reporting Period, etc.
3.6 Analysis of assets and liabilities
3.6.1 Significant changes in asset composition
Currency: RMB
At the end of 2021 At the beginning of 2021
Percentage Explanation of
Percentage in Percentage in
Amount Amount change major changes
total assets total assets
Monetary funds 14,322,716,793.82 13.57% 10,078,983,803.86 10.87% 2.70%
Accounts
6,436,842,058.88 6.10% 3,879,744,130.04 4.19% 1.91%
receivable
Inventory 12,100,381,644.06 11.46% 9,650,858,867.17 10.41% 1.05%
Long-term
equity 12,085,626,559.38 11.45% 10,062,484,360.52 10.86% 0.59%
investments
Fixed assets 46,117,918,498.81 43.69% 41,579,728,480.95 44.86% -1.17%
Construction in
3,896,282,585.50 3.69% 7,801,532,982.72 8.42% -4.73%
progress
Right-of-use
411,032,649.33 0.39% 454,147,120.45 0.49% -0.10%
assets
Short-term loans 33,778,694,677.24 32.00% 26,482,672,125.98 28.57% 3.43%
Contract
1,723,901,780.92 1.63% 1,468,187,681.02 1.58% 0.05%
liabilities
Long-term loans 15,996,229,686.31 15.16% 16,609,903,029.23 17.92% -2.76%
Lease
380,145,523.29 0.36% 394,876,049.88 0.43% -0.07%
liabilities
97
Hengyi Petrochemical 2021 Annual Report
High proportion of overseas assets
Proportion Whether
Specific Controls to Inco of overseas there is
Operation
content of Reasons Asset size Location ensure asset me assets in the significant
mode
assets security status Company's risk of
net assets impairment
Strengthen the
parent
Subsidiaries
Hong Built by Company's
controlled Overseas USD6,54
Kong/Brunei/Si the management Good 161.23% No
by the investment 9,031,700
ngapore Company control over
Company
overseas
subsidiaries
Other information N/A
3.6.2 Assets and liabilities measured at fair value
Currency: RMB
Item Beginning balance Ending balance
Financial assets
1. Trading financial assets (excluding derivative financial assets) 251,904,308.53 388,958,054.67
2. Derivative financial assets 737,015,777.82 0.00
3. Investment in other equity instruments 5,600,000.00 5,600,000.00
Subtotal of financial assets 994,520,086.35 394,558,054.67
financial liabilities 145,909,776.80 25,375,802.83
Other changes
Whether the measurement attributes of the Company's main assets changed significantly
during the Reporting Period
□ Yes √ No
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Hengyi Petrochemical 2021 Annual Report
3.6.3 Restricted asset rights as of the end of the Reporting Period
Ending book value
Item Reason for restriction
of the year
Monetary funds 4,077,979,841.98 Margin
Notes receivable and receivables financing 341,723,232.79 Pledge to open acceptance bills
Long-term equity investments 5,649,517,951.90 Mortgage loan
Sale and leaseback financial leases and
Fixed assets 27,374,437,506.09
mortgage loan
Intangible assets 826,395,111.39 Mortgage loan and financial lease guarantee
Construction in progress 1,785,315,463.26 Mortgage loan and financial lease guarantee
Inventory 1,014,909,209.79 Mortgage loan
Total 41,070,278,317.20 -
3.7 Analysis of investment status
3.7.1 General situation
Investment amount during the Investment amount in the same period of
Range of change
Reporting Period (RMB ) the previous year (RMB )
5,315,505,561.36 3,743,354,861.36 42.00%
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Hengyi Petrochemical 2021 Annual Report
3.7.2 Significant equity investments acquired during the Reporting Period
Unit: RMB 10,000
Progress as
Name of Main Investment investment Shareholding Sources Investment Product of the Whether involved Disclosure
Partner Disclosure index (if any)
investee business method amount ratio of funds period type balance sheet in a lawsuit date (if any)
date
Production http://www.cninfo.com.cn/new/di
Ningbo
and sales of sclosure/detail?plate=szse&orgId
Zhongjin
Yisheng New petroleum Capital Self-owne =gssz0000703&stockCode=0007
49,000 49% Petroche 30 PTA Completed No 12/09/2021
Materials products and increase d capital 03&announcementId=121184880
mical Co.,
chemical 5&announcementTime=2021-12-
Ltd.
products 09
Production Dalian
PTA,
Hainan and sales of Self-owne Yisheng
Acquisition 37,350 50% 30 bottle Completed No / /
Yisheng PTA and d capital Investmen
flake
bottle flakes t Co., Ltd.
Hainan Production Capital 50,000 50% Self-owne Dalian 30 PTA, Completed No 12/09/2021 http://www.cninfo.com.cn/new/di
100
Hengyi Petrochemical 2021 Annual Report
Progress as
Name of Main Investment investment Shareholding Sources Investment Product of the Whether involved Disclosure
Partner Disclosure index (if any)
investee business method amount ratio of funds period type balance sheet in a lawsuit date (if any)
date
Yisheng and sales of increase d capital Yisheng bottle sclosure/detail?plate=szse&orgId
PTA and Investmen flake =gssz0000703&stockCode=0007
bottle flakes t Co., Ltd. 03&announcementId=121184879
8&announcementTime=2021-12-
09
Hangzhou Hangzhou
Jingxin Supply chain Qingyun Warehou RMB
Capital Self-owne
Supply Chain management 14,210 49% Holding 30 sing 128,650,700 No 04/26/2022 /
increase d capital
Management services Group services paid up
Co., Ltd. Co., Ltd.
Total - - 150,560 - - - - - - - - -
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Hengyi Petrochemical 2021 Annual Report
3.7.3 Significant non-equity investments in progress during the Reporting Period
Currency: RMB
Cumulative actual
Whether it is Industry Amount invested
Investme investment amount Sources of Project Disclosure date
Project name fixed asset involved in during the Reporting Disclosure index (if any)
nt method as of the end of the funds progress (if any)
investment the project Period
Reporting Period
Built by http://www.cninfo.com.cn/new/disclosure/detail?plate=s
Brunei Project Petrochemical Self-financing
the Yes 1,169,371,270.11 1,571,666,683.75 1.69% 09/16/2020 zse&orgId=gssz0000703&stockCode=000703&announc
Phase II industry and loans
Company ementId=1208444483&announcementTime=2020-09-16
Fujian Yijin Built by http://www.cninfo.com.cn/new/disclosure/detail?plate=s
Chemical fiber Self-financing
New Functional the Yes 457,738,280.80 1,381,784,299.36 103.00% 08/29/2020 zse&orgId=gssz0000703&stockCode=000703&announc
industry and loans
Fiber Project Company ementId=1208325104&announcementTime=2020-08-29
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Hengyi Petrochemical 2021 Annual Report
Cumulative actual
Whether it is Industry Amount invested
Investme investment amount Sources of Project Disclosure date
Project name fixed asset involved in during the Reporting Disclosure index (if any)
nt method as of the end of the funds progress (if any)
investment the project Period
Reporting Period
Haining New
Material New
Functional Built by http://www.cninfo.com.cn/new/disclosure/detail?plate=s
Chemical fiber Self-financing
Fiber the Yes 1,459,814,800.73 8,072,432,483.58 91.00% 08/29/2020 zse&orgId=gssz0000703&stockCode=000703&announc
industry and loans
Technology Company ementId=1208325105&announcementTime=2020-08-29
Transformation
Project
Suqian Yida
New
Built by http://www.cninfo.com.cn/new/disclosure/detail?plate=s
Environment-fr Chemical fiber Self-financing
the Yes 230,508,324.8 266,484,944.03 7.08% 06/01/2021 zse&orgId=gssz0000703&stockCode=000703&announc
iendly industry and loans
Company ementId=1210132115&announcementTime=2021-06-01
Differentiated
Fiber Project
Total - - - 3,317,432,676.44 11,292,368,410.72 - - - -
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Hengyi Petrochemical 2021 Annual Report
3.7.4 Investment in financial assets
3.7.4.1 Investment in securities
The Company's made no investment in securities in the Reporting Period.
3.7.4.2 Hedging business
Unit: RMB 10,000
Ending
investment
Beginning amount as a Actual gain
investment Ending percentage of or loss
Type of Hedging Start
amount of End date investment the Company's during the
Investment date
hedging amount net assets at Reporting
investment the end of the Period
Reporting
Period
Foreign exchange hedging 107,916 2021/1/2 2022/06/01 0 0.00% 5,728
Commodity hedging 90,491 2021/1/2 2021/12/31 38,729 1.50% 42,345
Total 198,407 - - 38,729 1.50% 48,073
Source of funds for
Self-owned funds
hedging investment
Involvement in lawsuits
N/A
(if applicable)
Date of disclosure of
announcement of the
BOD for approval of 01/23/2021
hedging investment (if
any)
Date of disclosure of
announcement of
shareholders meeting for 02/08/2021
approval of hedging
investment (if any)
Risk analysis and 1. Market risk: When the market changes drastically, the Company may not be able to
description of control fully lock in the price of raw materials or products, thereby resulting in losses. 2.
measures for hedging Liquidity risk: Commodity hedging transactions are ordered within the authority
positions during the specified in the Company's Management System for Commodity Derivatives
Reporting Period Transactions. If the market fluctuates drastically, losses may be caused by forced
(including but not limited liquidation of positions due to lack of time for margin replenishment. 3. Operational
to market risk, liquidity risk: As futures and forward transactions are highly specialized and complex,
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Hengyi Petrochemical 2021 Annual Report
risk, credit risk, unexpected losses may be caused due to defects in information systems or internal
operational risk, and legal controls. 4. Credit risk: When the price fluctuates greatly to the disadvantage of the
risk) counterparty, the counterparty may violate the relevant provisions of the contract and
cancel the contract, resulting in losses to the Company. 5. Legal risk: Due to changes
in relevant legal systems or violations of relevant legal systems by the counterparty,
the contract may not be executed normally, resulting in losses to the Company. Risk
control measures taken by the Company: The BOD of the Company has reviewed and
approved the Management System for Foreign Exchange Derivatives Transactions
and the Management System for Commodity Derivatives Transactions, which
stipulate that the Company engages in hedging investment business with the main
purpose of hedging, and speculation and arbitrage trading are prohibited. The systems
clearly stipulate the principles of the Company's business operations, approval
authority, internal audit process, responsible departments and responsible persons,
information isolation measures, internal risk reporting system and risk handling
procedures, which are in line with the relevant requirements of regulatory authorities
and meet the needs of actual operations. The specified risk control measures are
practical and effective.
Changes in market price
or air value of products Changes in market price or air value of products involved in hedging investment
involved in hedging during the Reporting Period; the analysis of the fair value of hedging should disclose
investment during the the specific methods used and the setting of relevant assumptions and parameters.
Reporting Period; the During the Reporting Period, the current gain and loss from the Company's hedging
analysis of the fair value investment was: RMB 480.73 million. The Company's hedging investment was priced
of hedging should disclose at fair value, and forward foreign exchange was basically determined according to the
the specific methods used price provided by or obtained from banks, the Reuters system and other pricing
and the setting of relevant service agencies. The Company conducted fair value measurement and confirmation
assumptions and every month; the transaction price of futures was the fair price.
parameters
Explanation on whether
No. The Company accounted for the hedging investment carried out in accordance
there is any significant
with the relevant provisions of the Ministry of Finance's Accounting Standards for
change in the accounting
Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments,
policy and specific
Accounting Standards for Business Enterprises No. 24 - Hedging, Accounting
principles of accounting
Standards for Business Enterprises No. 23 - Transfer of Financial Assets, Accounting
for hedging of the
Standards for Business Enterprises No. 37 - Presentation of Financial Instruments and
Company in the Reporting
relevant guidelines to reflect the relevant items of the balance sheet and profit and loss
Period compared with the
statement.
previous Reporting Period
Special opinions of The hedging investment carried out by the Company for the purpose of hedging was
independent directors on closely related to the Company's daily business needs and complied with relevant
the Company's hedging laws and regulations. The Company formulated the Management System for Foreign
investment and risk Exchange Derivatives Transactions and the Management System for Commodity
control Derivatives Transactions, which have strengthened the Company’s risk management
105
Hengyi Petrochemical 2021 Annual Report
and control abilities and improved the Company's ability to withstand market risks,
causing no damage to the interests of the Company and all shareholders.
The Company shall comply with the disclosure requirements for chemical industry specified in
Guidelines No. 3 for Self-Regulation of Listed Companies of Shenzhen Stock Exchange -
Industry Information Disclosure
During the Reporting Period, the Company carried out hedging investment for the purpose of
reasonably avoiding the risk of price fluctuations of raw materials and finished products, reducing
the impact of price fluctuations of raw materials and finished products on the normal operation of the
Company, and ensuring the stable operation and sustainable profitability of the Company. The
commodities involved in the hedging transactions included raw materials and finished products
related to the Company's production and operation.
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Hengyi Petrochemical 2021 Annual Report
3.7.5 Raised funds
3.7.5.1 Use of raised funds
Unit: RMB 10,000
Proportion
Total
of
amount of
Total Cumulative cumulative Amount
raised funds Total
amount of Total amount total amount total amount of raised
Year of with amount of
Mode of Total funds raised of raised of raised of raised Usage and destination of raised funds not funds idle
fund changed raised
fund raising raised funds used funds used funds with funds with yet used for more
raising usage funds not
in this cumulatively changed changed than two
during the yet used
period usage usage in years
Reporting
total funds
Period
raised
As of December 31, 2021, RMB 43.484
Issue of
million was left in the Company's special
shares to
account for raised funds, and is intended
purchase
to be used for intelligent upgrading and
2019 assets and 291,091.12 80.29 288,785.36 0 156,300 53.69% 4,348.4 0
transformation project and differentiated
raise
fiber energy saving and consumption
supporting
reduction upgrading and transformation
funds
project.
Public
As of December 31, 2021, the balance of
issuance of
2020 198,737.74 0 198,737.74 0 0 0.00% 0.17 the Company's special account for raised 0
convertible
funds was RMB 1,700.
corporate
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Hengyi Petrochemical 2021 Annual Report
bonds in
2020
Total 489,828.86 80.29 487,523.1 0 156,300.00 31.91% 4,348.57 0
General description of the use of raised funds
1. As approved by CSRC Permit [2018] No. 1937 issued by the China Securities Regulatory Commission and agreed by the Shenzhen Stock Exchange, the
Company raised a total of RMB 2,949,999,987.00 through non-public issuance of 213,768,115 ordinary shares (A shares) to eligible investors, which was verified by
Ruihua Certified Public Accountants (Special General Partnership). After deducting the broker’s underwriting fees and related issuance expenses, the actual net
amount of funds raised was RMB 2,910,911,218.99. As of December 31, 2020, the Company has used RMB 2,838,559,800 from the funds.
2. As approved by CSRC Permit [2020] No. 522 issued by the China Securities Regulatory Commission and agreed by the Shenzhen Stock Exchange, the
Company publicly issued 20 million convertible corporate bonds to eligible investors, each with a face value of RMB 100. The total issuance amount was RMB 2
billion, the conversion price was RMB 11.50 per share, and the bonds were listed on the Shenzhen Stock Exchange on November 16, 2020. The total amount of funds
raised from the public issuance of convertible corporate bonds was RMB 2 billion. After deducting the paid underwriting and sponsorship fees of RMB 11 million, the
remaining RMB 1,989 million was used for the "1-mtpa Intelligent Differentiated Environmental Functional Fiber Project" implemented by Haining Hengyi New
Materials Co., Ltd.
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Hengyi Petrochemical 2021 Annual Report
3.7.5.2 Projects for committed investment with raised funds
Unit: RMB 10,000
Whet
Whet her
her Amo Benef there
Investme Whet
the unt its is a
nt her
Projects for proje invest Cumulative Date when realiz signifi
Total progress the
committed ct has Adjusted ed investment the project ed cant
committed as of the expec
investment and been total durin amount as reaches its durin chang
investment end of ted
investment chang investment g the of the end of scheduled g the e in
of raised the benef
direction of ed (or amount (1) Repo the period availabilit Repo the
funds period its are
over-raised funds partia rting (2) y date rting feasib
(3)=(2)/( achie
lly Perio Perio ility
1) ved
chang d d of the
ed) projec
t
Projects for committed investment
Brunei Refining
and November $19,3
No 376,562.33 376,562.33 0 377,633.81 100.28% No No
Petrochemical 2019 29.41
Project
500,000 t/a
differentiated
functional fiber No more August 8,865
No 93,500 0 93,647.49 100.16% No No
upgrading and than 93,500 2020 .92
transformation
project
Intelligent
Not Not
upgrading and No more November
No 28,170 80.29 25,621.7 90.95% appli appli No
transformation than 28,170 2020
cable cable
project
Differentiated
fiber energy
saving and
Not Not
consumption No more
No 8,500 0 8,399.34 98.82% May 2019 appli appli No
reduction than 8,500
cable cable
upgrading and
transformation
project
250,000 t/a Yes No more 416.05 0 416.05 100.00% Not Not Not No
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Hengyi Petrochemical 2021 Annual Report
environment-frien than applicable appli appli
dly functional 141,500 cable cable
fiber upgrading
and
transformation
project
Intelligent
Not Not
upgrading and No more Not
Yes 5,283.95 0 3,406.99 64.48% appli appli No
transformation than 20,500 applicable
cable cable
project
1-mtpa Intelligent
No more Partially Not
Environmental 13,68
No than 200,000 0 198,737.74 99.37% available appli No
Functional Fiber 3.88
200,000 in 2020 cable
Project
Subtotal of
No more
committed
- than 712,432.33 80.29 707,863.12 - - - -
investment for the
868,732.33
projects
Investment direction of over-raised funds
N/A
No more
Total - than 712,432.33 80.29 707,863.12 - - - -
868,732.33
Failure to meet
the planned
progress or
generate expected Due to the COVID-19 pandemic and the sharp fluctuations in oil prices, the revenue of some
revenue and projects did not meet expectations
reasons (to be
described by
project)
Description of
significant
Not applicable
changes in project
feasibility
Amount, purpose
and progress of
Not applicable
use of over-raised
funds
Change of
location for Not applicable
implementation
110
Hengyi Petrochemical 2021 Annual Report
of projects for
committed
investment
Adjustment of
implementation
mode of projects Not applicable
for committed
investment
Applicable
th
1. On February 1, 2019, the 24 meeting of the 10th session of the BOD of the Company
reviewed and approved the Proposal on Using Raised Funds to Replace Self-raised Funds and
Intermediary Fees and Related Taxes Pre-paid for Relevant Investment Projects, agreeing to
use RMB 1,147,288,319.73 from the raised funds to replace the self-raised funds and the
intermediary fees and related taxes that had been paid for relevant investment projects, of
which the self-raised funds that had been invested in the projects were RMB 1,141,188,319.73
and the intermediary fees and related taxes paid in advance by the Company with its own funds
were RMB 6,100,000.00. On June 18, 2019, the 30th meeting of the 10th session of the BOD of
the Company reviewed and approved the Proposal on Using Raised Funds to Replace
Self-raised Funds Pre-paid for Relevant Investment Projects, agreeing to use RMB
331,666,503.97 from the raised funds to replace the self-raised funds that had been paid for
Preliminary
relevant investment projects As of December 31, 2021, the Company has replaced the
investment and
self-raised funds invested in advance of RMB 1,473,806,091.82, and the remaining
replacement of
5,148,731.88 has not been replaced.
projects for
2. According to the Proposal on the Company's Public Issue of Convertible Corporate Bonds
committed
reviewed and approved at the 29th Meeting of the 10th Session of the BOD on April 25, 2019
investment
and the 2018 Annual General Meeting of Shareholders on May 9, 2019, it is agreed that if the
Company has invested its own funds in the construction of the above projects first before the
funds raised from the issuance of convertible corporate bonds are in place, the funds can be
replaced in accordance with the procedures prescribed by relevant laws and regulations after
the funds raised are available. As of October 23, 2020, the Company had invested RMB
4,606,157,244.19 in the above-mentioned project with its own funds. After deducting the
supporting fund of RMB 756,000,000.00 raised by the Company on January 30, 2019 through
the non-public issue of RMB ordinary shares to specific objects for the construction of the
1-mtpa Intelligent Environmental Functional Fiber Project, the remaining amount was RMB
3,850,157,244.19. The Company decided to replace its own funds, RMB 1,987,377,358.49,
invested in the project with the raised funds. As of December 31, 2021, the Company has
replaced the self-raised funds invested in advance of RMB 1,987,377,358.49.
Temporary
replenishment of
working capital Not applicable
with idle raised
funds
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Hengyi Petrochemical 2021 Annual Report
Amount and
reasons for the
balance of raised Not applicable
funds in project
implementation
As of December 31, 2021, RMB 43.484 million was left in the Company's special account for
Usage and
raised funds, and is intended to be used for intelligent upgrade and transformation projects,
destination of
differentiated fiber energy-saving and consumption-reducing upgrading and transformation
unused raised
projects, etc. The raised funds of RMB 1,700 temporarily deposited are intended to be used for
funds
the 1-mtpa Intelligent Environmental Functional Fiber Project.
Problems or other
situations in the
use and Not applicable
disclosure of
raised funds
3.7.5.3 Changes of projects for investment with raised funds
During the Reporting Period, there was no change of the projects for investment with raised
funds.
3.8 Sales of major assets and equity
3.8.1 Sales of major assets
□ Applicable √ Not applicable
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Hengyi Petrochemical 2021 Annual Report
3.8.2 Sales of major equity
Unit: RMB 10,000
Net profit
contributed Net profit Whether it is
by the equity contributed implemented
Whether
to the listed by the as planned; if
Impact of Pricing Whether it the equity
Transacti company equity sale Relationship not, explain
Counter Sold Date of the sale on principle is a involved Disclosure
on price from the to the listed with the reasons Disclosure index
party equity sale the of equity connected has been date
(10,000) beginning of company as counterparty and the
Company disposal transaction fully
current a percentage measures the
transferred
period to the of the total Company has
date of sale net profit taken
(10,000)
http://www.cninfo.co
m.cn/new/disclosure/
Hainan Ningbo detail?plate=szse&or
Net assets
Jiashui Hengyi gId=gssz0000703&st
06/30/20 as of Non-related 06/29/202
Trading Industry 21,000 -1,646.94 N/A 0.17% No Yes Yes ockCode=000703&a
21 March 31, party 1
Co., Co., nnouncementId=121
2021
Ltd. Ltd. 0354714&announce
mentTime=2021-06-
29
113
Hengyi Petrochemical 2021 Annual Report
3.9 Analysis of major subsidiaries and JV companies
Major subsidiaries and JV companies with an impact of 10% or more on the net profit of the
Company
Unit: RMB 10,000
Company Type of Registered Operating Operating
Main business Total assets Net assets Net profit
name company capital income profit
Hengyi Refining and USD
Subsidiary 4,053,480.61 849,364.93 3,594,810.02 124,973.37 124,738.48
Brunei petrochemical 1,014,000,000
Zhejiang USD
Subsidiary PTA 1,794,025.97 913,132.86 3,030,842.32 48,477.94 38,267.28
Yisheng 514,447,100
Hainan JV
PTA 458,000 1,145,411.50 481,736.89 1,680,459.55 36,883.35 34,217.72
Yisheng company
Hengyi
Subsidiary DTY 300,000 3,880,542.68 798,783.82 5,428,168.29 91,684.21 91,243.50
Limited
Polyester
Hengyi
Subsidiary flakes, POY, 28,074 293,347.67 95,752.99 381,008.64 11,678.14 10,951.88
Polymer
etc.
Polyester
Hengyi
Subsidiary flakes, POY, 275,725 1,258,795.53 497,835.78 1,320,748.04 33,690.46 34,065.72
High-Tech
etc.
Haining Polyester
New Subsidiary flakes, POY, 328500 961,794.77 335,315.04 792,425.38 33,304.95 24,555.17
Materials etc.
Taicang
Subsidiary POY 77,100 224,019.73 115,414.25 161,437.59 12,778.55 9,853.20
Yifeng
Shuangtu
POY, FDY,
New Subsidiary 60,000 521,900.57 222,568.39 677,866.54 28,618.14 26,316.87
flakes
Materials
Hangzhou FDY, POY,
Subsidiary 100,000 321,948.64 117,673.38 484,792.39 10,798.14 9,476.84
Yijing DTY, flakes
Jiaxing
Subsidiary FDY 300,000 479,621.74 286,260.19 530,117.94 13,446.86 11,718.77
Yipeng
Hong Kong Investment and
Subsidiary 150,950 1,368,852.84 1,042,624.04 788,476.89 80,106.07 80,106.07
Tianyi trade
China
JV
Zheshang Finance 2,126,870 228,672,300 16,688,300 5,447,100 1,493,200 1,291,600
company
Bank
Acquisition and disposal of subsidiaries during the Reporting Period
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Hengyi Petrochemical 2021 Annual Report
Methods of acquiring and
Company name disposing of subsidiaries during
the Reporting Period
Ningbo Shengmao Trading Co., Ltd. Establishment or investment
Haining Hengqi Environmental Protection Technology Co., Ltd. Establishment or investment
Zhejiang Xiaoyi Supply Chain Management Co., Ltd. (Zhejiang
Establishment or investment
Xiaoyi Supply Chain Management Co., Ltd.)
Ningbo Hengyi Industry Co., Ltd. Disposal
Hangzhou Jingxin Supply Chain Management Co., Ltd. Disposal
Haining Yixin Logistics Co., Ltd. Disposal
Description of major subsidiaries and JV companies
3.9.1 Hengyi Brunei
The Company holds 70% of the shares of Hengyi Industries Sdn. Bhd. through Hong Kong Tianyi
International Holding Co., Ltd. The registered capital of Hengyi Brunei is USD1.014 billion, and the
business scope involves petroleum refining and petrochemicals.
3.9.2 Zhejiang Yisheng
The Company holds 70% of the shares of Zhejiang Yisheng Petrochemical Co., Ltd. through
Zhejiang Hengyi Petrochemical Co., Ltd.. Zhejiang Yisheng has a registered capital of
USD514,447,100, with business scope covering: production of chemical products (excluding
chemical products subject to license); manufacture of basic chemical raw materials (excluding
chemical products subject to license, such as hazardous chemicals); manufacture of synthetic fibers;
sales of chemical products (excluding chemical products subject to license); sales of synthetic
materials; sales of synthetic fibers; sales of new membrane materials; sales of petroleum products
(excluding hazardous chemicals); general cargo warehousing services (excluding hazardous
chemicals and other items subject to license and approval); technology services, technology
development, technology consulting, technology exchange, technology transfer, technology
promotion; technology import and export; goods import and export; import and export agency
(except for business subject to approval according to law, other business activities can be carried out
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Hengyi Petrochemical 2021 Annual Report
independently and legally with the business license). The Company currently has three large PTA
Production Lines, with a PTA production capacity of 5mtpa and a PIA production capacity of
300,000 tons.
3.9.3 Hainan Yisheng
The Company holds 50% of the shares of Hainan Yisheng Petrochemical Co., Ltd. through Zhejiang
Hengyi Petrochemical Co., Ltd. Hainan Yisheng has a registered capital of RMB 4.58 billion, with
business scope covering: production, processing, wholesale and retail of purified terephthalic acid,
polyester flakes, polyester bottle flakes, polyester staple fibers, POY yarns, FDY yarns, crude cobalt
oxide and manganese oxide, and chemical fiber raw materials; purchase and sales of paraxylene (PX),
acetic acid, and ethylene glycol; self-supporting and acting as an agent for the import and export of
various goods and technologies; terminal facilities operation, general cargo handling service in the
terminal area, terminal tugboat operation, ship service, fresh water supply for ships, collection of
ship pollutants (including oily sewage, residual oil, tank washing water, domestic sewage and
garbage), and supply of oil containment boom.
3.9.4 Hengyi Limited
The Company directly holds 99.72% of the shares (actually enjoys 100% of the rights) of Zhejiang
Hengyi Petrochemical Co., Ltd. Hengyi Limited has a registered capital of RMB 3 billion. The
business scope: production, processing and sales of chemical fibers and chemical raw materials
(excluding hazardous chemicals); import and export.
3.9.5 Hengyi Polymer
The Company holds 58.90504% of the shares (actually enjoys 60% of the rights) of Zhejiang Hengyi
Polymer Co., Ltd. through Zhejiang Hengyi Petrochemical Co., Ltd. Hengyi Polymer has a
registered capital of RMB 281 million. The business scope covers: production, processing and sales
of polyester flakes, POY yarns, chemical fiber raw materials, textile fabrics, and garments; export of
the company’s own products and technologies; import of raw and auxiliary materials, instruments
and meters, mechanical equipment, spare parts and technologies required for production of the
company (except for commodities and technologies that are restricted by the state and prohibited
from import and export by the state); warehouse management; processing with imported materials;
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Hengyi Petrochemical 2021 Annual Report
three-processing and one compensation business. In May2001, Hengyi Polymer took the lead in
investing in melt direct spinning production lines in China.
3.9.6 Hengyi High-tech
The Company holds 90.67% of the shares of Zhejiang Hengyi High-tech Materials Co., Ltd. through
Zhejiang Hengyi Petrochemical Co., Ltd. The registered capital of Hengyi High-tech is RMB
2,757.25 million, and the business scope covers: production, processing and sales of polyester flakes,
POY yarns, FDY yarns, and chemical fiber raw materials; export of the company’s own products and
technologies and import of self-use products and technologies (except for items that are restricted by
the state and prohibited from import and export by the state); all other legal business not subject to
approval.
3.9.7 Haining New Materials
The Company holds 100% of the shares of Haining Hengyi New Materials Co., Ltd. through
Zhejiang Hengyi Petrochemical Co., Ltd., and the registered capital of Haining New Materials is
RMB 3,285 million. Haining New Materials’ business scope is: manufacture, processing, and
wholesale of differentiated chemical fibers, polyester flakes, POY yarns, FDY yarns, and chemical
fiber raw materials; export of the company’s own products and technologies; import of raw and
auxiliary materials, mechanical equipment, and spare parts required for production of the company;
warehouse management.
3.9.8 Taicang Yifeng
The Company holds 100% of the shares of Taicang Yifeng Chemical Fiber Co., Ltd. The registered
capital of Taicang Yifeng is RMB 771 million. The business scope: production, processing and sales
of differentiated functional chemical fibers; distribution of textile raw materials and products,
chemical raw materials and products; self-supporting and acting as an agent for the import and
export of various goods and technologies (except for commodities and technologies that are
restricted by the state or prohibited from import and export).
3.9.9 Shuangtu New Materials
The Company holds 100% of the shares of Zhejiang Shuangtu New Materials Co., Ltd., and the
registered capital of Shuangtu New Materials is RMB 600 million. The business scope: general
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Hengyi Petrochemical 2021 Annual Report
business: production of chemical products (excluding chemical products subject to license); sales of
chemical products (excluding chemical products subject to license); sales of synthetic fibers;
synthetic fiber manufacturing; sales of synthetic materials; manufacture of synthetic materials
(excluding hazardous chemicals) (except for business subject to approval according to law, other
business activities can be carried out independently and legally with the business license). Licensed
business: import and export of goods; import and export of technologies (Business activities subject
to approval according to law can only be carried out after approved by relevant departments. Specific
business activities are subject to the approval results). The main products are FDY, POY and fiber
grade polyester flakes.
3.9.10 Hangzhou Yijing
The Company holds 100% of the shares of Hangzhou Yijing Chemical Fiber Co., Ltd. through
Zhejiang Hengyi Petrochemical Co., Ltd., and Hangzhou Yijing has a registered capital of RMB one
billion. The business scope: general business: production of chemical products (excluding chemical
products subject to license); sales of chemical products (excluding chemical products subject to
license); sales of synthetic fibers; manufacture of synthetic fibers; sales of synthetic materials;
manufacture of synthetic materials (excluding hazardous chemicals); non-residential real estate
leasing (except for business subject to approval according to law, other business activities can be
carried out independently and legally with the business license). Licensed business: import and
export of technologies; import and export of goods. The main products include FDY, POY and DTY.
3.9.11 Jiaxing Yipe ng
The Company holds 100% of the shares of Jiaxing Yipeng Chemical Fiber Co., Ltd., which has a
registered capital of RMB 3 billion. The business scope: manufacture, processing and sales of
polyester flakes and FDY yarns; sales of chemical fiber raw materials; import and export of goods.
(hazardous chemicals excluded). The main products are FDY and fiber grade polyester flakes.
3.9.12 Hong Kong Tianyi
The Company holds 100% of the shares of Hong Kong Tianyi International Holding Co., Ltd.
through Zhejiang Hengyi Petrochemical Co., Ltd. The registered capital of Hong Kong Tianyi is
USD 1,509.5 million, and the business scope involves investment and trading.
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Hengyi Petrochemical 2021 Annual Report
3.9.13 China Zheshang Bank
The Company holds a total of 748,069,283 shares of China Zheshang Bank Co., Ltd. through its
subsidiary Zhejiang Hengyi Petrochemical Co., Ltd. and its indirect subsidiary Zhejiang Hengyi
High-tech Materials Co., Ltd., accounting for 3.52% of the total share capital of China Zheshang
Bank. The business cope: financial business (For details, please refer to the approval of the China
Banking and Insurance Regulatory Commission). Established in 2004, the company is one of the 12
national joint-stock commercial banks approved by the China Banking and Insurance Regulatory
Commission. China Zheshang Bank was listed on the main board of the Hong Kong Stock Exchange
on March 30, 2016 (stock code: 02016.HK) and on the Shanghai Stock E xchange on November 26,
2019 (stock code: 601916.SH).
3.10 Information on structured entities controlled by the Company
□ Applicable √ Not applicable
3.11 Prospects for the future developme nt of the Company
In 2022, the Company will continue to closely focus on the strategic development policy of
"consolidating, highlighting and enhancing the competitiveness of our main business", realize
resource sharing, systematically build upstream and downstream synergy, consolidate integration
advantages, enhance domestic and overseas linkage, improve the "polyester + polyamide"-driven
industry chain, deepen the "petrochemical +" multi-layered and multi-dimensional industrial layout,
enhance the overall competitiveness, and build the Company into one of the leading international
chemical groups.
3.11.1 Future business plan
The Company will strictly adhere to the two bottom lines of legal compliance and safe production to
maintain stable production and operation; intensify scientific research and innovation efforts, and
strengthen the continuous contribution of R&D innovation to the Company's production, operation
and development; promote intelligent manufacturing, continuously increase investment in industrial
intelligent technology, and implement lean production; improve marketing service capabilities to
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Hengyi Petrochemical 2021 Annual Report
deeply bind customers; take multiple initiatives to improve the talent training and incentive
mechanism.
3.11.1.1 Based on the Company's strategic development plan, we will steadily maintain
the existing production capacity and actively promote the construction of strategic projects
According to the requirements of high-quality development in the new era and the new pattern of
industrial development, the Company will always focus on enhancing our industrial competitiveness,
resolutely implement the strategic plan, push forward the construction and commissioning of new
projects in an orderly manner, and gradually improved the Company's unique industrial layout of
"refinery, polyester and polyamide". In 2022, under the influence of geopolitics, the export of
product oil products from Russia will be frustrated, and the European and American buyers will turn
to the Middle East and squeeze the product oil resources originally supplied to the Asia-Pacific
market. The significant decline in the export of product oil products from the Middle East to the
Asia-Pacific market will aggravate the tight supply in Southeast Asia, and the product oil market in
Southeast Asia will maintain the booming trend. The Company will seize the current window period
when the epidemic prevention and control is released in Southeast Asia and the domestic economy
continues to recover to maintain safe and steady production and operation of the first phase of the
Brunei Project and domestic polyester business. In addition, to further enrich product range and
optimize the product portfolio, the Company will continue to promote the construction of major
strategic projects such as Phase II of the Brunei Project, the 1.2-mtpa Caprolactam-Polyamide
Integration and Supporting Project, and the Suqian Yida’s 1.1-mtpa New-type Differentiated
Environmental Fiber Project.
Phase II of the Brunei Project has received a preliminary approval letter from the Brunei government.
According to the project planning, embankment reclamation and other works are being carried out in
an orderly manner. The project will help the Company further reduce the production costs, ensure the
stability of raw material supply, improve upstream supporting production capacity, strengthen the
Company's edge in coordinated operation of upstream and downstream industries, optimize the
Company's product portfolio, increase the added value of products, enhance the Company's overall
profitability, build a core circle along the Belt and Road for development in ASEAN countries, and
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Hengyi Petrochemical 2021 Annual Report
gradually become a leading petrochemical enterprise in the world in terms of comprehensive
strength.
The products of the "1.2-mtpa Caprolactam-Polyamide Integration and Supporting Project" involve
high-end nylon fibers, engineering plastics and films, covering a variety of application fields. The
most advanced gas-phase rearrangement technology developed independently by the Company is
adopted. With atomic economy reaching 100% and no by-product ammonium sulfate, it can be
considered a green, low-carbon, clean and efficient technology. The current advanced unit
technology in the industry is used to establish the whole preparation process of the project. All
production elements and energy sources are fully equipped for the whole process. The energy
consumption and material consumption of the products are greatly reduced, effectively lowering the
production costs of raw materials such as ammonia, liquid ammonia, hydrogen peroxide,
cyclohexanone. It can help the Company to achieve precise cost control, smooth out the price
fluctuations caused by the upstream raw material end, and further realize cost reduction and
efficiency increase. After the project is put into operation, it can effectively extend the downstream
industry chain of aromatic hydrocarbons, optimize the product portfolio, enhance the Company's
competitiveness, solidify the leading position in the industry, increase the overall profitability, and
further improve the Company's integrated strategic industrial layout.
3.11.1.2 We will increase investment in R&D and actively promote the transformation of
new technologies and new materials
The Company has always been committed to the R&D of green chemicals and advanced materials,
while attaching great importance to scientific research innovation and transformation of
achievements. In 2022, the Company will continue to increase investment in software and hardware
for technological innovation and the introduction and training of high-level talents, focus on the
R&D and application of high-end products in the field of "polyester + polyamide”, promote the
transformation of technological achievements, improve the contribution of scientific research to the
core competitiveness of the main business, strive to create more achievements in key technologies,
equipment innovation and R&D of high value-added differentiated products, accelerate the
transformation of scientific research results and the launch of new products, and build a world-class
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Hengyi Petrochemical 2021 Annual Report
R&D base for key common technologies and high-end chemical products for refining and chemical
integration to become a technology leader in the industry..
Meanwhile, as a leading enterprise in China's chemical fiber industry, the Company will actively
comply with the national requirements of "carbon peaking and carbon neutrality", integrate the
concept of green development into specific products, advance the development of new products such
as biodegradable polyester, bio-based polyester and foamed polyester in an orderly manner,
synchronize the optimization of industrialization projects and the R&D of pilot and key lab test
projects, and strengthen the R&D of new green products to play a good leading and demonstration
role for the healthy and sustainable development of chemical fiber industry.
3.11.1.3 We will strengthen the integration of data and intelligence, and continue to
improve the capacity of the integrated industrial digital platform
The Company will continue to uphold the concept of transformation from "manufacturing" to
"intelligent manufacturing", further implement the digital transformation strategy, enhance the
capacity of the integrated industrial digital platform, and deeply empower the production and sales
sides and other departments. We will improve intelligent production management and control
capabilities through the operation of digital factories, and make innovation in customer service
ecosystems through a chemical fiber supply chain platform that integrates micro-mall, supply chain
finance, and warehousing and logistics.
In 2022, the Company plans to promote the construction of the second phase of the "Hengyi Brain"
project to realize intelligent production control and deeply explore the value of operating da ta; push
forward the implementation of a number of high-quality software system projects and hardware
upgrades and iterations to ensure the stability of the operating system.
3.11.1.4 We will improve the talent system and provide a guarantee of talent supply for
the Company’s development
The Company will continue to deepen the organizational reform in order to build a young,
professional and international elite team. We will strengthen the construction of talent echelon,
establish leadership of middle and high-level managers, reserve, train and upgrade the middle-level
and grass-roots staff, promote stable front-line work on a regular basis, continuously increase
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Hengyi Petrochemical 2021 Annual Report
employees' sense of belonging by improving relevant systems, increasing policy transparency,
reforming compensation and benefits for front-line personnel, and enhancing the atmosphere at the
grassroots level, promote localization of talent training for the Brunei project, and extend talent
selection and training from basic to management talents.
3.11.2 Possible risks and countermeasures of the Company
3.11.2.1 Macroeconomic risks
The Company is engaged in the production and sales of petrochemical and polyester fi ber products.
The petrochemical and polyester fiber industry is closely related to the development of the world
economy and China's economy, and people's livelihood. The product prices and sales are affected by
macroeconomic fluctuations and changes in supply and demand. With the acceleration of economic
globalization and integration, national macro-control and cyclical fluctuations of the world economy
will have an impact on the development of the industry. If the global economic growth slows down
or declines, it will directly have a direct impact on the Company's business, operating results and
financial position end demand.
3.11.2.2 Safety and environment-friendly production risks
As the awareness of eco-friendliness increases and the government's environment-friendly
requirements become stricter, the Company strictly implements the Production Safety Law of the
People's Republic of China, Eco-friendliness Law of the People's Republic of China and other
relevant laws and regulations to ensure safe and environmentally friendly production, and earnestly
fulfills our social responsibility. Since the operation of the main production entity, no major safety
and eco-friendliness incidents have occurred. With the expansion of the Company's production scale
and the extension of the industry chain, preventing safety and eco-friendliness accidents has become
the focus of the Company's operation and management.
In order to reduce the safety and eco-friendliness production risks in the industry, the Company
strengthens the construction of the organizational structure and institutional system to further
implement the safety and eco-friendliness production responsibility system. According to the
arrangement of China’s 1, 2 and 3 levels of safety standardization, the Company actively carries out
the safety standardization acceptance work, and strives to build a safety standard management
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Hengyi Petrochemical 2021 Annual Report
system. The Company will implement the dual-prevention work mechanism combining safety risk
classification and control and hidden danger investigation and management, strengthen safety
training, increase safety investment, practice the strategy of promoting safety based on science and
technology, promptly remove safety and eco-friendliness hazards, and eliminate all possibilities of
major accidents.
3.11.2.3 Risk of significant fluctuations of crude oil price
The Company is a leader in the field of oil refining-chemical-chemical fiber in China. More than 80%
of the cost in the industry chain in which we operate is determined by upstream raw materials, and
the fluctuation of crude oil price will affect the prices of various products in the industry chain,
thereby exacerbating the uncertainty in raw material costs and operating costs, and resulting in the
accompanying increase in sales risk and fluctuations in the Company’s income. In 2022, the
Company will continue to optimize the inventory strategy to reduce the adverse impact of product
price fluctuations in the industry chain on the Company’s operations as a result of crude oil price
fluctuations.
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Hengyi Petrochemical 2021 Annual Report
3.12 Reception of research, communication, interview and other activities during the Reporting Period
Main content of
Reception Visitor
Time Location Visitor communication and Index of basic facts of research
method type
information provided
171 institutions including Company operation and Record Form of Hengyi Petrochemical’s
The Company’s Telephone
02/24/2021 Institution CITIC Securities and industry development Investor Relation Activities on February 24, 2021
meeting room communication
Xitai Capital trend on SZSE: 1209300796.PDF (cninfo.com.cn)
Company operation and Record Form of Hengyi Petrochemical’s Investor
The Company’s 1 media, Financial
03/10/2021 Field research Institution industry development Relation Activities on March 10, 2021 on SZSE:
meeting room Associated Press
trend 1209377517.PDF (cninfo.com.cn)
93 institutions including Company operation and Record Form of Hengyi Petrochemical’s
The Company’s Telephone
04/20/2021 Institution Shenwan Hongyuan and industry development Investor Relation Activities on April 20, 2021 on
meeting room communication
Bosera Funds trend SZSE: 1209767286.PDF (cninfo.com.cn)
Record Form of Hengyi Petrochemical’s
61 institutions including Company operation and
The Company’s Telephone Investor Relation Activities on August 25, 2021
08/25/2021 Institution Sealand Securities and industry development
meeting room communication on SZSE: 1210871293.PDF (cninfo.com.cn)
Hengqin Life trend
1210871294.PDF (cninfo.com.cn)
Record Form of Hengyi Petrochemical’s
The Company’s Telephone 1 media, China Business
08/25/2021 Institution Company operation Investor Relation Activities on August 25, 2021
meeting room communication Journal
on SZSE: 1210871295.PDF (cninfo.com.cn)
p5w.net Investors who
"Investor Institution participated in the Company operation and Record Form of Hengyi Petrochemical’s
09/01/2021 Relations Other s and Company's 2021 industry development Investor Relation Activities on September 1, 2021
Interactive individuals semi-annual results trend on SZSE: 1210968327.PDF (cninfo.com.cn)
Platform" briefing
09/16/2021 The Company’s Telephone Institution Five institutions including Company operation and Record Form of Hengyi Petrochemical’s
125
Hengyi Petrochemical 2021 Annual Report
Main content of
Reception Visitor
Time Location Visitor communication and Index of basic facts of research
method type
information provided
meeting room communication Changjiang Securities and industry development Investor Relation Activities on September 16,
Ping An Asset trend 2021 on SZSE: 1211093496.PDF (cninfo.com.cn)
Management
71 institutions including Company operation and Record Form of Hengyi Petrochemical’s
The Company’s Telephone
10/28/2021 Institution CICC and Taiping industry development Investor Relation Activities on October 28, 2021
meeting room communication
Pension trend on SZSE: 1211431412.PDF (cninfo.com.cn)
Record Form of Hengyi Petrochemical’s
The Company’s Telephone
11/22/2021 Institution 1 media, zghy.org.cn Company operation Investor Relation Activities on November 22,
meeting room communication
2021 on SZSE: 1211672291.PDF (cninfo.com.cn)
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Hengyi Petrochemical 2021 Annual Report
Section 4 Corporate Governance
4.1 Basic status of corporate governance
During the Reporting Period, the Company strictly complied with the Company Law, Securities Law,
the Code of Corporate Governance for Listed Companies in China, Rules Governing the Listing of
Shares on Shenzhen Stock Exchange, and Guidelines of the Shenzhen Stock Exchange for
Standardized Operation of Companies Listed on the Main Board and other relevant laws and
regulations. Based on the actual situation of the Company, we continuously improved and enhanced
the standardized operation of corporate governance, and established a sound internal management
and control system to regulate the operation of the Company. The Company's internal control system
has been increasingly improved, and the standardization level of governance has been continuously
increased.
4.1.1 Shareholders and shareholders' general meetings
During the Reporting Period, the Company strictly complied with laws and regulations, and
convened and held shareholders' general meetings in a standardized manner. The convening and
holding procedures of the shareholders' general meetings, the qualifications of the persons attending
the shareholders' general meetings, the voting procedures and voting results of the shareholders'
general meetings all complied with the Company Law, Rules for the Shareholders' Meetings of
Listed Companies and other laws and regulations and the Company's Rules of Procedure for the
General Meeting of Shareholders, which ensured that all shareholders, especially minority
shareholders, could fully exercise their rights. The Company's shareholders' general meetings during
the Reporting Period were convened by the BOD, and lawyers were engaged to witness the meetings
on site, ensuring the legality of the meeting convening, holding and voting procedures, and
safeguarding the legitimate equities of the Company and shareholders.
4.1.2 The Company and the controlling shareholder
The Company is completely independent from the controlling shareholder and its subsidiaries in
terms of business, personnel, assets, organization, and finance. The Company has independent and
complete business and the ability to operate independently. The Company's BOD, BOS and internal
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Hengyi Petrochemical 2021 Annual Report
organizations operate independently. The controlling shareholder of the Company can strictly
regulate its behavior. Major decisions of the Company were made by the shareholders’ general
meetings in accordance with the law. The controlling shareholder exercised its shareholder rights in
accordance with the law, and did not directly or indirectly interfere with the decision-making and
operating activities of the Company beyond the shareholders’ general meetings of the Company.
4.1.3 Directors and the BOD
The Company elected directors in strict accordance with the selection and appointment procedures
stipulated in the Company Law and the Articles of Association of the Company. The number and
composition of the BOD of the Company met the requirements of laws and regulations. All directors
of the Company could carry out their work in accordance with the Rules of Procedure of the BOD,
attend the board meetings and shareholders' general meetings on time with a conscientious and
responsible attitude, faithfully perform their duties in the interests of the Company and all
shareholders, actively participate in training on relevant knowledge, study relevant laws and
regulations, and promote the standardized operation and scientific decision-making of the BOD. The
independent directors of the Company could perform their duties independently in accordance with
the corresponding rules and regulations, without being influenced by the actual controller of the
Company or other units or persons that have an interest in the Company.
During the Reporting Period, the procedures of the meetings of the BOD of the Company were in
compliance with relevant regulations, the minutes of the meeting were complete and true, and the
disclosure of relevant information at the meetings was timely, accurate and adequate. The BOD of
the Company set up four special committees, namely the Remuneration Assessment and Nomination
Committee, the Risk Control Committee, the Audit Committee and the Strategy and Investment
Committee, which have played an important role in promoting the standardized operation and
healthy development of the Company.
4.1.4 Supervisors and the Board of Supervisors
The Board of Supervisors (BOS) of the Company consists of three supervisors, one of whom is an
employee representative. The number and personnel of the Company's BOS met the requirements of
relevant laws and regulations and the Company's Articles of Association. All the supervisors of the
Company could perform their duties conscientiously in accordance with the requirements of the
Company's Rules of Procedure of the BOS and other relevant regulations, attend the shareholders’
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Hengyi Petrochemical 2021 Annual Report
general meeting, attend the meetings of the BOD as nonvoting delegates, convene the meetings of
the BOS according to the prescribed procedures, diligently and conscientiously supervise the legality
and compliance of the Company's financial situation, directors and senior management, and
safeguard the legitimate equities of the Company and its shareholders.
4.1.5 Stakeholders
The Company fully respected and safeguarded the legitimate equities of relevant stakeholders to
achieve a win-win situation for customers, suppliers, employees, shareholders and other stake holders
and jointly promote the Company's sustainable and steady development.
4.1.6 Information disclosure and transparency
The Company strictly followed the requirements of relevant laws and regulations as well as the
Information Disclosure Management System and the Investor Relations Management System to
conscientiously fulfill our information disclosure obligations, disclose the Company's operation and
management and matters that have significant impact on the Company in a true, accurate, complete
and timely manner, coordinate the relationship between the Company and investors, receive
investors’ visits, and answer investors’ inquiries. The Company's designated newspapers and
websites such as STCN, cs.com.cn, Shanghai Securities News, Securities Daily and CNINFO
(http://www.cninfo.com.cn) for the Company's information disclosure.
4.1.7 Performance evaluation and incentive and restraint mechanisms
The Company is gradually improving and establishing fair and transparent performance evaluation
standards and incentive and restraint mechanisms for directors, supervisors and senior management.
The appointment of senior management of the Company was open and transparent, in line with laws
and regulations.
Whether there is any material difference between the actual situation of corporate governance
of the Company and the laws, administrative regulations and the rules on the governance of
listed companies issued by the China Securities Regulatory Commission
□ Applicable √ Not applicable
There is no material difference between the actual situation of corporate governance of the Company
and laws, administrative regulations and the rules on the governance of listed companies issued by
the China Securities Regulatory Commission.
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Hengyi Petrochemical 2021 Annual Report
4.2 Independence of the Company in guaranteeing the Company's assets, personnel, finance,
organization, and business relative to the controlling shareholder and actual controller
The Company carried out operations in strict accordance with the Company Law, Articles of
Association and other laws, regulations and rules, established a sound corporate governance structure
of the Company, and maintained independent from the controlling shareholder in terms of business,
personnel, assets, organization, and finance. The Company has an independent and complete
business system and the ability to operate independently.
4.2.1 Business: The Company has an independent and complete supply, R&D, production and
sales system, has the ability to operate independe ntly in the market, conduct business, accounting
and decision-making, assume responsibilities and risks independently, and does not rely on the
controlling shareholder or other any related parties.
4.2.2 Personnel: The Company has formed a complete system for labor, personnel and salary
management, and an independent human resources management department to manage labor,
personnel and salary independently of the controlling shareholder. The Company has an independent
workforce. The Company's directors, supervisors and senior management are legally elected in
accordance with the Company Law, Articles of Association and other relevant laws, regulations and
rules. The Company's senior executives all work in the Company and receive remuneration, and do
not hold any positions other than directors and supervisors in the controlling shareholder and its
subsidiaries.
4.2.3 Assets: The Company has a clear property relationship with the controlling shareholder, and
independently owns complete legal person assets, production and supporting facilities, land, plant,
machinery and equipment related to production and operation, as well as ownership and right to use
of trademarks, patents and non-patented technologies. The Company has full control over all assets,
and its assets and funds are not occupied by the controlling shareholder to the detriment of the
interests of the Company.
4.2.4 Organization: The Company established a sound organizational system to meets its own
production and operation needs. The functional departments operate independently and smoothly,
and there is no subordination relationship between the controlling shareholder and the functional
departments.
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4.2.5 Finance: The Company has an independent financial and accounting department equipped
with full-time financial personnel. The Company established an independent accounting system and
a standardized financial management system, and financial decisions were made independently. The
Company opened an independent bank account to independently make ta x declarations and perform
tax obligations in accordance with the law. There is no shared bank account or mixed tax payment
with the controlling shareholder.
4.3 Horizontal Competition
□ Applicable √ Not applicable
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Hengyi Petrochemical 2021 Annual Report
4.4 Information on the annual general meeting and extraordinary general meetings of shareholders held during the Reporting Period
4.4.1 The general meeting of shareholders held during the Reporting Period
Type of Percentage Date of Disclosure
Session of meeting Resolutions
meeting of investors meeting date
1. Reviewed and approved the Proposal on the Estimated Amount of Daily Connected
Transactions in 2021;
2. Reviewed and approved the Proposal on Determining the Company's Guarantee to its
Controlled Subsidiaries and Mutual Insurance Amount between Controlled Subsidiaries in 2021";
3. Reviewed and approved the Proposal on Carrying out Foreign Exchange Hedging Business in
st Extraordinary
The 1 Extraordinary 2021;
general
General Meeting of 56.41% 02/08/2021 02/09/2021 4. Reviewed and approved the Proposal on Carrying out Commodity Hedging Business in 2021;
meeting of
Shareholders in 2021 5. Reviewed and approved the Proposal on the Provision of Financial Support to the Company by
shareholders
the Controlling Shareholder and Connected Transactions;
6. Reviewed and approved the Proposal on Purchasing Liability Insurance for the Company's
Directors, Supervisors and Senior Management;
7. Reviewed and approved the Proposal on Joint Investment and Establishment of a Company
with Related Parties and Related Party Transactions
1. Reviewed and approved the Proposal on “The Fourth Employee Stock Ownership Plan of
Hengyi Petrochemical Co., Ltd. (Draft)” and its Summary;
The 2nd Extraordinary
2. Reviewed and approved the Proposal on Requesting the General Meeting of Shareholders to
Extraordinary general
1.89% 04/20/2021 04/21/2021 Authorize the BOD to Handle Matters Related to the Company's Fourth Employee Stock Ownership
General Meeting of meeting of
Plan;
Shareholders in 2021 shareholders
3. Reviewed and approved the Proposal on the “Management Measures for the Fourth Employee
Stock Ownership Plan of Hengyi Petrochemical Co., Ltd."
2020 Annual General Annual 51.09% 05/11/2021 05/12/2020 1. Reviewed and approved the Proposal on the "Annual Report 2020" and its Summary;
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Hengyi Petrochemical 2021 Annual Report
Type of Percentage Date of Disclosure
Session of meeting Resolutions
meeting of investors meeting date
Meeting of general 2. Reviewed and approved the Work Report of the BOD for FY 2020;
Shareholders meeting of 3. Reviewed and approved the Work Report of the BOS for FY 2020;
shareholders 4. Reviewed and approved the Report on the Financial Accounts for FY 2020;
5. Reviewed and approved the Proposal on Profit Distribution of the Company for FY 2020;
6. Reviewed and approved the Self-Evaluation of Internal Control for FY 2020;
7. Reviewed and approved the Proposal on the Annual Deposit and Use of Raised Funds in 2020;
8. Reviewed and approved the Proposal on the Appointment of Accounting Firm;
9. Reviewed and approved the Proposal on Achievement of Performance Commitment and
Performance Compensation Plan in 2020 Regarding the Issuance of Shares for Purchase of Assets
and Related Party Transactions;
10. Reviewed and approved the Proposal on Requesting the General Meeting of Shareholders to
Authorize the Company's BOD to Fully Handle Matters Related to Share Repurchase and
Cancellation;
11. Reviewed and approved the Proposal on Addition of Daily Related Party Transactions for 2021;
12. Reviewed and approved the Proposal on Amending Part of the “Articles of Association of the
Company"
1. Reviewed and approved the Proposal on the Company's Compliance with the Conditions for
Public Issuance of Convertible Corporate Bonds;
2. Reviewed and approved the Proposal on the Company's Public Issue of Convertible Corporate
The 3rd Extraordinary
Bonds;
Extraordinary general
43.51% 06/16/2021 06/16/2021 3. Reviewed and approved the Proposal on the "Public Issuance of Convertible Corporate Bonds
General Meeting of meeting of
by Hengyi Petrochemical Co., Ltd.";
Shareholders in 2021 shareholders
4. Reviewed and approved the Proposal on Preparation of the Report on the Use of the Previous
Raised Funds by the Company;
5. Reviewed and approved the Proposal on the “Feasibility Analysis Report on the Use of Funds
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Hengyi Petrochemical 2021 Annual Report
Type of Percentage Date of Disclosure
Session of meeting Resolutions
meeting of investors meeting date
Raised From Public Issue of Convertible Corporate Bonds by Hengyi Petrochemical Co., Ltd.”;
6. Reviewed and approved the Proposal on the Dilution of Immediate Return From Public Issue of
Convertible Bonds, Measures to Filling and Commitment of Relevant Subjects;
7. Reviewed and approved the Proposal on the Company's Dividend Return Plan for Shareholders
for the Next Three Years (2021-2023)";
8. Reviewed and approved the Proposal on Formulating the “Rules for the Meeting of Convertible
Bondholders of Hengyi Petrochemical Co., Ltd.”;
9. Reviewed and approved the Proposal on Requesting the General Meeting of Shareholders to
Authorize the BOD to Handle the Public Issue of Convertible Corporate Bonds
Extraordinary
The 4th Extraordinary
general 1. Reviewed and approved the Proposal on Providing Affiliated Entrusted Loans to a JV
General Meeting of 39.45% 11/12/2021 11/13/2021
meeting of Company-Yisheng New Materials"
Shareholders in 2021
shareholders
1. Reviewed and approved the Proposal on Related Party Transactions for the Capital Increase of
Extraordinary Zhejiang Yisheng New Materials Co., Ltd.;
The 5th Extraordinary
general 2. Reviewed and approved the Proposal on Related PartyTransactions for the Capital Increase of
General Meeting of 52.90% 12/24/2021 12/25/2021
meeting of Hainan Yisheng Petrochemical Co., Ltd.;
Shareholders in 2021
shareholders 3. Reviewed and approved the Proposal on Adding the Estimated Amount of Daily Connected
Transactions in 2021;
4.4.2 The preference shareholders whose voting rights have been restored request the convening of an extraordinary general meeting
□ Applicable √ Not applicable
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Hengyi Petrochemical 2021 Annual Report
4.5 Directors, supervisors and senior management
4.5.1 Basic information
Number of Number of Increase Decrease Number of
Reasons for
shares held at restricted of shares of shares Other shares held
Employm Start date of End date of Stock increase or
Name Title Gender Age the beginning shares in current in current changes at the end of
ent status term term options decrease of
of the period granted period period (shares) the period
shares
(shares) (shares) (shares) (shares) (shares)
President and
Qiu Yibo Current Male 35 05/15/2015 09/13/2023 1,365,000 1,365,000
CEO
Fang
Vice President Current Male 58 05/16/2011 09/13/2023 4,777,500 4,777,500
Xianshui
Ni Defeng Director Current Male 44 08/25/2017 09/13/2023 6,051,500 6,051,500
Lou Director, Vice
Current Male 60 09/14/2020 09/13/2023 0 0
Jianchang President
Director,
Mao Ying Chief Current Female 41 09/14/2020 09/13/2023 0 0
Financial
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Hengyi Petrochemical 2021 Annual Report
Number of Number of Increase Decrease Number of
Reasons for
shares held at restricted of shares of shares Other shares held
Employm Start date of End date of Stock increase or
Name Title Gender Age the beginning shares in current in current changes at the end of
ent status term term options decrease of
of the period granted period period (shares) the period
shares
(shares) (shares) (shares) (shares) (shares)
Officer, Vice
President
Director, Vice
Wu Zhong Current Male 33 09/14/2020 09/13/2023 109,200 109,200
President
Chen Independent
Current Male 57 08/25/2017 09/13/2023 0 0
Sanlian Director
Yang Independent
Current Male 65 08/25/2017 09/13/2023 0 0
Bozhang Director
Yang Independent
Current Male 58 08/25/2017 09/13/2023 0 0
Liuyong Director
Wang Executive
Current Male 52 05/16/2011 09/13/2023 5,778,500 5,778,500
Songlin Vice President
Chen Vice President Current Male 55 08/25/2017 09/13/2023 3,640,000 3,640,000
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Hengyi Petrochemical 2021 Annual Report
Number of Number of Increase Decrease Number of
Reasons for
shares held at restricted of shares of shares Other shares held
Employm Start date of End date of Stock increase or
Name Title Gender Age the beginning shares in current in current changes at the end of
ent status term term options decrease of
of the period granted period period (shares) the period
shares
(shares) (shares) (shares) (shares) (shares)
Liancai
Zhao
Vice President Current Male 37 09/15/2020 09/13/2023 327,600 327,600
Donghua
Zheng Secretary of
Current Male 43 08/28/2017 09/13/2023 2,912,000 2,912,000
Xingang the Board
Chairman of
Li Yugang Current Male 45 09/15/2020 09/13/2023 218,400 218,400
the BOS
Jin
Supervisor Current Female 36 09/14/2020 09/13/2023 109,200 109,200
Danwen
Ni Jinmei Supervisor Current Female 47 08/28/2020 09/13/2023 273,000 273,000
Total - - - - - - 25,561,900 25,561,900 -
Whether there is any loss of office of directors, supervisors or dismissal of the senior management during the Reporting Period
□ Yes √ No
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Hengyi Petrochemical 2021 Annual Report
Changes in directors, supervisors and senior management of the Company
□ Applicable √ Not applicable
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Hengyi Petrochemical 2021 Annual Report
4.5.2 Employment status
Professional background, main work experience and main responsibilities of the current
directors, supervisors and senior management of the Company
4.5.2.1 Directors
Qiu Yibo, male, born in December 1987, is a Chinese national with a bachelor degree and used to
work as Manager of Investment Management Department of Sinopec Chemical Sales Co., Ltd. East
China Branch and Hengyi Petrochemical Co., Ltd. He is currently President and CEO of Hengyi
Petrochemical Co., Ltd., and concurrently serves as Director of Zhejiang Hengyi Group Co., Ltd.,
Executive Director of Suqian Yida New Material Co., Ltd., Executive Director of Zhejiang Yizhi
Information Technology Co., Ltd., President of Fujian Yijin Chemical Fiber Co., Ltd., Vice President
of Zhejiang Hengyi Polyamide Co., Ltd., Director of Zhejiang Baling Hengyi Caprolactam Co., Ltd.,
Director of Dongzhan Shipping Co., Ltd., Executive Director of Ningbo Jinhou Industrial Investment
Co., Ltd., Director of Zhejiang Xianfeng Data Technology Co., Ltd., Executive Director of Zhejiang
Hengyi Hanlin Enterprise Management Co., Ltd. and Executive Director of Hangzhou Yibo
Investment Management Co., Ltd.
Fang Xianshui, male, born in March 1964, is a Chinese senior economist with a bachelor degree and
has more than 30 years of production management experience in chemical fiber industry. He used to
work as General Manager of Hangzhou Hengyi Industrial Corporation, General Manager of
Hangzhou Hengyi Chemical Fiber Co., Ltd., and General Manager of Zhejiang Hengyi Group Co.,
Ltd. He is currently Vice President of Hengyi Petrochemical Co., Ltd., and concurrently serves as
Director of Zhejiang Hengyi Group Co., Ltd., Executive Director and CEO of Zhejiang Hengyi
Petrochemical Co., Ltd., President of Zhejiang Hengyi Polymer Co., Ltd., President of Zhejiang
Yisheng Petrochemical Co., Ltd., President of Zhejiang Hengyi High-tech Materials Co., Ltd.,
Director of Zhejiang Baling Hengyi Caprolactam Co., Ltd., Director of Hong Kong Tianyi
International Holding Co., Ltd., Director of Good Park International Investment Co., Ltd., Director
of Yisheng Dahua Petrochemical Co., Ltd., Executive Director of Hainan Yisheng Trading Co., Ltd.,
Executive Director of Zhejiang Yixin Chemical Fiber Co., Ltd., Executive Director and CEO of
Ningbo Hengyi Engineering Management Co., Ltd., President of Hainan Yisheng Petrochemical Co.,
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Hengyi Petrochemical 2021 Annual Report
Ltd., Executive Director and President of Zhejiang Hengyi Petrochemical Sales Co., Ltd., President
of Ningbo Hengyi Trading Co., Ltd., Director of Hong Kong Yisheng Co., Ltd., Executive Director
of Shanghai Hengyi Polyester Fiber Co., Ltd., President of Zhejiang Hengyi International Trading
Co., Ltd., Director of Fujian Yijin Chemical Fiber Co., Ltd., Director of Zhejiang Yisheng New
Materials Co., Ltd., Director of Zhejiang Hengyi Polyamide Co., Ltd., Executive Director of
Zhejiang Hengkai Energy Co., Ltd., Executive Director of Zhejiang Shuangtu New Materials Co.,
Ltd., Executive Director of Zhejiang Hengyi Energy Co., Ltd., Executive Director of Zhejiang
Xiaoyi Supply Chain Management Co., Ltd., and Director of Dalian Yisheng Investment Co., Ltd.
Ni Defeng, male, born in January 1978, is a Chinese national with a doctoral degree and has nearly
20 years of work experience in finance and investment. He used to work as Auditor of Pan-China
Certified Public Accountants, Manager of Finance Department, Manager of Investment Development
Department, and Assistant to CEO of Zhejiang Hengyi Group Co., Ltd., and investment Director of
Hengyi Petrochemical Co., Ltd. He is currently Director of Hengyi Petrochemical Co., Ltd., and
concurrently serves as Director and CEO of Zhejiang Hengyi Group Co., Ltd., Director of Zhejiang
Xianfeng Data Technology Co., Ltd., Director of Hangzhou Hengyi Investment Co., Ltd., Director of
Zhejiang Hengyi Polyamide Co., Ltd., Director of Lanping County Qingdian Bay Zinc Industry Co.
Ltd., Director of Hainan Hengshengyuan International Tourism Development Co., Ltd., Executive
Director and CEO of Hangzhou Jinglin Asset Management Co., Ltd., Director of Dalian
Yishengyuan Real Estate Co., Ltd., and President of Hangzhou Jinyi Industrial Co., Ltd.
Lou Jianchang, male, born in November 1962, is a Chinese professor-level senior engineer with a
master degree of engineering conferred by China University of Petroleum (Beijing) and an MBA
degree conferred by University of Houston. He used to work as Deputy Chief Dispatcher of General
Dispatching Office, Deputy Plant Manager, and Plant Manager of Sinopec Yanshan Petrochemical
Company Refinery; Deputy General Manager of Sinopec Yanshan Petrochemical Company; Deputy
Director of Sinopec Material and Equipment Department and Deputy General Manager of Sinopec
International Business Co., Ltd. He is currently Director and Vice President of Hengyi Petrochemical
Co., Ltd., and concurrently serves as Director of Fujian Yijin Chemical Fiber Co., Ltd., and Director
of Zhejiang Baling Hengyi Caprolactam Co., Ltd.
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Hengyi Petrochemical 2021 Annual Report
Mao Ying, female, born in February 1981, is a Chinese senior economist with a bachelor degree. She
used to work as Assistant to CEO of Hengyi Petrochemical Co., Ltd. and Chief Financial Officer of
Hengyi Brunei. She is currently Vice President and Chief Financial Officer of Hengyi Petrochemical
Co., Ltd.
Wu Zhong, male, born in July 1989, is a Chinese national with a bachelor of law degree conferred by
Zhejiang Gongshang University. He used to work as Deputy General Manager of Zhejiang Hengyi
Petrochemical Sales Co., Ltd. and General Manager of Ningbo Hengyi Industry Co., Ltd. He is
currently Director and Vice President of Hengyi Petrochemical Co., Ltd., and concurrently serves as
Director of Fujian Yijin Chemical Fiber Co., Ltd., Executive Director of Hainan Hengjing Trading
Co., Ltd., and Executive Director of Zhejiang Hengyi International Trading Co., Ltd.
Chen Sanlian, male, Han nationality, born in November 1964, is a Chinese national without overseas
permanent residency or party affiliation. He holds a bachelor of law degree, an independent director
qualification certificate and a lawyer qualification certificate. He successively served as Editorial
Director and Deputy Editor of "Lawyers and Legal System" magazine, lawyer of High Mark Law
Firm, and Deputy Secretary-general and Secretary-general of the Lawyers Association of Zhejiang.
He is currently full-time Vice President of the Lawyers Association of Zhejiang, Member of the
Zhejiang Provincial Political Consultative Conference, and Vice President of the Association of
Intellectuals of Zhejiang, as well as Visiting Professor of the Law School of Zhejiang University of
Technology, arbitrator of the Shanghai International Economic and Trade Arbitration Commission,
and arbitrator of the Hangzhou Arbitration Commission. He is an independent director of Hengyi
Petrochemical Co., Ltd. and concurrently serves as an independent director of Calxon Group Co.,
Ltd., Zheshang Development Group Co., Ltd., and Viewshine Ltd.
Yang Liuyong, male, born in March 1964, is a Chinese national with a doctoral degree. He is
currently a professor of finance at Zhejiang University and Deputy Dean of Academy of Financial
Research, Zhejiang University. He joined the Communist Party of China in 1984 and started working
in 1987. He studied agricultural economics at Zhejiang University from 1980 to 1984 for a bachelor
degree and from 1984 to 1987 for a master degree. He has been a teacher in the Department of
Finance of Zhejiang University since 1987 (including studying in the Department of Agricultural
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Hengyi Petrochemical 2021 Annual Report
Economics and Management of Zhejiang University from 1996 to 2001 [as a doctoral student]), and
is also an independent director of Hengyi Petrochemical Co., Ltd.
Yang Bozhang, male, born in July 1957, is Chinese senior accountant with a junior college degree.
He used to work as Vice President of Zhejiang Association of CFO, Director and Vice President of
Transfar Group Co., Ltd., General Manager of Zhejiang Transfar Jiangnan Dadi Development Co.,
Ltd., CEO of Hangzhou Transfar Science and Technology City Company, Secretary of the Party
Committee of Transfar Logistics Group Co., Ltd., President of the BOS of Zhejiang Wynca Chemical
Industrial Group Co., Ltd. (600596), and Director of Zhejin Trust Co., Ltd. He is currently President
of Transfar Group Finance Co., Ltd., President of Hangzhou Kezhu Investment and Development
Co., Ltd., and the President of Hangzhou Kerong Real Estate Co., Ltd. He is also an independent
director of Hengyi Petrochemical Co., Ltd.
4.5.2.2 Supervisors
Li Yugang, male, born in November 1977, is Chinese economist and international registered internal
auditor with a master degree and more than ten years of audit work experience. He used to work as
Deputy Director of Audit Department of the BOD and First Deputy Director of Legal Department of
Shagang Group, and is currently Director of Audit and Legal Department of Hengyi Petrochemical
Co., Ltd.
Jin Danwen, female, born in April 1986, is Chinese national with a master of accounting degree
conferred by Hangzhou Dianzi University. She holds qualifications of Chinese certified public
accountant and intermediate accountant. She used to work as Director of Finance Department of
Hengyi Industries Sdn. Bhd. She is currently General Manager of Fund Management Department of
Hengyi Petrochemical Co., Ltd. and Director of Finance Department of Hengyi Industries Sdn. Bhd.
She concurrently serves as Director of Hangzhou Jinyi Industrial Co., Ltd., and Director of Zhejiang
Hengyi High-tech Materials Co., Ltd.,
Ni Jinmei, female, born on March 21, 1976, is a Chinese economist. She used to work as General
Manager of Zhejiang Hengyi Polymer Co., Ltd., and General Manager of Comprehensive
Management Center of Zhejiang Hengyi Petrochemical Co., Ltd. Currently, she is Executive Director
and General Manager of Hangzhou Yijing Chemical Fiber Co., Ltd.
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Hengyi Petrochemical 2021 Annual Report
4.5.2.3 Senior executives
Wang Songlin, male, born in April 1970, Chinese nationality, master degree, has more than 20 years
of experience in the petrochemical fiber industry. He used to be the deputy director of CTPIC, the
office director of CNCFC, the general manager of China Chemical Fiber Economic Information
Network, and the general manager of Beijing Cotton Zhanwang Information Consulting Co., Ltd. He
is currently the executive vice president of Hengyi Petrochemical Co., Ltd., the director of Zhejiang
Baling Hengyi Caprolactam Co., Ltd., the chairman of Haining Hengyi New Material Co., Ltd., the
executive director and president of Haining Hengyi Thermal Power Co., Ltd., the executive dir ector
and president of Haining Hengyi Thermal Power Co., Ltd, and director of Jiangsu New Horizon
Advanced Functional Fiber Innovation Center Co., Ltd.
Chen Liancai, male, born in June 1967, Chinese nationality, bachelor degree, senior engineer, with
more than 20 years of experience in the petrochemical industry. He used to be the deputy general
manager of Sinopec Zhenhai Refining & Chemical Branch, the deputy general manager of Guodian
Sinopec Ningxia Energy Chemical Co., Ltd., and the general manager of Sinopec Great Wall Energy
Chemical (Ningxia) Co., Ltd. He is currently the Chief Executive Officer (CEO) of Hengyi Brunei
and the Vice President of Hengyi Petrochemical Co. Ltd.
Zhao Donghua, male, born in February 1985, Chinese nationality, Master of Law of Zhejiang
University, Intermediate Economist. He used to serve as the representative of securities affairs, the
deputy manager of the legal affairs department, and the assistant general manager of the marketing
center of Hengyi Petrochemical Co., Ltd. He is currently the general manager of Zhejiang Hengyi
Petrochemical Sales Co., Ltd. and the vice president of Hengyi Petrochemical Co., Ltd.
Zheng Xingang, male, born in December 1979, Chinese nationality, bachelor degree from Huazhong
University of Science and Technology, master degree from Wuhan University, EMBA degree from
Fudan University, senior economist. He has more than 10 years of investment and financing wor k
experience. He once served as deputy manager of the capital operation department, deputy manager
of the investment development department, and director of the office of the BOD of Hengyi
Petrochemical Co., Ltd. He is currently the secretary of the BOD and assistant to the president of
Hengyi Petrochemical Co., Ltd.
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Serving in shareholder units
Whether to receive
Name of Positions held in Start date of remuneration
Name of shareholder units
incumbent shareholder units term allowance in
shareholder units
Qiu Yibo Zhejiang Hengyi Group Co., Ltd. Director 09/26/2017 No
Fang Xianshui Zhejiang Hengyi Group Co., Ltd. Director 10/18/1994 No
Fang Xianshui Hangzhou Hengyi Investment Co., Ltd. President & GM 10/08/2021 No
Ni Defeng Zhejiang Hengyi Group Co., Ltd. Director & President 09/26/2017 Yes
Ni Defeng Hangzhou Hengyi Investment Co., Ltd. Director 12/28/2016 No
Description of the position in the shareholder unit N/A
Serving in other units
Whether to receive
Name of Positions held in Start date of
Name of other units remuneration allowance
incumbent other units term
in other units
Hangzhou Yibo Investment
Qiu Yibo Executive Director 03/17/2016 No
Management Co. Ltd.
Ningbo Jinhou Industry Manager &
Qiu Yibo 05/03/2016 No
Investment Co. Ltd. Executive Director
Zhejiang Yizhi Information Executive Director
Qiu Yibo 02/07/2021 No
Technology Co. Ltd. & GM
Zhejiang Hengyi Hanlin Executive Director
Qiu Yibo 08/20/2020 No
Real Estate Co. Ltd. & GM
Fujian Yijin Chemical Fiber
Qiu Yibo President 01/26/2018 No
Co. Ltd.
Zhejiang Hengyi Polyamide
Qiu Yibo Vice President 01/14/2021 No
Co., Ltd.
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Hengyi Petrochemical 2021 Annual Report
Whether to receive
Name of Positions held in Start date of
Name of other units remuneration allowance
incumbent other units term
in other units
Zhejiang Baling Hengyi
Qiu Yibo Director 06/09/2021 No
Caprolactam Co., Ltd.
Suqian Yida New Materials
Qiu Yibo Executive Director 01/19/2018 No
Co., Ltd.
Qiu Yibo Dongzhan Shipping Co. Ltd. Director 11/30/2017 No
Zhejiang Xianfeng Data
Qiu Yibo Director 06/07/2016 No
Technology Co. Ltd.
Zhejiang Yixin Chemical
Fang Xianshui Executive Director 07/26/2017 No
Fiber Co. Ltd.
Hainan Yisheng Trading Co.
Fang Xianshui Executive Director 08/14/2014 No
Ltd.
Zhejiang Hengkai Energy
Fang Xianshui Executive Director 12/18/2017 No
Co. Ltd.
Ningbo Hengyi Trading Co.,
Fang Xianshui President 05/24/2011 No
Ltd.
Ningbo Hengyi Engineering GM & Executive
Fang Xianshui 11/27/2014 No
Management Co. Ltd. Director
Zhejiang Hengyi Energy Co.
Executive Director
Fang Xianshui Ltd. (浙江恒逸能源有限公 09/24/2021 No
& GM
司)
Zhejiang Xiaoyi Supply
Chain Management Co., Ltd.
Executive Director
Fang Xianshui (Zhejiang Xiaoyi Supply 04/19/2021 No
& GM
Chain Management Co.,
Ltd.)
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Hengyi Petrochemical 2021 Annual Report
Whether to receive
Name of Positions held in Start date of
Name of other units remuneration allowance
incumbent other units term
in other units
Zhejiang Hengyi Executive Director
Fang Xianshui 07/26/2004 No
Petrochemical Co., Ltd. & GM
Zhejiang Hengyi High-Tech President &
Fang Xianshui 10/15/2007 No
Materials Co., Ltd. manager
Zhejiang Hengyi Polymer
Fang Xianshui President 09/05/2000 No
Co., Ltd.
Zhejiang Yisheng
Fang Xianshui President 05/12/2015 No
Petrochemical Co., Ltd.
Zhejiang Hengyi Manager &
Fang Xianshui 07/24/2017 No
Petrochemical Sales Co. Ltd. Executive Director
Hainan Yisheng
Fang Xianshui President 06/23/2014 No
Petrochemical Co., Ltd.
Shanghai Hengyi Polyester
Fang Xianshui Executive Director 05/14/2015 No
Fiber Co. Ltd.
Fujian Yijin Chemical Fiber
Fang Xianshui Director 01/26/2018 No
Co. Ltd.
Yisheng Dahua
Fang Xianshui Director 04/29/2006 No
Petrochemical Co., Ltd.
Zhejiang Hengyi Polyamide
Fang Xianshui Director 08/12/2013 No
Co., Ltd.
Dalian Yisheng Investment
Fang Xianshui Director 09/29/2007 No
Co., Ltd.
Zhejiang Baling Hengyi
Fang Xianshui Director 01/10/2008 No
Caprolactam Co., Ltd.
Fang Xianshui Zhejiang Yisheng New Director 11/27/2017 No
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Hengyi Petrochemical 2021 Annual Report
Whether to receive
Name of Positions held in Start date of
Name of other units remuneration allowance
incumbent other units term
in other units
Materials Co., Ltd.
Haining Hengyi New
Fang Xianshui Director 10/05/2019 No
Materials Co., Ltd.
Hong Kong Tianyi
Fang Xianshui International Holding Co., Director 09/17/2009 No
Ltd.
Good Park International
Fang Xianshui Director 09/17/2009 No
Investment Co. Ltd.
Hong Kong Yisheng Co.,
Fang Xianshui Director 06/27/2014 No
Ltd.
Hangzhou Jinyi Industrial
Ni Defeng President & GM 09/30/2019 No
Co. Ltd.
Hangzhou Jinglin Asset Executive Director
Ni Defeng 03/12/2018 No
Management Co. Ltd. & GM
Zhejiang Hengyi Polyamide
Ni Defeng Director 01/27/2015 No
Co., Ltd.
Lanping County Qingdian
Ni Defeng Director 01/16/2006 No
Bay Zinc Industry Co. Ltd.
Hainan Hengshengyuan
Ni Defeng International Tourism Director 02/26/2018 No
Development Co. Ltd.
Dalian Yishengyuan Real
Ni Defeng Director 03/29/2018 No
Estate Co. Ltd.
Zhejiang Xianfeng Data
Ni Defeng Director 06/07/2016 No
Technology Co. Ltd.
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Hengyi Petrochemical 2021 Annual Report
Whether to receive
Name of Positions held in Start date of
Name of other units remuneration allowance
incumbent other units term
in other units
Fujian Yijin Chemical Fiber
Lou Jianchang Director 10/22/2020 No
Co. Ltd.
Zhejiang Baling Hengyi
Lou Jianchang Director 06/09/2021 No
Caprolactam Co., Ltd.
Hainan Hengjing Trading Executive Director
Wu Zhong 08/21/2020 No
Co. Ltd. & manager
Zhejiang Hengyi Executive Director
Wu Zhong 07/01/2021 No
International Trade Co. Ltd. & GM
Fujian Yijin Chemical Fiber
Wu Zhong Director 10/22/2020 No
Co. Ltd.
Hainan Hengjing Trading
Jin Danwen Supervisor 08/21/2020 No
Co. Ltd.
Hangzhou Jinyi Industrial
Jin Danwen Director 02/28/2020 No
Co. Ltd.
Zhejiang Hengyi High-Tech
Jin Danwen Director 02/28/2020 No
Materials Co., Ltd.
Zhejiang Hengyi
Jin Danwen Engineering Management Supervisor 01/29/2018 No
Co. Ltd.
Zhejiang Hengyi Hanlin
Jin Danwen Supervisor 08/20/2020 No
Real Estate Co. Ltd.
Haining Hengyi New
Jin Danwen Supervisor 10/27/2020 No
Materials Co., Ltd.
Zhejiang Hengyi Executive Director
Wang Songlin 08/04/2020 No
Petrochemical Research & GM
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Hengyi Petrochemical 2021 Annual Report
Whether to receive
Name of Positions held in Start date of
Name of other units remuneration allowance
incumbent other units term
in other units
Institute Co. Ltd.
Haining Hengyi Thermal Manager &
Wang Songlin 09/13/2017 No
Power Co., Ltd. Executive Director
Jiangsu New Horizon
Wang Songlin Advanced Functional Fiber Director 07/19/2018 No
Innovation Center Co., Ltd.
Haining Hengyi New
Wang Songlin President 06/29/2018 No
Materials Co., Ltd.
Hangzhou Yijing Chemical Executive Director
Ni Jinmei 05/29/2019 No
Fiber Co., Ltd. & GM
Description of the position in the shareholder unit N/A
Punishme nts of the Company’s current and outgoing directors, supervisors and senior
management by securities regulators during the Reporting Period in the previous three years
□ Applicable √ Not applicable
4.5.3 Remuneration of directors, supervisors and senior manage ment
Decision-making procedures, basis for determination, and actual payme nt of remuneration of
directors, supervisors, and senior management
The Company passed the "Salary and Performance Appraisal Management System for Senior
Management Staff " (reviewed and approved at the third meeting of the 8 th BOD) to conduct
performance appraisal and pay remuneration to the Company's directors, supervisors and senior
management. The annual remuneration of directors, supervisors and senior managers who receive
remuneration from the Company in 2021 (including total remuneration of basic salary, bonuses,
allowances, subsidies, employee benefits and various insurance premiums, public reserve funds and
other forms of pre-tax payment from the Company ) is released in accordance with the Company’s
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Hengyi Petrochemical 2021 Annual Report
relevant regulations, and based on the Company’s operating conditions and the duties and work
performance evaluation of relevant personnel by BOD. During the Reporting Period, the
remunerations of the Company's directors, supervisors and senior management have been paid on a
monthly basis.
Upon agreement reached at the first meeting of the Company’s eleventh BOD on September 15,
2020 and the Company’s fifth extraordinary general meeting of shareholders on October 12, 2020,
the allowance standard of the independent director was adjusted to RMB 150,000 per person per year
(including Tax), allowances are paid on an average monthly basis.
Remuneration of directors, supervisors and senior manage ment during the Reporting Period
of the Company
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Hengyi Petrochemical 2021 Annual Report
Unit: RMB 10,000
Whether to get
Total pre-tax
remuneration
Employment remuneration
Name Title Gender Age from related
status received from
parties of the
the Company
Company
President and
Qiu Yibo Male 35 Current 142.59 No
CEO
Fang Xianshui Vice President Male 58 Current 145.09 No
Ni Defeng Director Male 44 Current - Yes
Director, Vice
Lou Jianchang Male 60 Current 136.85 No
President
Directors, VP
Mao Ying Female 41 Current 101.60 No
and CFO
Director, Vice
Wu Zhong Male 33 Current 91.03 No
President
Independent
Chen Sanlian Male 57 Current 15.00 No
Director
Independent
Yang Bozhang Male 65 Current 15.00 No
Director
Independent
Yang Liuyong Male 58 Current 15.00 No
Director
Executive Vice
Wang Songlin Male 52 Current 131.68 No
President
Chen Liancai Vice President Male 55 Current 118.08 No
Zhao Donghua Vice President Male 37 Current 106.59 No
Secretary of
Zheng Xingang Male 43 Current 71.99 No
the Board
Chairman of
Li Yugang Male 45 Current 53.59 No
the BOS
Jin Danwen Supervisor Female 36 Current 41.99 No
Ni Jinmei Supervisor Female 47 Current 63.50 No
Total - - - - 1,249.58 -
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Hengyi Petrochemical 2021 Annual Report
4.6 Performance of Duties by the Directors during the Reporting Period
4.6.1 Performance of the BOD during the Reporting Period
Date of Disclos
Session of meeting meetin ure Resolutions
g date
1. Reviewed and approved the Proposal on the Estimated Amount of Daily Related Party Transactions in 2021;
2. Reviewed and approved the Proposal on Determining the Company's Guarantee to its Controlled Subsidiaries and
Mutual Insurance Amount between Controlled Subsidiaries in 2021";
3. Reviewed and approved the Proposal on Carrying out Foreign Exchange Hedging Business in 2021;
4. The “Resolution on Carrying out Commodity Hedging Business for the Year 2021” was deliberated and adopted;
The Fifth Meeting of the
01/22/2 01/23/2 5. Reviewed and approved the Proposal on the Provision of Financial Support to the Company by the Controlling
Eleventh Session of the
021 021 Shareholder and Related Party Transactions;
BOD
6. Reviewed and approved the Proposal on Purchasing Liability Insurance for the Company's Directors, Supervisors and
Senior Management;
7. The “Resolution on Joint Investment in Establishment of a Company with Related Parties and Carrying out Related
Party Transactions” was deliberated and adopted;
8. The “Resolution on Convening the First EGM for the Year 2021” was deliberated and adopted;
The Sixth Meeting of
03/17/2 03/18/2 1. The “Resolution on Adjustment of the Program of Share Repurchase by Way of Centralized Bidding” was deliberated
the Eleventh Session of
021 021 and adopted;
the BOD
1. Reviewed and approved the Proposal on “The Fourth Employee Stock Ownership Plan of Hengyi Petrochemical Co.,
The Seventh Meeting of Ltd. (Draft)” and its Summary;
04/01/2 04/02/2
the Eleventh Session of 2. Reviewed and approved the Proposal on Requesting the General Meeting of Shareholders to Authorize the BOD to
021 021
the BOD Handle Matters Related to the Company's Fourth Employee Stock Ownership Plan;
3. Reviewed and approved the Proposal on the “Management Measures for the Fourth Employee Stock Ownership Plan
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Hengyi Petrochemical 2021 Annual Report
Date of Disclos
Session of meeting meetin ure Resolutions
g date
of Hengyi Petrochemical Co., Ltd."
4. The “Resolution on Convening the Second EGM for the Year 2021” was deliberated and adopted;
1. The “Resolution on Annual Report 2020 and the Summary” was deliberated and adopted;
2. Reviewed and approved the Work Report of the BOD for FY 2020;
3. The “Report on Financial Final Accounts 2020” was deliberated and adopted;
4. The “Resolution on Distribution of the Company’s Profits for FY 2020” was deliberated and adopted;
5. The “Report on Social Responsibilities 2020” was deliberated and adopted;
6. Reviewed and approved the Self-Evaluation of Internal Control for FY 2020;
7. The “Resolution on Deposit and Use of Raised Funds for FY 2020” was deliberated and adopted;
8. The “Resolution on Renewal of the Appointment of the Accounting Firm” was deliberated and adopted;
9. Reviewed and approved the Proposal on Achievement of Performance Commitment and Performance Compensation
The Eighth Meeting of Plan in 2020 Regarding the Issue of Shares for Purchase of Assets and Related Party Transactions;
04/19/2 04/20/2
the Eleventh Session of 10. Reviewed and approved the Proposal on Requesting the General Meeting of Shareholders to Authorize the
021 021
the BOD Company's BOD to Fully Handle Matters Related to Share Repurchase and Cancellation;
11. The “Resolution on Retrospective Adjustment of Previous Financial Statements due to Enterprise Merger Under
Common Control and Change in Accounting Policies” was deliberated and adopted;
12. The “Resolution on Increase in Daily Related Party Transactions for the Year 2021” was deliberated and adopted;
13. The “Resolution on Carrying out Bill Pool Business” was deliberated and adopted;
14. The “Resolution on External Donation for Poverty Alleviation” was deliberated and adopted;
15. The “Resolution on Amendment of Some Articles of the Articles of Association of the Company” was deliberated
and adopted;
16. The “Resolution on Convening 2020 Annual General Meeting of Shareholders” was deliberated and adopted;
The Ninth Meeting of 04/26/2 04/27/2 1. The “First Quarterly Report 2021 (Full Text & Body)” was deliberated and adopted;
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Hengyi Petrochemical 2021 Annual Report
Date of Disclos
Session of meeting meetin ure Resolutions
g date
the Eleventh Session of 021 021
the BOD
1. Reviewed and approved the Proposal on the Company's Compliance with the Conditions for Public Issue of
Convertible Corporate Bonds;
2. Reviewed and approved the Proposal on the Company's Public Issue of Convertible Corporate Bonds;
3. Reviewed and approved the Proposal on the Company's Public Issue of Convertible Corporate Bonds;
4. The “Resolution on Formulating ‘Convertible Bond Holders’ Meeting Rules’” was deliberated and adopted;
5. The “Resolution on the Feasibility Analysis Report of the Company’s Public Offering of Convertible Bonds for
Raising Funds” was deliberated and adopted;
The Tenth Meeting of 6. The “Resolution on the Company's Shareholder Return Plan for the Next Three Years (2021-2023)” was deliberated
05/31/2 06/01/2
the Eleventh Session of and adopted;
021 021
the BOD 7. The “Resolution on Public Offering of Convertible Bonds to Dilute the Spot Return, Filling Measures and
Commitments of Relevant Subjects” was deliberated and adopted;
8. The “Resolution on Report on Use of the Funds Raised in the Previous Time” was deliberated and adopted;
9. The “Resolution on Submission to the General Meeting of Shareholders to Authorize the BOD to Handle Specific
Matters Regarding the Company’s Public Offering of Convertible Bonds” was deliberated and adopted;
10. The “Resolution on the Subsidiary’s Investment and Construction of a 1.1-mtpa New-type Functional Fiber Project”
was deliberated and adopted;
11. The “Notice on the Third EGM for the Year 2021” was deliberated and adopted;
The Eleventh Meeting
06/28/2 06/29/2 1. The “Resolution on Transfer of 100% Equity in the Wholly-owned Subsidiary Ningbo Hengyi Industry Co. Ltd.” was
of the Eleventh Session
021 021 deliberated and adopted;
of the BOD
The Twelfth Meeting of 08/24/2 08/25/2 1. The “Resolution on ‘Semi-annual Report 2021’ and the Summary” was deliberated and adopted;
the Eleventh Session of 021 021 2. The “Resolution on Semi-annual Special Report on Deposit and Use of Raised Funds for the Year 2021” was
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Hengyi Petrochemical 2021 Annual Report
Date of Disclos
Session of meeting meetin ure Resolutions
g date
the BOD deliberated and adopted;
3. The “Resolution on Adjustment of the Fourth ESOP of the Company” was deliberated and adopted;
4. The “Resolution on Change of Accounting Policies” was deliberated and adopted;
1. The “Resolution on the Third Quarterly Report 2021” was deliberated and adopted;
2. The “Resolution on Increase in Estimated Amount of Daily Related Party Transactions for the Year 2021” was
The Thirteenth Meeting deliberated and adopted;
10/27/2 10/28/2
of the Eleventh Session 3. The “Resolution on Provision of Entrusted Loan to the Invested Company, Yisheng New Materials” was deliberated
021 021
of the BOD and adopted;
4. The “Resolution on Share Repurchase by Way of Centralized Bidding (Phase II)” was deliberated and adopted;
5. The “Resolution on Convening the Fourth EGM for the Year 2021” was deliberated and adopted;
1. The “Resolution on Capital Increase to Zhejiang Yisheng New Materials Co. Ltd. and Related Party Transactions”
was deliberated and adopted;
The Fourteenth Meeting 2. The “Resolution on Capital Increase to Hainan Yisheng Petrochemical Co., Ltd. and Related Party Transactions” was
12/08/2 12/09/2
of the Eleventh Session deliberated and adopted;
021 021
of the BOD 3. The “Resolution on Increase in Estimated Amount of Daily Related Party Transactions for the Year 2021” was
deliberated and adopted;
4. The “Resolution on Convening the Fifth EGM for the Year 2021” was deliberated and adopted;
1. The “Resolution on Changing the Scope of Business of the Company and Amendment of ‘the Articles of
The Fifteenth Meeting Association’” was deliberated and adopted;
12/30/2 12/31/2
of the Eleventh Session 2. The “Resolution on Increase in Estimated Amount of Daily Related Party Transactions for the Year 2021” was
021 021
of the BOD deliberated and adopted;
3. The “Resolution on Convening the First EGM for the Year 2022” was deliberated and adopted;
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Hengyi Petrochemical 2021 Annual Report
4.6.2 Attendance of Directors in the Board Meeting and the General Meeting of
Shareholders
Attendance of Directors in the Board Meeting and the General Meeting of Shareholders
Number of Number of
Number of Number of Whether absent Number of
board attendance of
on-site attendance of Number of from board attendance of
Name of meetings to board meetings
attendance of board absence at board meetings in person General
director attend during by means of
board meetings by meetings for two consecutive Shareholders
the Reporting telecommunicati
meetings entrustees times Meetings
Period ons
Qiu Yibo 11 2 9 0 0 No 6
Fang Xianshui 11 2 9 0 0 No 6
Ni Defeng 11 2 9 0 0 No 6
Lou Jianchang 11 2 9 0 0 No 6
Mao Ying 11 2 9 0 0 No 6
Wu Zhong 11 2 9 0 0 No 6
Chen Sanlian 11 2 9 0 0 No 6
Yang Bozhang 11 2 9 0 0 No 6
Yang Liuyong 11 2 9 0 0 No 6
Reasons for failure to attend the board meetings in person for two consecutive times:
4.6.3 Objections of directors to related issues of the Company
Whether the directors raise objections to relevant matters of the Company
During the Reporting Period, the directors did not raise objections to the Company’s related matters.
4.6.4 Other information on directors' performance of duties
Whether directors’ suggestions to the Company are accepted
√ Yes □ No
Statements of directors on the acceptance or rejection of proposals on company issues
During the Reporting Period, all directors of the Company strictly followed the Company Law,
Securities Law, Code of Corporate Governance for Listed Companies, Guidelines of Shenzhen Stock
Exchange for the Standardized Operation of Listed Companies and the Articles of Association and
Rules of Procedures for the BOD to diligently carry out their work and perform their duties. They
took the initiative to pay attention to the Company's operation and management information,
financial position, important matters, etc., put forward opinions on the Company’s important
156
Hengyi Petrochemical 2021 Annual Report
decisions regarding its governance and operation, deeply discussed the proposed resolutions
submitted to the BOD for deliberation, expressed their own views and reached unanimous options
after full communication and discussion. They fully considered the interests and demands of
minority shareholders when making decisions, and resolutely supervised and promoted the
implementation of the resolutions adopted at the BOD in order to make the decisions scientific,
timely and efficient and protect the legitimate equities of the Company and all shareholders.
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Hengyi Petrochemical 2021 Annual Report
4.7 Performance of duties by the special committees under the BOD during the Reporting Period
Numbe Other
Details of
r of Date of Important opinions and recommendations perform
Committee Members Contents objections
meetin meeting made ance of
(if any)
gs held duties
The “Resolution on Joint Investment in The Committee strictly followed the
01/08/20 Establishment of a Company with Related Parties Company Law, the Regulatory Rules of
Qiu Yibo,
Strategy and 21 and Carrying out Related Party Transactions” the CSRC, the Articles of Association and
Fang Not
Investment was deliberated; the Rules of Procedure for the BOD to Not
Xianshui, Ni 2 applica
Decision-making The “Resolution on the Subsidiary’s Investment diligently perform its duties. It put forward applicable
Defeng and ble
Committee 05/28/20 and Construction of 1.1-mtpa New-type opinions on and unanimously approved all
Yang Liuyong
21 Differentiated Environmental Fiber Project” was proposed resolutions after full
deliberated; communication and discussion.
1. The “Annual Report on Implementation of
Internal Audit 2020” was deliberated;
2. The “Annual Report on Financial Final The Committee strictly followed the
Yang Accounts 2020” was deliberated; Company Law, the Regulatory Rules of
Bozhang, 3. The “Annual Audit Report 2020” was the CSRC, the Articles of Association, the
Chen Sanlian, deliberated; Rules of Procedure for the BOD and other Not
04/17/20 st
Not
Audit Committee Yang 4 4. The “Annual Report 2020 (the 1 draft)” relevant laws and regulations to diligently applica
21 applicable
Liuyong, Lou was deliberated; perform its duties. It put forward opinions ble
Jianchang and 5. The “Annual Report on Internal Control on and unanimously approved all proposed
Mao Ying Self-Evaluation 2020” was deliberated; resolutions after full communication and
6. The “Resolution on Deposit and Use of discussion
Raised Funds for FY 2020” was deliberated;
7. The “Resolution on Summary of Funds
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Hengyi Petrochemical 2021 Annual Report
Numbe Other
Details of
r of Date of Important opinions and recommendations perform
Committee Members Contents objections
meetin meeting made ance of
(if any)
gs held duties
Appropriation and Other Related Fund
Transactions for Non-operating Purpose for FY
2020” was deliberated;
8. The “Resolution on Renewal of the
Appointment of the Accounting Firm” was
deliberated;
1. The “First Quarterly Report 2021 (draft)”
04/12/20 was deliberated;
21 2. The “First Quarterly Report on Internal
Audit 2021” was deliberated;
1. The “Semi-annual Report 2021 (the 1st
draft)” was deliberated;
2. The “Resolution on Semi-annual Special
08/16/20
Report on Deposit and Use of Raised Funds for
21
the Year 2021” was deliberated;
3. The “Semi-annual Report on Internal Audit
2021” was deliberated;
1. The “Third Quarterly Report 2021 (the 1st
10/13/20 draft)” was deliberated;
21 2. The “Third Quarterly Report on Internal
Audit 2021” was deliberated;
Risk Control Chen Sanlian, 01/08/20 1. The “Resolution on Carrying out Foreign The Committee strictly followed the Not Not
3
Committee Yang 21 Exchange Hedging Business for the Year 2021” Company Law, the Regulatory Rules of applica applicable
159
Hengyi Petrochemical 2021 Annual Report
Numbe Other
Details of
r of Date of Important opinions and recommendations perform
Committee Members Contents objections
meetin meeting made ance of
(if any)
gs held duties
Bozhang and was deliberated; the CSRC, the Articles of Association and ble
Lou 2. The “Resolution on Carrying out the Rules of Procedure for the BOD to
Jianchang Commodity Hedging Business for the Year 2021” diligently perform its duties. It put forward
was deliberated; opinions on and unanimously approved all
1. The “Resolution on Renewal of the proposed resolutions after full
Appointment of the Accounting Firm” was communication and discussion
04/01/20
deliberated;
21
2. The “Annual Report on Financial Final
Accounts 2020” was deliberated;
The “Resolution on the Subsidiary’s Investment
05/28/20 and Construction of 1.1-mtpa New-type
21 Differentiated Environmental Fiber Project” was
deliberated;
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Hengyi Petrochemical 2021 Annual Report
4.8 Performance of duties by the BOS
Were there any risks found by the BOS in its supervisory activities during the Reporting
Period?
The BOS had no objections to the matters under supervision during the Reporting Period
4.9 Employees of the Company
4.9.1 Number of employees, professional composition and education level
Number of employees in the parent company at the end of the
10
Reporting Period (person)
Number of employees of service in major subsidiaries at the end of
16,810
the Reporting Period (person)
Total number of employees in service at the end of the Reporting
16,820
Period (person)
Total number of employees receiving salaries in current period
16,820
(person)
Number of retired employees whose expense is born by the parent
261
company and major subsidiaries (person)
Professional Composition
Number of professional
Professional composition category
composition (person)
Production personnel 14,146
Sales staff 316
Technical staff 1,604
Financial staff 147
Administrative personnel 607
Total 16,820
Education level
Education level category Quantity (person)
Master degree or above 277
Bachelor degree 1,813
College degree or below 14,730
Total 16,820
4.9.2 Compensation policies
The Company implements a labor contract system, sign labor contracts with every employee in
accordance with the "Labor Law", "Labor Contract Law" and relevant labor laws and regulations.
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Hengyi Petrochemical 2021 Annual Report
The Company strictly implements the national employment system, labor protection system, and
social security system, pays social insurance for employees in accordance with national regulations,
sets up corresponding safety protection measures, and creates a good and safe production
environment for employees. Through innovative management mechanisms, the Company guides the
functional system to continuously improve quality and efficiency, and to create a streamlined and
efficient functional team of headquarters. The Company develops an effective salary incentive
system for the Company's financial personnel, administrative personnel, technical personnel,
production personnel and sales personnel, and gives corresponding performance rewards based on
the performance evaluation of the Company, department and individual.
4.9.3 Training plans
The Company established Hengyi Enterprise University according to the needs of production and
operation and talent training, aiming to build a competitive enterprise university a nd support
Hengyi's global development. It serves as the power center and load bearing platform for Hengyi's
organizational development, talent training, technology accumulation, and corporate transformation.
The "Blue" series of talent projects are implemented in Hengyi University, to establish talent
echelons at different levels; meanwhile, it attaches importance to continuous improvement, job skill
assessment, and on-the-job education promotion to enhance professional skills and effectiveness. The
Company develops training plans for different types of employees, organizes internal and outbound
trainings according to the plan, pays special attention to job skills training, and provides certification
for special positions and hazardous chemical operators to ensure safe production and normal
operation. The Company also trains technical and business backbones through targeted training to
improve their business capabilities.
4.9.4 The situation of labor outsourcing
Total number of working hours of labor outsourced (hours) 5,688,293
Total remuneration paid for labor outsourced (RMB ) 130,830,733
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Hengyi Petrochemical 2021 Annual Report
4.10 The Company’s common stock profit distribution and capitalization of capital reserves
During the Reporting Period, the common stock profit distribution policy, especially the
formulation, imple mentation or adjustment of the cash dividend policy
According to the China Securities Regulatory Commission's "Notice on Further Implementing Issues
Related to Cash Dividends of Listed Companies" (ZJF [2012] No. 37), Guangxi Securities
Regulatory Bureau "Notice on Strengthening the Awareness of Returning Shareholders and
Improving Dividend Mechanism" (GZJF [2012] 23) and "Guidelines for the Supervision of Listed
Companies No. 3-Cash Dividends of Listed Companies" Securities Regulatory Commission
Announcement [201309] No. 43 and other documents, combined with the actual situation of the
Company, specific provisions has been made for the profit distribution decision-making procedures
and profit distribution policy in the "Articles of Association". In addition, it has formulated the
"Shareholder Dividend Return Plan for the Next Three Years (2019-2021)" to better guarantee the
reasonable return of all shareholders, further refine the provisions of the profit distribution policy i n
"Articles of Association", and increase the transparency and operability in dividend distribution
decision, establish a continuous, stable and scientific return plan and mechanism for investors to
ensure the continuity and stability of the profit distribution policy. During the Reporting Period, the
Company shall strictly implement the above profit distribution policy.
According to the 2020 Profit Distribution Plan approved by the Company’s 2020 Annual General
Meeting of Shareholders held on May11, 2021: based on the Company’s total existing share capital
of 3,681,645,407 shares, a cash dividend of RMB 3.00 (including tax) will be distributed to all
shareholders for every 10 shares, No bonus shares will be given and no capital reserve will be
capitalized. The Company published the “Announcement on the Implementation Hengyi
Petrochemical Co., Ltd.’ Annual Dividend Distribution in 2020”, and the implementation was
completed on July 6, 2021.
Special description of cash dividend policy
Whether it meets the requirements of the Company's Articles of Association or the
Yes
resolutions of the general meeting of shareholders:
Whether the dividend standard and proportion are clear and definite: Yes
Were the relevant decision-making procedures and mechanisms complete? Yes
Whether independent directors have performed their due diligence and played their due
