恒力石化:恒力石化2021年年度报告（英文删节版）

Hengli Petrochemical Co. Ltd.Annual Report 2021 Abridgement
Company Code: 600346ANNUAL REPORT
202101
Dear shareholders partners and employees:
The tides of Bohai Sea have brought warmth to the springy Northern country.Despite occasional coldness the changing seasons have marked the inevitable passage
of time.The hardships we have experienced last year were partly expected and partly
unexpected. We have expected that the Covid-19 pandemic would recur geopolitical
conflicts would continue and the world economy would be sluggish. However the
frequency of pandemic recurrence the depth of the conflicts and the difficulty of
economic recovery were still beyond our expectations. The chill was felt by every
individual at this juncture of profound changes unseen in a century.However hardships are in themselves a kind of growth and experience an
inevitable path towards realizing great dreams. We must overcome the difficulties of
the present in order to achieve a better future.“Misfortune may be a blessing in disguise.” During this chess game which
features both “crisis” and “opportunity” “the unchanged” and “changes” and
lockdown and opening-up the pioneering Hengli people have made each move with
deliberation to prepare for crises in advance and seize opportunities when they come
to seek innovation in the unchanged and remain composed during changes and to
meditate during lockdown to pursue a brighter future during opening-up. This year
has witnessed Hengli sailing farther away through the rise and fall of history.However arduous and long the journey is it will eventually be accomplished.Against the backdrop of profound changes unseen in a century intertwined with the
Covid-19 pandemic Hengli is willing to be as hard-working as “old cattle” to develop
its main businesses achieve critical breakthroughs deploy the innovation chain
around its industrial chain and vice versa. During this year we have promoted the
“dual circulation strategy” and focused on developing the real economy putting
into operation the 200kt industrial yarn project of Hengli Chemical Fiber as well as
the polyester film project and degradable plastic project of Kanghui New Material.Hengli (Huizhou) Industrial Park Hengli Refining and Chemical Fine Chemical Park
Phase I Project and Hengli (Yangtze River Delta) International New Materials
Industrial Base have started construction. The PBS biodegradable plastic project with
an annual output of 900kt and the lithium battery diaphragm project with an annual
output of 1.6 billion square meters have been successively launched. The businessANNUAL REPORT
202102
layout of the five major industrial chains has begun to emerge. We have carried out a
groundbreaking reform to overcome the shortcomings of the industry. We have
become the second company in the world and the first in China that is able to produce
12-micron silicon-coated release laminated lithium battery protective film on line.
Our production of MLCC release base film accounted for over 65% of the national
total and our high-purity tetrahydrofuran (THF) has been used in the innovative
research and development of drugs to treat Covid-19. Our self-developed Henglink
industrial Internet platform has been rated as a “demonstration project” by the
Ministry of Industry and Information Technology and selected as a provincial
industrial Internet platform in Liaoning Province. We have applied for 700 patented
technologies with cutting-edge technologies in multiple industries. We have
attached equal importance to environmental protection and intelligent
manufacturing to achieve leading efficiency. As a petrochemical company
despite owning large-scale equipment Hengli still insists on environmental protection
and intelligent manufacturing throughout its manufacturing process. Since HengliPetrochemical Hengli Refinery and Hengke New Material were awarded “NationalGreen Factory” in 2017 and 2020 respectively Hengli Chemical Fiber was also
awarded in early 2022. So far four companies under Hengli have been awarded
“National Green Factory”. We have always embraced gratitude and responsibility
and stayed true to our mission since we first started business. Hengli has actively
supported poverty alleviation student aid and disaster relief among other publicwelfare projects. Our efforts have paid off as in 2021 Hengli made it to the “Top 100Global Enterprises” won the “National Labor Day Medal” and achieved gratifying
annual operating data: our annual operating income amounted to RMB197.97 billion
a year-on-year increase of 29.2%; our annual profit amounted to RMB15.53 billion a
year-on-year increase of 15.37%.Data and honors speak louder than words. They testify to Hengli’s strong
momentum and resilience. However as we are happily sharing our achievements wealso know that “a single feather cannot support a roc just as a single foot cannotsupport a horse.” It is thanks to the national strategic guidance and the support of all
shareholders partners and employees that Hengli can make it this far. Therefore
Hengli has distributed RMB7.02 billion in dividends to repay its shareholders. The
fourth phase of its employee stock ownership plan has earned three times of returnANNUAL REPORT
202103
and a new phase of employee stock ownership plan with a larger scale and a wider
scope has been launched. We hope that the benefits of development can be shared by
all Hengli people.The journey is long and arduous and we must take every step earnestly. The
new era has sent us a beautiful invitation but also brought us all kinds of difficulties.At present or in the future there are going to be challenges for the development of the
nation businesses and households. As we are aware of the close relation between the
rise and fall of a company and that of a nation Hengli will always keep the nation on
its mind and concentrate on its mission to serve the country.The patriotism of entrepreneurs can take many forms but the first and foremost
is to run a first-class company. Based on the domestic and international environmentfor 2022 Hengli has clearly set the path to “lead development with talents and createthe future with innovation”. In the new year we must be "talent-oriented" and
establish talent leadership. We will create a working environment that recognizes
loves and respects talents improve the talent pool development mechanism featuring
“talent attraction utilization retention and training” and establish a leader training
and evaluation system oriented by responsibility ability and contribution. In this way
we can ensure endless brainpower for corporate development. We will adopt a
dual-motor system driven by efficiency and innovation advocate a pragmatic
active and intelligent way of working and encourage hard work enthusiasm and
determination. We will advocate a working attitude of being preemptivetime-sensitive and effective and dedicate ourselves to building a “learning-orientedinnovative and technological” national enterprise. We will continue to increase
investment in research and development by encouraging our employees to innovate
and promoting their intrinsic motivation to boost both quantity and quality in
scientific research. Meanwhile we will also strengthen cooperation with domestic and
foreign universities research institutes and major international enterprises and solicittheir resources to achieve innovative breakthroughs. We will “get the big picturewhile also addressing the finest detail" to achieve progress against all odds. In the
face of the complex and intense external environment we will “get the big picture”
strategically by focusing on both international and domestic markets and the five main
sectors and industrial chains; we will also “address the finest detail” tactically byworking on our business essentials featuring “quality cost effectiveness andANNUAL REPORT
202104responsiveness”. We will improve the construction of the six major systems including
safety and environmental protection management system financial security system
talent development system quality management system big data and information
system and corporate culture system and will make efforts in party construction
anti-corruption and caring for employees.Granted the journey ahead will never be smooth especially one that is against
the current and amid stormy waves. Looking forward Hengli firmly believes thatthere are unprecedented opportunities hidden in the “profound changes unseen in acentury” and that it is the best time to forget ahead with diligence.As long as we march forward regardless of wind and storms we willeventually see the light at the end of the tunnel. Hengli has built itself “from a dropof oil and a piece of cloth". It started from a small textile factory with only three acres
of land to an international company with nine production bases. We have gone
through all kinds of bitterness and hardships to where we are. As we are sailing in the
middle of the stream we see that beyond the turbulent wind and waves there is a
bright future awaiting.“The broader the future the more we need to explore.” Based on the current
achievements Hengli will strengthen its efforts to create a "new highland" for talents
scale new heights in efficiency improvement achieve breakthroughs in the quality
and quantity of research and development and make tangible efforts in ensuring safeproduction. Looking forward Hengli will continue on the path featuring “high qualitylow energy consumption and green and intelligent development” focus its efforts
within the industry and enhance the leading role of innovation so as to live up to the
ardent expectations of the nation.Together we will conquer mountains and seas to make great achievements!
Chairman:ANNUAL REPORT
202105
Financial statements signed and sealed by the legal
representative person in charge of accounting and person in
charge of the accounting organization (accounting supervisor).Reference File
Directory Original audit report sealed by the accounting firm and signed and sealed by a certified public accountant.Original copies of all company documents and announcements
publicly disclosed during the reporting period.ANNUAL REPORT
202106
Chapter Ⅰ Definitions
In this report the terms listed below are defined as follows unless the context otherwise implies:
Definition of Frequently-Used Terms
Reporting Period Refers to From 1 January 2021 to 30 June 2021
Company the Refers to Hengli Petrochemical Co. Ltd.Company or Hengli
Petrochemical
CSRC Refers to China Securities Regulatory Commission
Ministry of Industry Refers to Ministry of Industry and Information Technology of the
and Information People's Republic of China
Technology
SSE Refers to Shanghai Stock Exchange
Company Law Refers to Company Law of the People's Republic of China
Securities Law Refers to Securities Law of the People's Republic of China
Articles of Association Refers to Articles of Association of Hengli Petrochemical Co.Ltd."
Hengli Group Refers to Hengli Group Co. Ltd. controlling shareholder of the
listed company
Hailaide Refers to Hailaide International Investment Ltd. person acting-in-
concert with controlling shareholder of the listed
company
Tak Shing Li Refers to Tak Shing Li International Holdings Ltd. person
acting-in- concert with controlling shareholder of the
listed company
Hegao Investment Refers to Jiangsu Hegao Investment Co. Ltd. person
acting-in-concert with controlling shareholder of the
listed company
Hengneng Investment Refers to Hengneng Investment (Dalian) Co. Ltd. person
acting-in- concert with controlling shareholder of the
listed company
Hengfeng Investment Refers to Hengfeng Investment (Dalian) Co. Ltd. person
acting-in- concert with controlling shareholder of the
listed company
Hengli Chemical Fiber Refers to Jiangsu Hengli Chemical Fiber Co. Ltd. subsidiary to
the listed company
Susheng Thermal Refers to Suzhou Susheng Thermal Power Co. Ltd. subsidiary to
Power the Hengli Chemical Fiber sub-subsidiary to the listed
company
Hengke Advanced Refers to Jiangsu Hengke Advanced Materials Co. Ltd subsidiary
Materials to the Hengli Chemical Fiber sub-subsidiary to the listedANNUAL REPORT
202107
company
Deli Chemical Fiber Refers to Jiangsu Deli Chemical Fiber Co. Ltd. subsidiary to the
Hengli Chemical Fiber sub-subsidiary to the listed
company
Kanghui New Material Refers to Formerly known as Yingkou Kanghui Petrochemical Co.Ltd. subsidiary to the listed company now renamed as
Kanghui New Material Technology Co. Ltd.Hengli Petrochemical Refers to Hengli Petrochemical (Dalian) Chemical Co. Ltd.Chemical subsidiary to the listed company
Hengli Investment Refers to Hengli Investment (Dalian) Co. Ltd. subsidiary to the
listed company
Hengli Petrochemical Refers to Hengli Petrochemical (Dalian) Co. Ltd. subsidiary to
(Dalian) the Hengli Investment sub-subsidiary to the listed
company
Hengli Petrochemical Refers to Hengli Petrochemical (Huizhou) Co. Ltd. subsidiary to
(Huizhou) the Hengli Investment sub-subsidiary to the listed
company
Hengli Petrochemical Refers to Hengli Petrochemical (Dalian) Refining Co. Ltd.Refining subsidiary to the listed company
Crude Oil Refers to Crude oil is petroleum directly exploited from an oil well
without being processed and is a dark-brown or
dark-green viscous liquid or semisolid flammable
substance that is composed of various hydrocarbons.Aromatic Hydrocarbon Refers to A hydrocarbon containing a benzene ring structure in its
molecule. Aromatic hydrocarbons mainly including
benzene methylbenzene xylene etc. are one of the
most important basic raw materials for the production of
petrochemicals.Ethylene Refers to A compound consisting of two carbon atoms and four
hydrogen atoms. It is the basic chemical raw material of
synthetic fiber synthetic rubber synthetic plastic
(polyethylene and polyvinyl chloride) synthetic ethanol
(alcohol) and also used in manufacturing chloroethylene
styrene ethylene oxide acetic acid acetaldehyde
ethanol and explosives etc.Polyethylene Refers to A thermoplastic resin produced by polymerization of
ethylene. Polyethylene is odorless and non-toxic and
feels like wax has excellent low-temperature resistance
good chemical stability and resistance to erosion of most
acid and alkali.Polypropylene (PP) Refers to A semi-crystalline synthetic resin material with strong
acid and alkali resistance excellent electrical insulation
capacity harder character and higher melting point than
PE.ANNUAL REPORT
202108
Styrene Refers to An organic compound which is usually a colorless but
aromatic liquid mainly used in the production of plastic
resin and rubber.Butadiene Refers to An organic compound which is a colorless gas with a
distinctive odor is the main raw material in the
production of synthetic rubber.Paraxylene (PX) Refers to A kind of aromatic hydrocarbon which is a colorless and
transparent liquid and is a raw material in the production
of purified terephthalic acid (PTA) used for
manufacturing plastic polyester fiber and film.Purified Terephthalic Refers to A white crystal or powder at room temperature
Acid (PTA) non-toxic and flammable which will burn as soon as
catching fire if mixing with air to a certain degree.Ethylene Glycol (MEG Refers to A colorless odorless sweet viscous liquid mainly used
or EG) in the production of polyester fiber antifreeze
unsaturated polyester resin lubricant plasticizer
non-ionic surfactant and explosive.Acetic Acid Refers to An organic compound which is a colorless liquid with a
pungent odor and is the raw material for the production
of rayon filmstrip aspirin etc.Polyester Polyester Refers to Polyethylene Terephthalate or Polyester or PET is a
Chip or PET fiber-forming polymer made from PTA and MEG
through interesterification or esterification and
condensation polymerization. Fiber-grade polyester chips
are used for producing polyester staple fibers and
polyester filament yarn while film-grade chips are used
for producing all categories of film products.PBAT Refers to Poly (butylene adipate-co-terephthalate) or PBAT is a
petrochemical-based biodegradable plastic with sound
biodegradability and is an active material in
biodegradable plastic research with broad market
application.PBS Refers to Polybutanediol succinate or PBS is polymerized from
succinate acid and Butane-14-diol (BDO) with sound
thermal performance and mechanical processing
performance. It is a typical fully biodegradable material
easy to be decomposed and metabolized by a variety of
natural microorganisms or enzymes in animals and plants
and finally decomposed into carbon dioxide and water.Polyester Fiber Refers to A synthetic fiber made of polyester formed by
polycondensation of organic diacid and dihydric alcohol
by spinning. The industrialized massively produced
polyester fiber is made from PET and is known as dacron
in China. It is the top major variety of synthetic fiber atANNUAL REPORT
202109
present.Polybutylene Refers to It is a condensation polymer of para toluic acid and
Terephthalate (PBT) Butane-14-diol which can be prepared by the methods
of transesterification or direct esterification through
polycondensation. PBT and PET together are known as
thermoplastic polyesters.Biaxially-Oriented Refers to BOPET has the characteristics of high strength good
Polyethylene rigidity transparency high gloss etc. with excellent
Terephthalate (BOPET) wear resistance folding resistance pinhole resistance
and tear resistance minimal thermal shrinkage and
sound antistatic property.Denier (D) Refers to 9000-meter fiber weighs 1 gram and is called 1 denier
(D).
Polyester Filament Yarn Refers to Balls wound by filament yarn of more than 1 km in
(PFY) length.PFY for Civil Use Refers to PFY used for clothing and household textile.Textile Yarn
PFY for Industrial Use Refers to Polyester macrofiber in large denier with strong strength
Industrial Yarn and high modulus for industrial use.Differential Fiber Refers to A new fiber variety that is differentiated from normal
varieties with evident breakthroughs on techniques or
performance or with certain special properties mainly
used for improving wearability through chemical
modification or physical deformation.POY Refers to Pre-oriented yarn or partially oriented yarn (POY) is
partially drawn PFY obtained by high-speed spinning
with orientation between the unoriented yarn and the full
drawn yarn.DTY Refers to Draw textured yarn (DTY) is made of POY through
drawing and false twist texturing usually with certain
elasticity and contractibility.FDY Refers to Full Drawn Yarn (FDY) is a synthetic fiber filament
further prepared by the spinning and drawing process.The fiber has been fully drawn and can be directly used
for textile processing.ANNUAL REPORT
202110
Chapter II Company Profile and Main
Financial Indicators
I Main Accounting Data
Unit: million RMB
Increase/Decrease over
2021 2020 the Same Period of the 2019
Previous Year (%)
Operating Income 197970.34 152373.40 29.92 100782.37
Net Profits Attributable to
Shareholders of the Listed 15531.08 13461.79 15.37 10025.18
Company
Net Profits Attributable to
Shareholders of the Listed
Company after Deducting 14520.70 12874.32 12.79 9275.61
Non-recurring Gains and
Losses
Net Cash Flow from
18670.1724142.88-22.6716936.97
Operating Activities
Increase/Decrease at the
End of Current
The End of The End of The End of
Reporting Period
202120202019
Compared to the End of
Previous Year (%)
Net Assets Attributable to
Shareholders of the Listed 57231.38 46905.08 22.02 36333.00
Company
Total Assets 210296.23 191028.73 10.09 174377.54
II Main Financial Indicators
Increase/Decrease over the
Main Financial Indicators 2021 2020 Same Period of the 2019
Previous Year (%)
Basic EPS (RMB/Share) 2.21 1.92 15.10 1.44
Diluted EPS (RMB/Share) 2.21 1.92 15.10 1.44ANNUAL REPORT
202111
Basic EPS after Deducting
Non-Recurring Gains and 2.07 1.83 13.11 1.33
Losses (RMB/Share)
ROEWA (%) 2.48 Percentage Points
30.0732.5531.77
Decreased
ROEWA after Deducting
3.02 Percentage Points
Non-Recurring Gains and 28.11 31.13 29.41
Decreased
Losses (%)
III. 2021 Main Financial Data by Quarter
Unit: million RMB
First Quarter Second Quarter Third Quarter Fourth Quarter
(Jan – Mar) (Apr – Jun) (Jul – Sep) (Oct – Dec)
Operating Income 53230.99 51343.49 46914.11 46481.76
Net Profits Attributable to
Shareholders of the Listed 4111.08 4531.13 4069.75 2819.12
Company
Net Profits Attributable to
Shareholders of the Listed
Company after Deducting 3757.71 4508.42 3748.90 2505.66
Non-recurring Gains and
Losses
Net Cash Flow from
5982.6010197.493308.83-818.74
Operating Activities
IV. Items and Amount of Non-recurring Profits and Losses
Unit: RMB
Non-recurring Profit and Loss Items Amount in 2021 Amount in 2020 Amount in 2019
Profit or loss from disposal of 1788290.01
-2353388.34-10313930.53
non-current assets
Tax refund or exemption approved
ultra vires or without any formal
approval or occurred occasionally
Government subsidies included in the 760570495.82 937331851.91 612253993.32
profit and loss of the current period
excluding those that are closely
relevant to the normal business
operation of the Company and
continuously enjoyed by the
Company in accordance withANNUAL REPORT
202112
national policies and regulations by a
certain standard quota or quantity
Profit or loss from entrusted asset 133647150.21
investment or management
Current net profit or loss from 754849.50
subsidiaries formed by business
combination under common control
from the beginning period to the
acquisition date
Profit or loss arising from investment 375366888.97 -158168853.40 266383453.84
income of trading financial assets
derivative financial assets trading
financial liabilities and derivative
financial liabilities of the Company
as well as investment gain received
from the disposal of held-for-trading
financial assets derivative financial
assets trading financial liabilities
and derivative financial liabilities
and other debt investments in
addition to effective hedging
business relevant to normal business
operation of the Company
Other non-operating incomes and -5096728.57 -11127746.48 -825178.73
expenses in addition to the above
Others that conform to the definition 45080477.29 1561440.57
of non-recurring profit and loss
Less: effect of income tax 183394674.73 200533876.52 206150432.59
Influenced amount of the minority -16064003.29 -20752079.27 46177523.40
shareholders’ equity (after-tax)
Total 1010378752.08 587461507.01 749572381.62
V. Items Measured through Fair Value
Unit: million RMB
Opening Influenced amount
Item Closing balance Change
balance on current profit
Derivative 361.73 696.43 334.70 729.75
financial assets
Derivative 89.00 296.82 207.82 -373.54
financial liabilities
Bank’s wealth 1288.40 20.00 -1268.40 19.24
managementANNUAL REPORT
202113
products and
structured deposits
Receivables 4082.39 3419.96 -662.43
financing
Fund trust and 97.94 97.94 2.02
asset management
products
National debt 164.99 164.99 0.38
reverse repurchase
Total 5821.52 4696.14 -1125.38 377.85ANNUAL REPORT
202114
Chapter Ⅲ Discussion and Analysis from
the Management
I. Discussion and analysis of the business performance
Since 2021 the global economy has been recovering in general with a pick-up in
the pace and international trade and investment have gradually returned to normal. The
Covid-19 vaccination has been expanded around the globe and multiple countries have
relaxed the pandemic control while implementing large-scale fiscal stimulus and easing
monetary policies. The world economy has gradually emerged from the recession under
the background. In the first half of 2021 major economies showed vigorous recovery
but when entering Q3 they have experienced a general slowdown and diverged growth
rates showing a fast growth followed by a slow one. Due to the unbalanced global
recovery there appeared a mismatch between supply and demand of global
commodities resulting in a rapid rise of inflation in the world. The increasing pressure
of inflation and the crisis in supply chain and energy cannot be resolved in the short
term. The global economic recovery and growth hence still face uncertainty. At the
beginning of 2022 the global economy continued to recover between the climbing
number of Covid cases and price index. Thanks to the improvement of global
vaccination coverage and efficacy the global economy is expected to show a
moderate growth in 2022. However the withdrawal of easing policies and the
weakening of cyclical rebound will constrain the recovery momentum. Because of
differences in policy support and vaccination coverage the “recovery gap” between
developed economies and emerging markets and developing economies will be
sustained leaning towards a diverged recovery. In addition geopolitical risks have
become an important driving force for the recent increase in international commodity
prices. After the sharp rise in 2021 international commodity prices will see another
strong pickup in 2022. The factors influencing the commodity market will be moreANNUAL REPORT
202115
complex and diverse. On the whole considering the slowdown of global economic
recovery the accelerated tightening of monetary policy by the Federal Reserve and
the gradual restoring of the global supply chain it is unlikely that commodity prices
will surge sharply again. However the prices of key energy such as crude oil are
expected to keep climbing as geopolitical events occur inventories remain at a
historically low level and the increase of production in OPEC+ is less than expected.The price of some non-ferrous metals such as copper and nickel may break new highs
because the green transformation of economy results in new large demands of some
metals and the inventories remain at a historically low level.Domestically speaking with the pandemic and global changes both unseen in a
century we should unswervingly do our own things well. China adheres to making
progress while maintaining stability and high-quality development strengthens the
cross-cycle adjustment of macro policies and enhances support for the real economy.The national economy has continued to recover its growth and main targets of 2021
have been well accomplished. The government aims to gradually change the traditional
growth model driven by real estate and infrastructure investment and actively
promotes economic transformation and a new development pattern at the same time.China’s economic growth and pandemic prevention and control have maintained a
leading position in the world and its GDP has steadily reached a new level. In 2021
China’s GDP was RMB114.37 trillion an increase of 8.1% over the previous year
calculated at constant prices. The average annual growth rate in the past two years is
5.1%. China’s share in the global economy keeps going up and continues to be a
critical engine that drives the world economic growth.However China’s economy still faces short and medium-term pressure from
“demand contraction supply shocks and weakening expectations”. “Development isthe foundation and key to solving all problems.” The Central Economic WorkConference clearly states that the policy for 2022 is to “prioritize stability whilepursuing progress”. On the one hand China will continue to implement the strategy of
expanding domestic demand promote the recovery of consumption expand effective
investment and enhance the endogenous drive for development. Our consumer marketANNUAL REPORT
202116
remains highly resilient with the trend of enlarging scale upgrading structure and
innovative consumption models unchanged. Consumption growth is well supported by
the economic recovery employment growth increase in residents’ income and the
gradual improvement of social security. On the other hand China will continue to
transform the economic structure develop new drivers of growth and give rein to the
strong development momentum of high-end manufacturing and high-tech integration
based on technologically innovative industrial chains such as new energy 5G
optoelectronic chips integrated circuits biotechnology industrial Internet and
artificial intelligence etc. China will improve the core competitiveness of the
manufacturing industry break through the bottlenecks in key areas and enhance the
resilience of the industrial chain and the supply chain.With regard to the chemical industry the year 2021 was characterized as “highgrowth followed by low development”. In the first half the pandemic in China was
under control and various industries gradually recovered and resumed work and
production. By virtue of the support of public policies the economy picked up and the
main chemical downstream industries also recovered significantly. The demand for
chemical products kept rising and achieved high growth in the first half. The prices and
price differentials of main chemical products produced by upstream refining
coal-gasification and ethylene plants such as PX pure benzene acetic acid
polypropylene ethylene glycol styrene polyethylene and butadiene generally
maintained and kept fluctuating significantly within the range thus leading to stable
profitability. Similar to the upstream downstream new chemical material products also
benefited from the increase of raw material costs and terminal demands recovery the
profitability of polyester yarn for civil use and that for industrial use rapidly returned to
normal and functional thin films engineering plastics biodegradable materials and
other under-supply materials maintained at higher prices with greater profitability.In the second half of 2021 the growth of the manufacturing industry slowed down
affected by the slump real estate and coal and electricity shortages and the service
industry showed decelerated growth due to the dispersed cases of Covid. Due to the
adverse factors problems such as slowing demand growth rising raw material costsANNUAL REPORT
202117
tightening energy efficiency constraints and periodic supply and demand imbalance
gradually emerged causing the overall declining growth rate of the industry and
mounting market volatility and downward pressure. As the crude oil price rose sharply
the price of crude-related products also went up accordingly whilst the price of
chemical products for the consumer side was more dependent on their own supply and
demand changes. In the turbulent external environment where the oil price and the
market wildly fluctuated industry leading enterprises with upstream production
capacity especially large-scale refining and petrochemical production capacity
demonstrated a more prominent risk-resistance and profitability along the entire
industry chain.
2021 was the first year of the “dual-carbon” actions. China has pledged to
establish and improve an economic system featuring green low-carbon and circular
development increase energy utilization efficiency raise the share of non-fossil fuels in
total energy consumption reduce carbon dioxide emissions and enhance the carbon
sink capacity of the ecosystem so as to ensure that carbon emission peaking and carbon
neutrality be achieved on schedule. The “dual-carbon” goal will transform the
supply-side structural reform and the industry leading to a low-carbon green and
high-quality development period.Entering the new period of the “14th Five-Year Plan” with the upstream
breakthrough the leading companies have fostered greater operation development
space and growth possibility under an operation mode which allows in-depth
coordination and complementary operation between the platform of “major chemical”
and the extension of advanced materials throughout the whole industrial chain.Meanwhile faced with the exponential growth and huge gap in the demand for
advanced chemical materials caused by the rapid development of “new consumption”
and “key & core technologies” in the future we should make full use of the continuous
empowerment of the upstream “major chemical” platform and the cumulative
development of downstream advanced materials for the “bottom down” development
of the new markets of downstream chemical materials which will become the historical
mission and core driving force for the development of our peers in the next five or evenANNUAL REPORT
202118
ten years and is expected to push the leading companies’ to build a
chemical-materials-based industrial chain and the improvement of scarce production
capacity so as to serve national upgrading in advanced manufacturing and consumption
and achieve a leapfrog breakthrough and a “secondary growth curve” of long-term
development under the effect of core technology manufacturing technique and an
overwhelming scale.At the corporate level the company proactively adapts to the new situation
development and changes focuses on the national strategic transformation deployment
of the industry continues to strengthen the basic support and development function of
the “major chemical” platform with “refining & chemicals+ethylene+coal chemicals”
as the upstream carrier upholds and adheres to Hengli’s “innovation and R&D genes”
expands deepens and refines our downstream advanced chemical material business
improves the R&D and technological capacity and raise the proportion of R&D in the
downstream sector in order to realize the “dual circulation” of coordinated
development of the “major chemical” platform and the advanced material business.During the reporting period the key tasks of listed companies are as follows:
1. Strengthening the basic support and development function of the “majorchemical” platform with “refining & chemicals+ethylene+coal chemicals” as the
upstream carrier with stable and flexible operation stable functioning of major
plants and significant synergy of the whole industrial chain model.
(1) The development of the upstream “major chemical” platform: “gainingstrength from hard work.” In Dalian Changxing Island Petrochemical Industrial ParkANNUAL REPORT
202119
one of the top seven petrochemical industrial parks in China we have concentrated
and efficiently built four major capacity clusters: benchmark refining and chemical
integration project at a capacity of 20000 kta modern coal chemical plant at a
capacity of 5000 kta the world’s largest single ethylene project at a capacity of 1500
kta and 5 sets of largest single PTA plant in the industry with a total capacity of
11600 kta. We have successfully shattered the “bottleneck” in business links and rawmaterial supply in the upstream and formed a strategic support platform of “majorchemical” with a combination of “world-class chemical refineries + modern coalchemical plants” and the integration of oil coal and chemical. Meanwhile as the
listed company owned 100% shares of both Hengli Refining and Hengli Chemical
our refining and chemical integration project is the only self-developed project owned
by a private company in the industry. Owning 100% of the equity and production
capacity guarantees that the profits of our refining ethylene and coal chemical
businesses and the output of important chemical raw materials can all be owned by
listed companies and shareholders. This effectively ensures the profitability of the
listed company and the ability to control the upstream “major chemical” development
platform.At present the business segments of the listed company in the midstream and
upstream have been based on a processing capacity of 20000 kt of crude oil and 5000
kt of raw coal. The main production is as follows: in the aromatics process an annual
output of 4500 kt of PX 1200 kt of pure benzene and 1660 kt of PTA (5000 kt from
the Huizhou base which is under construction). In the olefin process we have an
annual production of 1800 kt of fiber-grade ethylene glycol 850 kt of polypropylene
720 kt of styrene 400 kt of high-density polyethylene and 140 kt of butadiene. In the
coal chemical process an annual output of 750 kt of methanol 400 kt of acetic acid
300 kt of pure hydrogen and 126 kt of liquid nitrogen. We have reserved and
transported high-end chemicals that are high value-added and in shortage within
China as well as midstream and upstream raw materials and additional gases to the
downstream advanced materials industrial chains. At the same time we were fully
equipped with the industry’s top 520MW high-power self-provided power plantANNUAL REPORT
202120
(providing a large amount of low-cost electricity and steam for self-use) self-supply
crude oil terminal (2 terminals at a handling capacity of 300 kt) China’s largest
refinery self-supply crude oil tank area (storage capacity: 6000 kt crude oil) and other
utilities including finished raw material terminals and tank area storage which greatly
reduces the production and operation costs. The refining and chemical plant coal
chemical plant ethylene plant and PTA plant in Changxing Island base are all
connected through the pipeline saving a lot of intermediate costs and transportation
costs forming a business strategic layout of a world-class petrochemical industrial
development platform and combining the matching integrated capacity and
top-equipped utility. This also lays a solid foundation of raw materials and industrial
supporting conditions for us to further develop the downstream advanced chemical
materials business of aromatics and olefins with advantages in scale and market
potential.
(2) Speeding up the construction of Hengli Chemical’s advanced materials
supporting projects: we have started the construction of the advanced materials
supporting project of Hengli Chemical in Dalian Changxing Island with a total
investment of 2310 million yuan. We reduced the investment cost through sharing the
utilities in the refining and chemical park and used pure benzene hydrogen nitrogen
and carbon dioxide produced by our refining ethylene and coal chemical plants as
the main raw materials to produce products like adipic acid and food-grade carbon
dioxide. The core product of this project is adipic acid with an annual production
capacity of 300 kt which will further integrate and improve our whole industrial
chain of degradable advanced materials of “crude oil-PTA adipic acid- PBAT”.Adipic acid is also an important raw material for the production of nylon 66. We will
also purify the carbon dioxide exhaust gas with a concentration of higher than 95%
emitted by low-temperature methanol washing equipment to 99.99% a food grade.This process not only recovers carbon dioxide an industrial waste gas but also
increases our benefits. This advanced material supporting project makes full use of
the raw material resources provided by the upstream to further add and optimize the
raw material supply structure of the “major chemical” platform enhancing ourANNUAL REPORT
202121
products’ output and added value. The project also improves the business system of
our whole industrial chain and marks a substantial and important step for listed
companies towards refining and chemical industry fine chemicals downstream of
olefins and deep processing of advanced materials.
(3) Operations of the “major chemical” platform: During the reporting periodthe prices of crude oil and coal witnessed ups and downs like riding on a “rollercoaster”. The recovery of downstream demand drove up the price of downstream
chemical products and significantly improving the price differences. In the volatile
industry environment the company has given full play to the advantages of
systematic coupling and technological leadership in refining & chemicals ethylene
and supporting coal chemical plants optimized plant operations and timely combinedthe fluctuation of raw materials and the trend of market demand so as to “produce oilproducts ethylene or aromatics as appropriate” maximizing the benefits of the
company’s product portfolio fully responding to market risks and changes and
achieving significant synergies between refining & chemicals and coal chemicals. The
company has responded flexibly by dovetailing its own advantages and adjusting its
product structure struck a balance between production and sales of major products
and ensured smooth operations and stable profitability.
2. With the support of the “major chemical” platform and by upholding
and adhering to Hengli’s “innovative R&D genes” we expand deepen and
refine our downstream advanced chemical material business and improve the
R&D and technological capacity and raise the proportion of R&D in the
downstream sector. Additionally based on the construction of projects to buildnew materials and new energy businesses we aim to create a “secondary growthcurve”.For the listed company the current downstream advanced material sector is
mainly distributed in high R&D businesses such as differentiated polyester fibers
functional polymer thins engineering plastics and PBS/PBAT biodegradable
advanced materials. With its upstream platform and downstream experiences Hengli
targets the growing demands in the advanced consumption and technological materialANNUAL REPORT
202122
markets boasting great potential for scaled production and high-end differentiation.Hengli is bringing its existing rapid and efficient processes and product development
models into the advanced material vertices to permeate these markets. To this end we
have already established three major materials research institutes the Fiber Research
Institute the Petrochemical Research Institute and the Advanced Materials Research
Institute dedicated to the R&D and business expansion of our advanced chemical
materials products.
(1) In the field of civilian PET fiber and industrial PET fiber our subsidiaries
Hengli Chemical Fiber Hengke New Material and Deli Chemical Fiber are the main
producers. They are high-tech companies with solid technical support rich talent
pools and market reserves. At present they boast a total production capacity of 2430
kt of civilian PET fiber and 400 kt of industrial PET fiber. We follow the development
path of market differentiation high-end technology and business integration and
make Hengli’s businesses more refined and differentiated. Hengli is currently the only
Chinese producer that can mass produce FDY products of 7D or below. In the R&D
of microfiber the company has been at the forefront of the industry by constantly
updating and introducing advanced technologies to make “one fiber” more fined and
lead the industry. During this reporting period Deli Chemical Fiber began mass
production of ultrafine 0.2 (D) monofilament with a specification of 15D/72f making
it one of the finest mass-produced ultrafine fibers in China. The high-density fabric
ultrafine fiber 5D/6f independently developed by the Hengke New Material has the
smallest total linear density in China suited for the IT industry such as mobile circuit
boards and electromagnetic waves shielding fabrics. For industrial PET fiber Hengli
Chemical Fiber’s 200kta industrial fiber project is a showcase that Hengli’s research
has transformed into major high-tech production. The project has been put into full
production for the first time making specialized downstream industry such as oil and
gas exploration and offshore engineering accessible to domestically produced fibers
effectively breaking the industry technology monopoly and the bottlenecks of key
technologies in high-performance industrial yarn.
(2) In the field of functional polymer thin films and engineering plasticsANNUAL REPORT
202123
sectors: The Company’s wholly-owned subsidiary Kanghui New Material is the
main producer of differentiated and high-performance polymer thin films with
environment-friendly nature and new plastic materials of a high-tech company.Through nearly a decade’s research and rapid development Kanghui has improved its
industrial competitiveness in mid-to-high-end functional polymer thin films and
advanced plastic materials and is now ranking among first-class of the industry. At
present Kanghui has an annual production capacity of 240 kt in PBT engineering
plastics at its Yingkou Base making it the largest PBT manufacturer in China. Its PBT
is mainly used for auto parts polymer alloys optical cable protective sleeves
electronic appliances and other industrial applications. It has a capacity of 385 kt of
BOPET functional polymer thin films applied to high value-added scenarios such as
BOPET optical equipment release film liner electronic appliances automotive
decoration construction and packaging. Kanghui has the largest domestic PBAT
annual production capacity of 33 kt by single set. The PBAT is used in green
development and environmental protection such as food-grade shopping bags
tableware and straws of PBS/PBAT.During the reporting period through research in mid-to-high-end products
Kanghui’s high-smooth MLCC (multilayer ceramic capacitor) release base film has
been mass produced and the ultra-smooth MLCC release base film process has been
finalized. Kanghui has also received certification from Japanese and South Korean
authorities and small batch production of the ultra-smooth MLCC release base film
begun. The ultra-smooth MLCC release base film has passed the technical verification
of the Japanese and South Korean authorities and will reach mass production soon.The 12-micron in-line silicon-coated release film developed by Kanghui has been
mass produced and exported and Kanghui has become the only company in China
and the second in the world that can produce products of the thickness with a
monthly production capacity of more than 60 million square meters.
(3) Construction of major projects in the PET advanced material sector: On
the basis of consolidating the existing PET advanced material production capacity andcompetitiveness and the R&D efficiency and the support of the upstream “majorANNUAL REPORT
202124chemical” platform Hengli further develops its PBS/PBAT degradable advanced
materials high-performance industrial yarns high-end PET film lithium battery
separator film and other emerging market demands and businesses. Details are as
follows:
a. The Jiangsu Xuanda Green Multifunctional Advanced Textile Materials
Project (Hengke Phase III) with a capacity of 1500 kt is located in Nantong Jiangsu
with a total investment of RMB9 billion. Its main project capacity includes 150 kt of
new elastic fibers 150 kt of environment-friendly fiber 300 kt of cationic POY 300
kt of full-dull POY and 600 kt of differential fiber (300 kt/year POY 300 kt/year
FDY). After completed the project will bring more advanced technology and added
value to our civilian PET fiber sector. The project is under progress in on orderly
manner. In addition the new production capacity of 1200 kt of textile yarns in Deli
Phase II and 1400 kt of industrial yarns in the Suzhou headquarters are also in their
planning phase and will start construction once government approval and other related
preparatory conditions are ripe.b. The Jiangsu Kanghui New Material Project with an annual output of 800 kt of
functional PET thin films and functional engineering plastics is located in the Yangtze
River Delta Eco-Green Integrated Development Demonstration Zone of Fenhu
Jiangsu. The total investment is RMB11.120 billion. The construction includes 470 kt
of high-end functional polyester film 100 kt of special available polymer thin films
150 kt of modified PBT and 80 kt of modified PBAT. The project produces products
that are in short supply differentiated and high value-added in China to meet the
demands of customers for mid-to-high-end PET films and functional plastics. After
the project is completed it will expand the company’s production capacity and market
share in the PET advanced material sector.c. The 450 kt PBS biodegradable plastic project of Kanghui Dalian New Material
is built on Changxing Island Dalian. With a total investment of RMB1.798 billion
the project features 450 kt of PBS/PBAT degradable advanced material capacity. The
project will expand the capacity and scale of the Company’s biodegradable advanced
material sector and increase the market share of biodegradable plastics.ANNUAL REPORT
202125
d. The lithium-ion battery separator film project has an annual output of 1.6
billion square meters. Kanghui introduced 12 wet-process production lines of
lithium-ion battery separator film from Shibaura Machine Co. Ltd of Japan. and
Qingdao Zhongke Hualian New Materials Co. Ltd. with an annual production
capacity of 1.6 billion square meters. The project is expected to be delivered within 18
months from January 2022.
3. We implement capital and equity operations of annual cash dividends the
fifth-phase employee stock ownership plan share repurchase and the plan of
issuing short-term financing bonds.For the investors to get stable and continuous rewards and share the Company’s
growth benefits with shareholders Hengli completed the 2020 annual interest
distribution and returned total cash dividends of RMB5407201800 (tax included).The amount of one-time cash dividends reached a record high in line with the
Company’s Five-Year Return Plan to Shareholders (2020-2024). The Plan presents an
expectation and mechanism to return stable rewards to shareholders.To create a community of shared interests between employees and shareholders
the Company has awarded the main core employees of the 1500 kta ethylene project
the 2500 kta PTA-4 project and the 2500 kta PTA-5 project with corporate stock. We
have implemented the fifth-phase employee stock ownership plan to share with
employees the rapid development.Believing in the company’s future development and recognition of the
Company’s value in order to safeguard the interests of the company and shareholders
we have launched the third-phase share repurchase plan with a repurchase fund of
RMB500 million to 1000 million. As of the date of this announcement the Company
has repurchased shares of the highest amount as planned and finished the third round
of share repurchase. Since March 2022 the A-share market and the industry have
witnessed great fluctuations. To maintain the stability of the Company’s investment
value and market value we have timely launched a large-scale fourth-phase share
repurchase plan with a repurchase fund of RMB1000 million to 1500 million. Up to
now the fourth phase plan is progressing in an orderly manner. The Company hasANNUAL REPORT
202126
repurchased 32595903 shares in total with a payment amount of RMB714 million.The launch and rapid implementation of the plan has played a vital role in stabilizing
the secondary market and avoiding irrational decline in the Company’s market value
building positive reputation in the market.In order to ensure the diversification of financing channels meet the needs of
capital turnover in business operation and enhance the flexibility of capital
management the Company has applied to the China National Association of Financial
Market Institutional Investors for the registration and issuance of short-term financing
bonds with an amount not exceeding RMB3000 million (including RMB3000
million). As of the date of this announcement the Company has obtained the Notice of
Acceptance of Registration and will issue the bonds within the validity period of the
registration based on the real conditions.
4. We always follow safe production as well as green and low-carbon
development in daily operation to achieve high-standard green and
environmentally-friendly efficient operations.Highly viewing design planning construction operation and detailed
management we practice the high-standard intrinsic safety and green and low-carbon
operation which is essential to the Company’s survival benefit and performance inits stable efficient and sustainable growth. We adhere to the policy of “safety firstprevention as the mainstay and comprehensive management” fully implement the
primary safety responsibility of the Company standardizes safety operation and HSE
system management continuously improves technological innovation in safety
production and reduces safety risks. At the same time we normalize the emergency
management of accidents and establish an emergency management system to prevent
and reduce the risk of emergencies and be better able to respond to emergencies.The Company integrates green and low-carbon production into its development.Through multiple measures of reducing the use of resources and energy improving
the efficiency of energy use and technological transformation and innovation the
Company has integrated upstream and downstream processes and achieved the
mutual supply of materials so as to ensure energy-saving and sustainableANNUAL REPORT
202127
development throughout the whole production process. Hengli Petrochemical (Dalian)
has built the world’s first PTA residue recovery system in the industry the R2R unit
overcoming the challenge the world faces in PTA residue recovery and treatment
recovered benzoic acid in an innovative way and realized the ecological development
of the petrochemical industry. Hengli’s refinery sewage treatment plant has adopted
the world’s leading French Degremont treatment technology and applied the
embedded sewage integrated treatment technology for the first time. With the
technology we have treated “waste” with “waste” and turned waste into treasure with
the available water gas and residue. Our emission standard is 30% higher than the
national one. Through recovering the waste heat of boilers low-parameter steam
low-temperature warm water high-temperature condensate as well as stepped heating
with different pressure levels we have saved nearly 2000 kt of standard coal every
year. Through energy gradient utilization steam pipe network optimization
large-scale application of frequency conversion technology and other measures we
achieved 1000 million kWh annual reduction of purchased electricity.Since the “dual-carbon” goal was put forward the Company has responded
quickly and taken effective measures. Currently we take the lead in emission
reduction with remarkable results. Hengli Petrochemical has become the refinery with
the largest scale of frequency changers in China saving 260 million kWh of
electricity every year equivalent to a reduction in consumption of 80.1 kt of standard
coal per year. Its aromatics plant has implemented the theoretical proportioning
technology of carbon monoxide online analysis to reduce the oxygen content of the
heating furnace so that the thermal efficiency of the heating furnace is up to more
than 93% and the annual fuel consumption can be reduced by 1.4 kt or about 2.2 kt
of standard coal. In 2021 Hengli Petrochemical saved 360 kt of steam equivalent to
about 41.4 kt of standard coal by optimizing the operation of the distillation column.Hengli (Nantong) Industrial Park plans to build a “power station on the roof” with an
installed capacity of 100MW using the idle roofs of warehouses and auxiliary
workshops and uses solar PV power to generate electricity. According to estimates
compared with thermal power after the 100MW “power stations on the roof” is fullyANNUAL REPORT
202128
on grid about 44 kt of standard coal can be saved every year reducing carbon dioxide
emissions by about 109 kt sulfur dioxide by about 260 tons and nitrogen oxides by
about 226 tons. Up to now all four phased PV projects have been put into operation
with a total installed capacity of about 60 MW and a long-term planned installed
capacity of 100 MW making it the largest company distributed PV power generation
project in Jiangsu Province.Plans and practices will bring about good results. During the reporting periodHengli Petrochemical (Dalian) Co. Ltd. was awarded the titles of “AdvancedCompany for Energy Conservation in the Petroleum and Chemical Industry Duringthe 13th Five-Year Plan Period” and “Benchmarking Company for Energy EfficiencyLeader in the Petroleum and Chemical Industry of 2020” with its energy efficiency of
purified terephthalic acid products leading the industry. Hengli Petrochemical (Dalian)
Refining Co. Ltd. also won the same two titles for its energy efficiency of crude oil
processing p-xylene and acetic acid leading the industry. Following Hengli
Petrochemical (Dalian) Hengli Refining and Hengke New Material awarded the titles
of “National Green Plant” in 2017 and 2020 respectively Hengli Chemical Fiber was
awarded the title of “National Green Plant” in early 2022. So far four subsidiaries
under the listed Company have been rated as national-level “Green Plants”.Facing the “carbon neutrality” requirement of the industrial development in the
future the Company will as always put safety and environmental protection first. We
will continue to perform well in keeping intrinsic safety of plants accelerate the R&D
on key core technologies and make great efforts in flue gas treatment wastewater
recycling solid waste disposal waste heat utilization and reduction of energy andresource consumption. We will create a world-class industrial park that is “the safestthe most environmentally friendly internally excellent and externally beautiful” and
practices our own high-quality growth path of coexistence between industrial
development and ecological and environmental protection and equal importance on
economic and social benefits.ANNUAL REPORT
202129
II. Information of the Company’s Businesses during the reporting
period
The main businesses of the Company cover refining petrochemical production
R&D and sales of PX acetic acid PTA EG Polyester Chip PFY for civil use PFY
for industrial use functional films engineering plastics and PBS/PBAT
bio-degradable advanced materials related to the whole industrial chain of advanced
polyester materials including downstream midstream and upstream business. It is the
first listed company of advanced chemical materials in the industry integrating thewhole industry chain of “crude oil aromatic hydrocarbon alkene PTA EG and newpolyester materials”.The Company has a production capacity of 4500 kt of PX and 400 kt of acetic
acid annually in the upstream and 1160 kt of PTA and 1800 kt of fiber-grade EG in
the midstream. Its PTA and EG products are partially for private use and the rest are
for market sales. In the downstream it has extensive varieties of advanced chemical
material products with complete specifications targeting the middle and high-end
market including PFY for civil use PFY for industrial use BOPET PBT PBS/PBAT
and other polyester and advanced chemical material products applied in textile
pharmaceutical automobile the environment and new energy electronics PV optical
instrument other industries with large scale differentiation and high additional value
and civil areas concerning basic necessities of life with massive demands.As the world-class petrochemical and ethylene projects concerning key
production capacity and all categories of scarce chemical raw materials in the
upstream have been fully put under operation and the competitive advantages of the
PTA business in the midstream keep expanding and consolidating the Company is
accelerating its pace to sustain deepen and optimize the“major chemical” platform
and raw material support for high-end advanced material and fine chemical
engineering business in the downstream to continuously extend the value and
industrial chain of advanced materials.ANNUAL REPORT
202130
III. Analysis of core competitiveness during the reporting period
1. The leading strategic advantage in developing the whole industry chain.
The Company is the first and fastest leading company in the industry to engage
in the whole industrial chain strategic development of polyester advanced materials in
China. It actively promotes coordinated and balanced development of all business
segments vigorously expands high-end production capacity in both upstream and
downstream commits itself to creating a world-class development pattern for a listed
platform with collaboration and integration of the whole industrial chain covering“crude oil-aromatic hydrocarbon alkene PTA EG polyester PFY for civil use PFYfor industrial use films plastics”. The Hengli 2000 kta petrochemical integration
project and the 1500 kta ethylene project are under full production which marks a
strategic breakthrough of the Company on key links in the petrochemical and
production chain of aromatic hydrocarbon and alkene making the Company theleader in the industry to integrate the whole industry chain of “crude oil aromatichydrocarbon alkene PTA EG new polyester materials”. In addition with new
projects of PTA advanced chemical materials and PBS/PBAT bio-degradable
advanced materials successively being inaugurated and under operation the
Company is gradually upgrading and optimizing its industrial layout consolidating
and expanding its industrial strengths in all links pushing ahead with the quantitative
transition of its business scope and qualitative transition of its business structure to
foster strategic strength in industrial collaboration and integration production
capacity structure and quality equipment scale and costs accumulation of process
techniques speed of project operation and development of the listed platform in the
high-quality competition of the whole industrial chain.
2. The comprehensive operation strength in scale + techniques + support.
The Company keeps introducing world-class production equipment and mature
technique packages for self-learning absorption and application and continuously
engages in technology and technique innovation and upgrading. It has been equipped
with the high-quality and efficient production capacity structure and publicANNUAL REPORT
202131engineering supporting facilities featuring “equipment upsizing capacity scaling-upstructural integration technique advancement green development and environmentfriendliness and complete support” in the whole industrial chain of advanced
polyester material covering the upstream midstream and downstream. Our
processing scale and technical level are second to none in the industry in terms of
individual unit installation total production capacity and process techniques giving
the Company advantages in scale and operation efficiency in unit investment costs
material and energy consumption conservation unit processing costs product
delivery circle product quality and diversification and ensuring stable and
preeminent quality performance. In addition with the most complete supporting
capacity in the industry including power energy port wharf tank field warehouse
and logistics the Company enjoys remarkable advantage in comprehensive operation
covering comprehensive cost saving service quality and performance and operation
efficiency. In the industrial park oil refining chemical engineering and coal-based
chemical processing are complementary and mutually reliant on each other with a
balance of high efficiency and cost control. The petrochemical business of the
Company is equipped with the largest-scale coal-hydrogen production facility across
the country generating low-cost pure hydrogen methanol acetic acid syngas and
other coal-based chemical products which plus the Company’s advantages in storage
and logistics of raw materials and products substantially improves the operational
flexibility and comprehensive cost advantage of the project.
3. The strength in market competition driven by advanced R&D.
The Company follows the development path laying equal stress on market
differentiation technology advancement large-scale equipment and business
integration upholds the innovation mechanism based on integration with market and
the technology creates R&D teams with experiences in global research sets up
high-level platforms for scientific R&D attaches equal importance to capacity for
technological R&D and that for innovation of new products makes quick response to
the latest changes of market demand and has stable mid-to-high-level client resources.Four subsidiaries under the company i.e. Hengli Chemical Fiber Deli ChemicalANNUAL REPORT
202132
Fiber Hengke New Material and Kanghui New Material are all high-tech companies.Thanks to fine management and upgrading techniques in the production the Company
has independently developed a series of differentiated and functional products based
on research held patents of a large number of products and won widespread market
recognition. We boast strength over our peers in quality and stability of products. As
the only company in China with the capacity for mass production of 5D FDY
products we provide more than 65% of the total output of MLCC release liners in
China and we are the first company in China as well as the second in the world to
hold the capacity for on-site production of 12-nanometer silicon-coated release
laminated protective films for lithium batteries. The absolute technological strength
and technical experience in the fields of functional films and PFY for civil use have
put us in an invincible position in the industrial competition that is difficult to
replicate in the short run.
4. The advantages of smart lean and efficient management.We are committed to promoting the idea of “deep integration of the Internet bigdata Artificial Intelligence (AI) and the real economy” by developing advanced
manufacturing capacity and regenerating internal driving force. In achieving this goal
we take the “intelligent interconnection” as a key starting point for industrial
upgrading and transformation through “replacing humans with machines” “replacingmachines with automatic machines” “replacing one machine with a complete set ofmachines” and “replacing digitalization with intelligentization” thus facilitating the
gradual transition from “strength in human resources” to “strength in technology” in
our development pattern. By means of the integrated application of intelligent
manufacturing the Internet the Internet of things and other technologies we are
constantly promoting the intelligent manufacturing throughout the entire process.Product traceability and full-process control are realized through a self-developed
product detection system automatic bar code system intelligent warehouse
management system and sales system together with the seamless integration with the
ERP system thus promoting the integration of key links such as corporate control
R&D manufacturing business management and financial connection facilitating theANNUAL REPORT
202133
transition from “manufacturing” to “smart manufacturing” and transforming from
single business management to highly-coordinated operation of the industrial chain.
5. Continuously accumulating talent management advantages.
We have formed a multi-disciplinary and multi-profession technological team
including refining petrochemical polymer materials chemical fiber engineering
textile engineering and electrical engineering. Besides our scientific R&D
capabilities are ahead of our domestic counterparts. While introducing external talents
we also attach great importance to the cultivation of our internal talents at the same
time by providing our employees with a smooth career development channel. In
addition we have also established a complete internal training system and trained a
large number of key personnel covering various aspects including R&D production
sales and management.Ⅳ. Main Business Operations during the Reporting Period
By the end of 2021 the Company’s total assets were RMB210296 million a
year-on-year increase of 10.09% and the net assets attributable to the shareholders of
the Listed Company were RMB57231 million a year-on-year increase of 22.02%.In 2021 the Company recorded a revenue of RMB197970 million a
year-on-year increase of 29.2% a net profit attributable to the shareholders of the
Listed Company of RMB15531 million an increase of 15.37% compared with the
same period of last year.(I) Main Business Analysis
1. Changes of Accounts from Income Statement and Cash Flow Statement
Unit: million RMB
Account Item Amount for the
Amount for the
same period of last Flux (%)
reporting period
year
Revenue 197970.34 152373.40 29.92
Cost of sales 167518.09 124116.31 34.97
Selling expenses 291.37 177.33 64.31
Administrative expenses 1985.40 1715.59 15.73
Financial expenses 4916.21 5028.77 -2.24
R&D expenses 1019.45 825.97 23.42ANNUAL REPORT
202134
Net cash flow from operating
18670.1724142.88-22.67
activities
Net cash flow from investing
-13097.72 -22410.88 N/A
activities
Net cash flow from financing
-7387.59 -1020.97 N/A
activities
Explanation of the reasons for changes in cost of sales: increase in cost of sales was
primarily due to revenue increase during the reporting period
Explanation of the reasons for changes in selling expenses: primarily due to
warehousing expenses increase during the reporting period
2. Revenue and Cost Analysis
(1) Main business by industry by product by region and by sales model
Unit: million RMB
By Sector
Year-on-
Year-on- Year-on- year
Gross
year year change
profit
By sector Revenue Cost of sales change of change of of gross
margin
revenue cost of profit
(%)
(%) sales (%) margin
(%)
Petrochemical 180371.58 150068.56 16.80 31.86 37.97 -3.68 pts
industry
Other 16846.29 17154.51 -1.83 19.27 18.99 0.24 pts
industries
By Product
Year-on-
Year-on- Year-on- year
Gross
year year change
profit
By product Revenue Cost of sales change of change of of gross
margin
revenue cost of profit
(%)
(%) sales (%) margin
(%)
Refining and 104931.71 80915.30 22.89 16.82 19.08 -1.46 pts
chemical
products
PTA 48163.11 47038.13 2.34 63.56 79.79 -8.81 pts
Polyester 27276.75 22115.14 18.92 55.69 50.9 2.57 pts
products
Others 16846.29 17154.51 -1.83 19.27 18.99 0.24 pts
By RegionANNUAL REPORT
202135
Year-on-
Year-on- Year-on- year
Gross
year year change
profit
By region Revenue Cost of sales change of change of of gross
margin
revenue cost of profit
(%)
(%) sales (%) margin
(%)
Domestic 175293.88 147063.15 16.1 27.12 33.01 -3.72 pts
Overseas 21923.98 20159.92 8.05 68.37 59.8 4.94 pts
Revenue cost and gross profit margin of refining and chemical products PTA and polyester
products include revenue cost and gross profit margin of trade.
(2) Production and sales volume analysis
Year-on-
Year-on- Year-on-y
year
year ear
Main Sales change
Unit Production Inventory change of change of
products volume of sales
productio inventory
volume
n (%) (%)
(%)
Refining mt 23.52 23.18 0.46 -6.49 -7.6 161.77
and
chemical
products
PTA mt 12.19 11.40 0.22 26.74 23.97 559.63
Polyester mt 3.33 3.13 0.32 25.04 15.28 39.10
products
Sales volume of refining and chemical products PTA and polyester products include respective
volume of trade but exclude volume of internal usage.
(3) Cost analysis
Unit: million RMB
By Sector
Proport Propor
ion in tion in
total total
Amount in Amount in Year-on-
costs costs
Cost the the same year Explanat
By sector of the of the
composition reporting period of change ion
reporti same
period last year (%)
ng period
period of last
(%) yearANNUAL REPORT
202136
(%)
Petrochemical Direct 136617.55 81.70 98878.87 80.27 38.17
industry material
Petrochemical Direct labor 1616.36 0.97 1266.45 1.03 27.63
industry
Petrochemical Power fuel 5439.39 3.25 3594.92 2.92 51.31
industry
Petrochemical Manufacturi 6395.26 3.82 5028.41 4.08 27.18
industry ng expenses
Other Direct 15405.12 9.21 12939.49 10.50 19.06
industries material
Other Direct labor 1693.29 1.01 1399.57 1.14 20.99
industries
Other Power fuel 24.96 0.01 28.29 0.02 -11.78
industries
Other Manufacturi 31.15 0.02 49.33 0.04 -36.86
industries ng expenses
By Product
Propor
Proport
tion in
ion in
total
total
Amount in Amount in costs Year-on-
costs
Cost the the same of the year Explanat
By product of the
composition reporting period of same change ion
reporti
period last year period (%)
ng
of last
period
year
(%)
(%)
Refining and Direct 73408.60 43.90 62228.07 50.52 17.97
chemical material
products
Refining and Direct labor 581.56 0.35 455.08 0.37 27.79
chemical
products
Refining and Power fuel 2744.42 1.64 1840.44 1.49 49.12
chemical
products
Refining and Manufacturi 4180.70 2.50 3426.17 2.78 22.02
chemical ng expenses
products
PTA Direct 44542.80 26.64 24889.65 20.21 78.96
material
PTA Direct labor 213.14 0.13 117.83 0.10 80.90
PTA Power fuel 1077.22 0.64 375.08 0.30 187.20ANNUAL REPORT
202137
PTA Manufacturi 1204.97 0.72 780.43 0.63 54.40
ng expenses
Polyester Direct 18666.15 11.16 11761.14 9.55 58.71
products material
Polyester Direct labor 821.65 0.49 693.55 0.56 18.47
products
Polyester Power fuel 1617.75 0.97 1379.41 1.12 17.28
products
Polyester Manufacturi 1009.59 0.60 821.81 0.67 22.85
products ng expenses
Others Direct 15405.13 9.21 12939.49 10.50 19.06
material
Others Direct labor 1693.29 1.01 1399.57 1.14 20.99
Others Power fuel 24.96 0.01 28.29 0.02 -11.78
Others Manufacturi 31.15 0.02 49.33 0.04 -36.86
ng expenses
Direct material expense of refining and chemical products PTA and polyester products include
purchase cost of trade.
(4) Main sales customers and suppliers
A. The Company’s main sales customers
The total sales of the top five customers was RMB14430.81 million accounting for
7.29% of the total annual sales. Sales from related parties among the top five
customers was RMB0 million accounting for 0% of total annual sales.B. The Company’s main suppliers
The total purchase of the top five suppliers was RMB54034.98 million accounting
for 33.48% of the total annual purchase. Purchase from related parties among the top
five suppliers was RMB0 million accounting for 0% of total annual purchase.
4. R&D Investment
(1) R&D investment
Unit: million RMB
Expensed R&D investment during the reporting period 1019.45
Capitalized R&D investment during the reporting period
Total R&D investment 1019.45ANNUAL REPORT
202138
Proportion of R&D investment in revenue (%) 0.51
Proportion of capitalized R&D investment
(2) R&D personnel
Number of R&D personnel 3220
Proportion of R&D personnel in the Company’s total employees (%) 9.03
Educational qualifications
Educational qualifications Number of personnel
Doctoral candidate 6
Master 65
Bachelor 1449
Junior college 1188
High school degree and below 512
Age
Age Number of personnel
below 30 years old (excl. 30 years old) 1005
30-40 years old (incl. 30 years old and excl. 40 years old) 1468
40-50 years old (incl. 40 years old and excl. 50 years old) 523
50-60 years old (incl. 50 years old and xcl. 60 years old) 222
60 years old and above 2
(II) Assets and Liabilities
1. Assets and liabilities
Unit: million RMB
Perce
Perce
ntage
ntage
in
in
total
Amount by total Amount by
assets
the end of the assets the end of the Flux
Item in the Explanation
reporting in the same period (%)
same
period reporti of last year
period
ng
of last
period
year
(%)
(%)
Trading 814.37 0.39 1.650.13 0.86 -50.65 Primarily due to
financial decreases in bank
assets wealth management
products and
structured deposit
balance
Accounts 2643.84 1.26 1363.60 0.71 93.89 primarily due toANNUAL REPORT
202139
receivabl increases in
e outstanding sales
receivable during the
closing period
Advance 2636.92 1.25 1994.37 1.04 32.22 Primarily due to
payment increases in
prepayment for
material purchase by
the end of the
reporting period
Inventori 33553.00 15.96 19691.12 10.31 70.40 Primarily due to
es increases in raw
material purchase
during the reporting
period
Construc 7782.85 3.70 4195.71 2.20 85.50 Primarily due to
tion in newly increased
progress investments in the
5-million-ton PTA
projects and the
green multi-function
textile new material
project with an
annual out of 1500kt
Other 3.902.59 1.86 2261.80 1.18 72.54 Primarily due to
non-curr increases in
ent assets prepayment for
long-term assets
purchase
Notes 16050.29 7.63 7805.07 4.09 105.64 Primarily due to
payable increases in
unexpired letters of
credit issued by the
end of the reporting
period
Tax 1276.89 0.61 2290.70 1.20 -44.26 Primarily due to
payable decreases in income
tax payable balance
by the end of the
reporting period
Non-curr 5423.23 2.58 3828.96 2.00 41.64 Primarily due to
ent increases in
liabilities long-term
due borrowings dueANNUAL REPORT
202140
within within one year by
one year the end of the
reporting period
Other 1399.27 0.67 719.12 0.38 94.58 Primarily due to
current newly increased
liabilities money margin
payable for the
acquisition of Hengli
Futures
Bonds - - 1013.97 0.53 -100.00 Due to redemption
payable of matured bonds
issued by the
Company
Undistrib 31118.45 14.80 21120.65 11.06 47.34 Primarily due to
uted transferred net
profits profits attributable to
the owners of the
parent company
realized during the
reporting period
2. Overseas assets
Of which: overseas assets were 3150.65368597 (Unit: million RMB) accounting for
1.50% of the total assets.
3. Assets with restrictions by the end of the reporting period
Unit: million RMB
Item Closing Reasons for Restrictions
Book Value
Cash and cash equivalent 6211.53 The Company pledged cash and cash equivalent in
order to obtain line of credit from financial institutions
Cash and cash equivalent 65.32 Margin paid for futures and financial derivatives
trading
Cash and cash equivalent 0.05 Immature interest receivable
Cash and cash equivalent 119.60 Litigation-related frozen provision
Trading financial assets 20.00 The Company pledged trading financial assets in order
to obtain line of credit from financial institutions
Accounts receivable 1338.20 The Company pledged notes receivable in order to
financing obtain line of credit from financial institutions
Inventories 0.72 The Company pledged warehouse receipts to offset
futures marginANNUAL REPORT
202141
Fixed assets 91413.84 The Company pledged fixed assets in order to obtain
line of credit from financial institutions
Fixed assets 328.66 Mortgaged in order to provide guarantee for
sales-leaseback contracts
Intangible assets 3876.63 The Company mortgaged intangible assets in order to
obtain line of credit from financial institutions
Constructions in progress 241.28 The Company mortgaged constructions in progress in
order to obtain line of credit from financial institutions
Total 103615.83
(Ⅲ) Analysis of Industrial operating information
1. Analysis of Industrial operating information on the chemical industry
Basic information on the industry
(1) Industrial policies and changes
* The 14th Five-year Plan For The Development Of The Raw Material Industry
In December 2021 the Ministry of Industry and Information Technology the
Ministry of Science and Technology and the Ministry of Natural Resources jointly
issued The 14th Five-year plan for the Development of Raw Material Industry putting
forward that technological research will be conducted to develop technology of heavy
and inferior oil processing and efficient conversion and utilization and advanced
technologies will be applied within the petrochemical industry especially low-carbon
technologies including the direct production of chemicals from crude oil intelligent
micro-reaction and continuous production of fine chemical products.* The 14th Five-Year Plan for Industrial Green Development
In November 2021 the Ministry of Industry and Information Technology issued
The 14th Five-Year Plan for Industrial Green Development which proposed main
tasks such as focusing on promoting advanced energy-saving processes such as the
direct production of chemicals from crude oil in the petrochemical and chemical
industry enhancing the process and structural matching collaborative supply of raw
materials among chemical companies strengthening the circular linkage among
companies parks and industrial clusters coordinating the domestic and international
resources and voluntarily improving cross-region industrial allocation. Efforts must
be also made to encourage eligible parks and companies to intensify the coupling andANNUAL REPORT
202142
circular utilization of resources in a bid to build “waste-free parks” and “waste-freecompanies”.* Action Plan on Energy Conservation and Carbon Reduction for Major
Businesses of Petrochemical Industries (2021-2025)
In October 2021 the National Development Reform Commission and the
Ministry of Industry and Information Technology jointly issued Opinions on Strictly
Restraining Energy Efficiency to Drive Energy Saving and Carbon Reduction in Key
Areas and the Action Plan on Energy Conservation and Carbon Reduction in Key
Petrochemical and Chemical Industries (2021-2025) boosting the green and low
carbon transformation in key industries of oil refining ethylene and synthetic
ammonia to achieve the goal of carbon dioxide peaking as scheduled.The action plan clearly puts forward the action target that “by 2025 throughenergy saving and carbon reduction the proportion of production capacity in the oil
refining ethylene ammonia and calcium carbide industries reaching the benchmark
level will exceed 30% significantly raising the overall energy efficiency of the
industry cutting carbon emission intensity and enhancing green and low carbondevelopment”. The overall implementation plan for technological transformation of
companies in key petrochemical industries will be formulated guiding the orderly
reduction of backward production capacity pushing forward energy-saving and low
carbon technology and equipment and promoting the holistic development of
industries. These majors tasks will be put into effect. We will select advanced and
applicable technologies for energy conservation in the oil refining ethylene and
synthetic ammonia industries and guide the technological transformation and upgrade
of backward companies. We will phase out the oil refining units of 2000 kta and
below and ethylene units of 300 kta and below strictly prohibit the construction of
new atmospheric and vacuum units of less than 10000 kta and catalytic cracker of
less than 1500 kta continuous catalytic reforming unit (including aromatics
extraction) below 1000 kta hydrocracker below 1500 kta and naphtha cracking
units of less than 800 kta to produce ethylene. We will apply low carbon deep
processing of heavy and inferior residues one-step conversion from syngas to olefinsANNUAL REPORT
202143
directly cracking crude oil to ethylene and other technologies adhere to the
development direction of refining-chemical integration the integration of coal
chemicals power and heat and poly generation and also build an industrial chain that
connects companies in supply and demand with interconnected production units. We
thus can improve the comprehensive utilization of resources reduce energy
consumption in logistics and transportation and promote the identification of
chemical parks.○4 The Guidelines of the 14th Five-Year Plan for the Petrochemical and
Chemical Industry
In January 2021 the China Petroleum and Chemical Industry Federation issued
the The Guidelines of the 14th Five-Year Plan for the Petrochemical and Chemical
Industry which pointed out that in the petroleum and chemicals industry emphasis
should be laid on producing high value-added oil products and chemical feedstock
instead of mass production of refined oil products refining capacity should be
integrated the ethylene industry should be improved and the competitiveness of PX
should be enhanced. In terms of new chemical materials the development in special
engineering plastics high-end functional film materials and thermoplastic elastomers
should be sped up making breakthroughs in preparing technologies across the whole
industry chain as in high-end polyolefins bio-based fibers and bio-based polyesters
diversify and upgrade the new chemical materials products and seeking pathways to
make up for the shortcomings and gaps in technologies.○5 The Ecological & Economic Development Plan of the 14th Five-Year Plan
for Liaoning Province
In January 2022 the General Office of the People’s Government of Liaoning
Province released The Ecological & Economic Development Plan of the 14th
Five-Year Plan for Liaoning Province stating that the petrochemical industrial chain
should be extended; The scale advantage of ethylene propylene PX PTA and other
bulk basic chemical feedstocks will be maintained to carry forward the high-end
development of the petrochemical industry and lay out advantageous product chains
along the olefins aromatics new materials and fine chemicals industry chains.ANNUAL REPORT
202144
“ More chemical products less refined oil output” for the petrochemical industry
will be proceeded. Further progress must be made in the transformation of the refining
and chemical production to be safe clean green and effective to achieve an intensive
high-end green and integrated development in the refining and chemical industry.Top priority should be given to the development of such new chemical materials as
high-end polyethylene special resin special engineering plastics and high-end
membrane.
(2) Basic information on the main industrial segment and industrial status of the
Company
* Petrochemical industry
The Company has a production capacity of 4500 kt PX basically meeting the
demand in raw materials for downstream PTA capacity In addition it is designed to
produce high-end chemical products that are in short supply with high added value in
China as 1800 kt EG 400 kt acetic acid 1200 kt of benzene 850 kt of
polypropylene 720 kt of styrene 400 kt of high-density polyethylene and 140 kt of
butadiene as well as oil products like high-grade gasoline above national VI standard
diesel and aviation kerosene. With the gradual elimination of small refineries with
high production costs and outdated equipment the concentration of the refining and
chemical industry and the competitiveness of large-scale new refineries will be
increased significantly. The company has outstanding advantages in policy support
process technology and industrial collaboration. Compared with other refining
companies we boast obvious strengths of high quality and low cost thus gaining
strong market competitiveness.* PTA
PTA is the direct upstream raw material of PET. China is the largest producer and
consumer of PTA in the world. Currently the Company has a PTA production
capacity of 16600 kta (including the 5000 kt under construction in Huizhou a
prefecture-level city of Guanggong Province). The Company has become the PTA
production supplier with the largest production capacity the most advanced
techniques and the most evident cost advantage in the world and the only companyANNUAL REPORT
202145
with equity capacity of more than 10 million tons in the industry.* New polyester materials
One of the company’s main businesses is the R&D production and sales of
related products of the new polyester materials. The main products include polyester
and new chemical material products as PET POY FDY DTY BOPET PBT
PBS/PBAT. The Company’s production capacity of filament for civil use ranks
among the top five in China and that of filament for industrial use ranking the second
place across the country making it one of the manufacturers of PFY for both civil and
industrial use with the largest scale and the most advanced techniques in China.Kanghui New Material a subsidiary of the Company has an annual production
capacity of 240 kt of PBT engineering plastics in the manufacturing base of Yingkou
a prefecture-level city of Liaoning Province. As the largest PBT manufacturer in
China its products are mainly used in auto parts polymer alloys optical cable
protective sleeves and electronic appliances. Kanghui New Material has an annual
production capacity of 385 kt of BOPET functional film capacity used in high
value-added businesses such as BOPET optical equipment release protection
electronic appliances vehicle decoration construction and packaging. It has the
largest annual single set PBAT production capacity of 33 kt based on its own
technology in China used in green applications such as food-grade shopping bags
tableware and straws of PBS/PBAT. The project of 450 kt of degradable plastic is
under construction in Changxing Island Dalian. Projects of 470 kt of high-end
functional polyester films 100 kt of special functional films 150 kt of modified PBT
and 80 kt of modified PBAT are under construction in Suzhou Fenhu leading to its
strong comprehensive competitiveness.
2. Products and production
(1) Main products
Primary
Business upstream Applications of major Main factors affecting
Products
segments raw downstream materials prices
materials
Oil Petroleum Crude oil Aviation kerosene Upstream raw materials
products refining gasoline and diesel and like crude oil andANNUAL REPORT
202146
other power fuels downstream demand
PX Chemical raw Crude oil PTA Upstream raw materials
materials and like crude oil and
chemicals downstream demand
manufacturing
Ethylene Chemical raw Crude oil PE ethylene glycol Upstream raw materials
materials and like crude oil and
chemicals downstream demand
manufacturing
PTA Chemical raw PX Polyester fiber bottle grade Crude oil and PX supply
materials and chips film grade chips etc. and downstream demand
chemicals
manufacturing
Polyester Polyester PTA Advertising light box cloth Upstream raw materials
Filament manufacturing MEG geotextile conveyor belt like crude oil and
automobile fiber and tire downstream textile
meridian clothing and prosperity
home textiles etc.Polyester Polyester PTA Filature Upstream raw materials
chips manufacturing MEG like crude oil and
downstream demand
BOPET Plastics product PTA Packaging film insulating Upstream raw materials
manufacturing MEG film capacitor film etc. like crude oil and
downstream demand
PBT Plastics product PTA Auto parts electronic Upstream raw materials
manufacturing BDO appliances aerospace like crude oil and
materials etc. downstream demand
(2) R&D and innovation
By December 31 2021 Hengli Chemical Fiber subsidiary to the Company
owned 413 invention patent rights 91 utility model patents 109 licensed patents
granted during the current reporting period (including 89 authorized patents in China
11 in the US 1 in the ROK 6 in Japan and 2 in Europe) and 20 authorized utility
model patents. Deli Chemical Fiber subsidiary to the Company owned 13 invention
patent rights 49 utility model patents 3 licensed patents granted during the current
reporting period and 18 authorized utility model patents. Kanghui New Material
subsidiary to the Company owned 17 invention patent rights 40 utility model patents
4 licensed patents granted during the current reporting period and 1 authorized utility
model patent. Hengke New Materials subsidiary to the Company owned 34 inventionANNUAL REPORT
202147
patent rights 51 utility model patents 1 PCT (Patent Cooperation Treaty) and 6
licensed patents granted during the current reporting period.
(3) Production capacity and construction work
Unit: million RMB
Investment
Designed Capacity Planned
Major Capacity under in capacity
capacity utilization completion
plants/projects construction under
(10 kt) (%) time
construction
PFY of Suzhou 140 96.70 400 kt of industrial 96
plant filament yarn under
construction
PFY for civil 120 78.94 900 kt under construction
use of Nantong
plant
PFY for civil 20 93.72
use of Suqian
plant
Polyester film 38.5 100
of Kanghui
New Material
(Yingkou)
Industrial Park
PET of 1.5 100
Kanghui New
Material
(Yingkou)
Industrial Park
Engineering 24 77.74
plastics of
Kanghui New
Material
(Yingkou)
Industrial Park
PBS 3.3 78.39
bio-degradable
advanced
materials
project of
Kanghui New
Material
(Yingkou)ANNUAL REPORT
202148
Industrial Park
PTA of Dalian 1160 105.05
plant
Refining and 2000 103.25
chemical
project of
Dalian plant
Ethylene 150
project of 109.45
Dalian plant
PTA of 5000 kt 2849 To be on
Huizhou plant stream in
mid-2022
New material 350 kta synthetic construction
supporting ammonia 300 kta nitric period of 3
chemicals acid 300 kta adipic years
project of acid and 200 kta
Hengli food-grade carbon
Petrochemical dioxide and the
(Dalian) supporting map and
Chemical Co. storage facilities
Ltd.
800 kta (1) 346 kta functional 177 construction
functional polymer thins period of 32
polymer thins (2) 124 kta high end months
and functional polymer thins
plastics project (3) 100 kta functional
of Jiangsu films
Kanghui New (4) 150 kta modified PBT
Material Co. (5) 80 kta modified
Ltd. PBAT facilities
1500 kta (1) 150 kta new 1333 construction
Jiangsu ultra-simulation period of 2
Xuanda Green functional elastic fiber years
Multifunctional project (two-component
Advanced paint)
Textile (2) 150 kta
Materials ultra-simulation
Project of differentiated
Jiangsu environmentally friendly
Xuanda fiber project (recycled
Polymer fiber)
Materials Co. (3) 300 kta modified
Ltd polyester fiber projectANNUAL REPORT
202149
(cation)
(4) 300kta differentiated
functional polyester fiber
project (full dull)
(5) 600 kta differentiated
ultra-simulation polyester
fiber project (300 kta
POY 300 kta FDY)
450 kt PBS 450 kt 237 constru
bio-degradable ction period
advanced of 1 year
materials
project of
Kanghui
(Dalian) New
Material
Technology
Co. Ltd
Note: the designed capacity of the plants and the projects listed above refers to what has been put
into production excluding those under construction
3. Raw materials procurement
Notes on the raw materials
Major
Procurement Procurement Consumption Variation
raw Settlement model
model amount (10 kt) amount (10 kt) ratio (%)
materials
letter of credit
crude oil contract spot 2117.78 2065.84 50
cable transfer
cable transfer
PX contract spot letter of credit 372.04 374.96 50.60
BA
MEG contract spot cable transfer 10.98 10.81 N/A
BDO contract spot BA 12.25 10.35 203.89
The impact of major procurement price changes on the Company’s operating costs: the
procurement prices of the raw material exerting positive impact on the Company’s operating costs.Notes on the main energy
Procurement Settlement Procurement Consumption
Major energy
model model amount amount
market-oriented monthly 2907.00 2907.00million
power
procurement settlement million kwh kwh
market-oriented monthly
thermal coal 6.7057 mt 7.0056 mt
procurement settlementANNUAL REPORT
202150
market-oriented monthly 160.67 million 158.76 million
natural gas
procurement settlement cubic meters cubic meters
The price of major energy sources is directly proportional to the Company's operating costs. The
prices of major energies are affected by national policies the supply and demand structure of the
regional markets and the stability of supply.
4. Product sales
(1) Main Business Operations By Segments
Unit: million RMB
YOY YOY Gross
YOY
Gross changes in changes margins
Business Operating Operating changes in
margin operating in gross among
segments revenue cost operating
(%) revenue margin the
cost（%）
（%） （%） peers
petrochemical
180371.58150068.5616.8031.8637.97-3.68
segment
other
16846.2817154.51-1.8319.2718.990.24
segments
(Ⅳ) Investment Status Analysis
General Analysis on Foreign Equity Investment
During the reporting period no major equity investment was made by the
Company. Six new major construction projects are as follows:
1. The 1500 kta green multifunctional textile advanced materials project of
Jiangsu Xuanda Polymer Materials Co. Ltd.Total investment reached RMB9000 million. The project is located in the Hengli
Textile Advanced Materials Industrial Park in the New Binjiang Area (Wujie County)
Tongzhou District Nantong City with a construction period of 2 years. According to
the feasibility study report the project is expected to realize annual revenue of
approximately RMB18618.87 million with an annual net profit of approximately
RMB1300.27 million after it reaches the target output.
2. The PBS biodegradable plastics project with 450 kta output of Kanghui
Dalian New Material Technology Co. Ltd.Total investment reached RMB1798.21 million. The project is located in the
western Industrial Zone of Dalian Changxing Island Economic and Technological
Development Zone with a construction period of 1 year. According to the feasibility
study report the project is expected to realize annual revenue of approximatelyANNUAL REPORT
202151
RMB10058.18 million with an annual net profit of approximately RMB2016.40
million after it reaches the target output.
3.The functional polyester film and functional plastics project with 800 kta
output of Jiangsu Kanghui New Material Technology Co. Ltd.Total investment reached RMB11124.52 million. The project is located in the
factories of Jiangsu Kangkui New Material Technology Co. Ltd. in the demonstration
zone of green and integrated ecological development of the Yangtze River Delta with
a construction period of 32 months. According to the feasibility study report the
project is expected to realize annual revenue of approximately RMB14505.10 million
with an annual net profit of approximately RMB2906.32 million after it reaches the
target output.
4. The advanced material supporting chemical project of Hengli Petrochemical
(Dalian) Chemical Co. Ltd.
Total investment reached RMB2310.92 million. The project is located in the
industrial park of Hengli Petrochemical (Dalian) in Dalian Changxing Island with a
construction period of 3 years. According to the feasibility study report the project is
expected to realize annual revenue of approximately RMB3517.8674 million with an
annual net profit of approximately RMB1261.1812 million after it reaches the target
output.
5.The high performance polyester engineering with 2.6 million-ton annual output
of Hengli Petrochemical (Dalian) New Material Technology Co. Ltd.Total investment reached RMB4001.36 million. The project is located in the
industrial park of Hengli Petrochemical (Dalian) New Material Technology in
Changxing Island with a construction period of 18 months. According to the
feasibility study report the project is expected to realize annual revenue of
approximately RMB16613.96 million with an annual profit of approximately
RMB99054 million and net profit of RMB841.96 million after it reaches the target
output.
6. The high performance resin and new material project with 1600 kta output
of Hengli Petrochemical (Dalian) New Material Technology Co. Ltd.Total investment reached RMB19988.26 million. The project is located in the
industrial park of Hengli Petrochemical (Dalian) in Dalian Changxing Island with a
construction period of 18 months. According to the feasibility study report the project
is expected to realize annual revenue of approximately RMB25375.37 million withANNUAL REPORT
202152
an annual profit of approximately RMB9151.57 million and net profit of
RMB6863.67 million after it reaches the target output.(Ⅴ) Analysis of Major Holding and Participating Companies
Unit: million RMB
Name of the Shareholding Business Registered Total Net Net
Subsidiaries Ratio (%) Nature Capital Assets Assets Profit
Hengli
Petrochemical
100 Manufacturing 17596 117893 31456 9781
(Dalian) Refining
Co. Ltd.Hengli
Petrochemical 99.83 Manufacturing 5890 35689 11624 -547
(Dalian) Co. Ltd.
Hengli
Petrochemical
99.99 Manufacturing 2208 29416 5755 1985
(Dalian) Chemical
Co. Ltd.Jiangsu Hengli
Chemical Fiber 100 Manufacturing 4575 28535 6885 2249
Co. Ltd.Kanghui New
Material
100 Manufacturing 831 8516 2926 1086
Technology Co.Ltd.Note: Jiangsu Hengli Chemical Fiber Co. Ltd includes its subsidiaries of Jiangsu Hengke
New Material Co. Ltd Nantong Teng'an Logistics Co. Ltd. Jiangsu Xuanda Polymer Material
Co. Ltd. Jiangsu Deli Chemical Fiber Co. Ltd. Suqian Deya New Material Co. Ltd. Hengli
Futures Co. Ltd. Hengli Hengxin Industry & Trade (Shanghai) Co. Ltd Suzhou Susheng
Thermal Power Co. Ltd. Suzhou Binglin Trading Co. Ltd. Sichuan Hengli New Material Co.Ltd. Hengli New Material (Suqian) Co. Ltd.Hengli Petrochemical (Dalian) Co. Ltd. includes its subsidiaries of Hengli Shipping (Dalian)
Co. Ltd. Hengli Petrochemical Co. Limited and Shenzhen Ganghui Trading Co. Ltd.Hengli Petrochemical (Dalian) Chemical Co. Ltd. includes its subsidiary of Hengli
Petrochemical (Dalian) Advanced Materials Technology Co. Ltd.Hengli Petrochemical (Dalian) Refining Co. Ltd. includes its subsidiaries of Hengli
Petrochemical International Pte. Ltd. Hengli Oilchem Pte. Ltd. Hengli Shipping International Pte.Ltd. Hengli Energy (Hainan) Co. Ltd. Hengli Oilchem (Hainan) Co. Ltd. Suzhou Hengli
Chemical Import and Export Co. Ltd. Shenzhen Shengang Trading Co. Ltd. Hengli Refining
Products Sales (Dalian) Co. Ltd. Hengli Aviation Oil Co. Ltd. Hengli Oilchem (Suzhou) Co.Ltd. Hengli Energy (Suzhou) Co. Ltd. Hengli Energy (Jiangsu) Co. Ltd. Hengli Storage and
Transportation (Dalian) Co. Ltd. Suzhou Hengli Chemical Polymer Co. Ltd.Hengli Petrochemical (Dalian) Chemical Co. Ltd. includes its subsidiaries of HengliANNUAL REPORT
202153
Petrochemical (Dalian) New Material Technology Co. Ltd.(Ⅵ) The structured entities (SE) controlled by the Company
By December 31 2021 the SE related to the Company but not included in the
financial statements were mainly engages in capital management business manage
and operate the customers’ capitals and provide investment management as in stocks
futures and other financial products. The total assets of the SE on December 31 2021
were RMB104.3122 million.V. Discussions and analysis of the Company’s future development
(Ⅰ) Industrial landscape and trend
1．Petrochemical industry
(1) Leaning towards intensive efficient and low-carbon development
Under the goal of “carbon neutrality and carbon emission peaking” our peers
will work harder to reduce energy consumption and emissions and improve crude oil
conversion. Through process intensification optimization of device design and
process flow and the development and application of energy management systems
the companies will minimize energy and raw material consumption maximize device
operation efficiency and production flexibility reduce the restrictions of other factors
and efficiently respond to the changing development environment to achieve low
carbon and high-quality development.
(2) Accelerating industrial upgrading and expanding demand for new chemical
materials lead to a broader market space
New chemical materials are important basic materials for strategic emerging
materials such as new energy high-end equipment green environmental protection
and biotechnology. Entering the “14th Five-Year Plan” period with the rapid growth
of strategic emerging industries as high-end equipment automobile manufacturing
electronic information new energy energy conservation and environmental protection
new construction bio-medicine application smart grid and 3D printing the demand
for new materials such as high-quality synthetic resin high-performance synthetic
rubber engineering plastics degradable materials electronic chemicals and
high-performance membrane materials continue to grow driving the rapid growth of
new chemical materials production capacity. With the development of downstream
industries the future market space for new chemical materials tends to be broad.ANNUAL REPORT
202154
2．PTA
China is the largest producer and consumer of PTA. Under the competitive
landscape of the integrated industrial chain leading companies in the PTA industry
have strong market competitiveness in terms of the scale of a single set of facility
stable production and operation material consumption energy consumption and
product quality. As the PTA industry is going through more fierce competition its
concentration will be further increased.
3．Polyester fiber
(1) Differentiated and high-end new fiber materials
The Company will develop differentiated and functional fiber products such as
intelligent super-simulation and dope dyeing and expand the application of
functional fibers in clothing home textiles industry and environmental protection
continue to optimize the production and application of high-performance fibers
improve the technological maturity of high-performance fibers that have been
engineered and industrialized improve the stability and uniformity of the existing
product quality and meet the needs of downstream applications enhance the
differentiation and functioning of basic fibers through copolymerization blending
and composite spinning to achieve high-quality efficient production and low cost
fibers strive to make breakthroughs in key technologies for large-scale production of
bio-based chemical fibers develop high-quality differentiated products and
strengthen application technology development.
(2) Accelerating intelligent and digitized transformation
The Company will build an intelligent manufacturing standard system for the
chemical fiber industry improve the R&D and application of intelligent
manufacturing industrialization technologies such as chemical fiber seek
breakthroughs in key software and hardware systems form integrated solutions and
full-process intelligent manufacturing technology integration and build smart
factories based on big data artificial intelligence and the industrial internet.The Company will push forward its digital transformation and the application of
artificial intelligence big data cloud computing and other emerging digital
technologies in chemical fiber enterprises improve the digitalization of the whole
industrial chain such as R&D design manufacturing operation and maintenance. By
applying digital technology to dovetail business processes management systems andANNUAL REPORT
202155
supply chain data it will innovate the management model as organizational structure
optimization dynamic and accurate services and auxiliary management
decision-making to raise enterprise management capabilities.
(3) Seeking green and low carbon transformation
The Company will carry forward energy-saving and low-carbon development
guide enterprises to purchase green electricity expand the proportion of new energy
applications such as solar energy. It will increase the R&D of green process
technology and equipment strengthen the technological transformation of clean
production and the application of key energy-saving and emission-reduction
technologies accelerate the development and construction of green factories green
products green supply chains and green parks in the chemical fiber industry carry
out the construction of a leading water and energy efficiency demonstration company
and proceed with carbon footprint accounting and social responsibility building.Through the recycling improvement the Company is to speed up the optimization of
the industrial structure of recycled chemical fibers and the upgrading of itself.(Ⅱ) Development strategy
General development strategy: we are committed to providing quality fiber andcreating a better life for the society. Under the principle of “doing the right things atthe right time” we adhere to the development philosophy of “innovationcoordination green and sharing” the operation concept of “winning global marketswith surpassing quality persistence and will” and the management ideal of
“people-centered scientific institutionalized and professional” foster a company
spirit of “solidarity integrity steadiness and innovation” increase the industrial
innovation capacity improve industrial structures and drive the Company into
high-end intelligent green integrated and international development.
(1) The Company will take solid steps in “improving the upstream andenhancing the downstream”. In the first place the Company will continue to
strengthen the upstream industrial platform to support the development of
“refining+ethylene+coalification” underpinning the “big chemicals” and implement
“making up and enhancing the industrial chains” and “R&D and innovations”
reserving space and paving ways for the new downstream material businesses in the
future. On top of that the Company will redouble its efforts in the downstream
businesses consolidate traditional market strengths benchmark the breakthroughs inANNUAL REPORT
202156
major new materials as the development and upgrading of “new consumption” and
“key&core technologies” nurture new leading material business growth points in
scale and make strides toward a world leading petrochemical new material company
that covers the whole industrial chain.
(2) The Company will take unswerving steps in adopting integrated development
strategy across the board. The Company will focus on diversifying the specs of the
products expanding capacity differentiating the products through R&D technology
and innovation upgrading and strive to realize the industrial development goal of“industrial growth in bases scale production meticulous products professionaltechnology and sound management”.(Ⅲ) Operational plan
The year 2022 is the crucial year for the Company to implement the 14thFive-Year Plan and move faster towards the development model of “platform+newmaterials”. Standing at a new strategic height and seizing the developmentopportunity the Company firstly actively implements “the renovation andconsolidation of the industrial chains” and “R&D and innovations” and consolidate
the platform and efficiency of “big chemicals” as the upstream and secondly fosters
the “second growing curve” with “new chemical materials” as the new guideline and
strike a new journey towards a high quality development. Our major work for the
whole year are as follows:
1. To continue to refine and strengthen the four business segments and enhance
the competitive advantages of the entire industry chain.Based on maintaining the existing industrial advantages the Company will
stimulate the advantages and potential of the entire industrial chain by continuous
renovation extension and consolidation of the industrial chain move towards the high
end of the industrial and value chain continuously optimize the product structure
improve product quality actively promote the linkage of production and sales and
strive for safe stable long full and optimal operation. The Company will achieve
steady progress in the 1600 kta high-performance resin and related supporting
projects 2600 kta functional polyester project 300 kta adipic acid chemical new
material supporting project and 1600 million square meter lithium battery diaphragm
project which are all under construction. The Company will ensure the smoothANNUAL REPORT
202157
progress of the projects and provide strong guarantee for its sustainable and
high-quality development.
2. To continue to strengthen quality cost and rapid response to ensure high
quality and efficiency in the Company’s operations.Quality is the bottom line of a Company’s survival. It is necessary to strive for
excellence in each product continuously improve quality standards enhance quality
and brand awareness push product quality to a higher level and maximize benefits.The Company will continue to strengthen cost control reduce costs and increaseefficiency adhere to the policy of “set production target based on sales and boost salesfrom production” and the philosophy of “customer-centered market-based andall-staff-involved marketing ”. It will dig deep into the market potential closely
follow up the market conditions and adjust strategies in a timely manner. The
Company will unite as one for the same goal spare no effort to achieve the annual
production and operation goals and ensure the high quality growth in profits.
3. To continue to improve the Company’s management system to ensure a stable
and long-term development.The Company will further improve the safety and environmental protection
management system strengthen risk identification and hidden danger investigation
and management intensify operation supervision and emergency drills consolidate
the foundation for safe production deeply practice the concept of green
environmental protection and low carbon development reduce pollution and carbon
emission gain profits through synergy improve the financial security system enhance
internal financial management and ensure zero risk of capital security. The Company
will continue to optimize the internal management system adhere to the principle of“regulating people through systems managing affairs through processes and raisingefficiency through forms” and improve the Company’s risk control capabilities. The
Company will strengthen the construction of the talent system cultivate and reserve
outstanding talents introduce high-quality talents improve the career promotion
mechanism and provide smooth channels and broad platforms for outstanding talents.It will optimize the corporate culture system foster the corporate image care for
employees make them feel at home and pass on the core concepts of the Company.ANNUAL REPORT
202158
(Ⅳ) Potential Risks
1. Risk of industry cyclical fluctuations
The development of the polyester fiber and petrochemical industry is influenced
by industry demands and its own development status thus featuring a certain level of
cyclicity. Changes of the macro environment such as China’s national economy and
export policy would bring risks of cyclical fluctuations to the industry. During
adjustment cycles falling product prices insufficient utilization of capacity and
decreasing profitability would be seen.
2. Risk of raw material price fluctuations
The Company’s production and operation are greatly affected by the price
changes of upstream raw materials especially crude oil and coal. If the Company’s
inventory procurement management and price adjustment of downstream product
market cannot effectively reduce or absorb the impact of price fluctuations of raw
materials its operation production and business performance could be adversely
impacted.
3. Foreign exchange risk
If the RMB continues to fluctuate substantially great uncertainties would be
posed to the Company’s exchange gains or losses export product prices denominated
in foreign currencies raw material prices and other operational factors. The Company
will leverage forward foreign exchange contracts and other methods to establish and
improve the exchange rate hedging mechanism and reduce the amount of foreign
currency receipts and payments in order to reduce the impact of exchange rate
changes on the Company’s profitability.
4. Environmental protection and safety Risk
With the enhancement of environmental awareness and stricter environmental
protection requirements from the government the Company proactively takes
environmental protection measures increase corresponding investments strictly
complies with relevant laws regulations and production specifications in its daily
management and establishes strict standard operation procedures. However
environmental or safety production accidents caused by human errors or accidents
still could not be eliminated which could affect the Company’s normal businesses.Therefore there are certain environmental protection and production safety risks.ANNUAL REPORT
202159
Chapter Ⅳ Corporate Governance
I. Notes on Corporate Governance
In strict accordance with the requirements of the Company Law the Securities
Law the Code of Corporate Governance for Listed Companies the Rules Governing
the Listing of Stocks on Shanghai Stock Exchange and other laws regulations and
regulatory documents the Company continuously improved the corporate governance
structure established and improved a sound system of internal management including
General Shareholders Meetings the Board of Directors and the Supervisory Committee
to regulate its operations. The Company has formed a corporate governance structure
with clear rights and responsibilities effective checks and balances scientific
decision-making and coordinated operations among organs of authority
decision-making organs supervisory organs and the senior management teams. The
structure ensures the effective implementation of the decision-making power of the
general shareholders’ meeting and the Board of Directors and the supervisory power of
the supervisory committee as well as efficient and compliant operations and
management of the senior management team. The Board of Directors of the Company
established four special committees i.e. the strategy committee the audit committee
the nomination committee and the remuneration and appraisal committee to provide
consultation and advice for the Board of Directors and make sure that its deliberation
and decision-making is professional and efficient. The Company continued to follow
closely new changes in regulatory laws and rules implement new regulatory policies
and requirements strengthen risk prevention and control push forward internal control
management carry out high-quality information disclosure narrow the scope of
insiders under the principle of validity accuracy timeliness completeness and fairness
to ensure equitable access to information of all shareholders. The Company managed
investor relations proactively and treated all investors fairly with integrity and openness.The Company carried forward the ESG system and delivered its social responsibilitiesANNUAL REPORT
202160
to safeguard the legitimate rights and interests of the Company and all shareholders and
ensured a sustainable and stable development.II. Notes on General Shareholders Meetings
During the reporting period the Company held three General Shareholders
Meetings in total. The convening and holding of the meetings complied with the
provisions of the Company Law the Rules for the General Shareholders Meetings of
Listed Companies and its Articles of Associations. The qualifications of the meeting
participants and conveners were legal and valid. The voting procedures and results of
the meetings were legal and valid. The resolutions of the General Shareholders
Meetings were legal and valid.Date Search index for
Date of
Meeting of resolution disclosure
resolution Meeting resolutions
session meeti on designated
disclosure
ng websites
2020 May Announcement on May 8 1. 2020 Annual Report on the Work
Annual 7 Resolution of the 2020 2021 of the Board of Directors
General 2021 Annual General 2. 2020 Annual Report on the Work
Meeting Meeting of Hengli of the Supervisory Committee
Petrochemical 3. 2020 Annual Report and its
(Announcement No.: abstract
2021-044) on 4. 2020 Annual Reports on Final
Shanghai Stock Accounts
Exchange website 5. 2020 Profit Distribution Plan
(http://www.sse.com.c 6. Proposal on Remunerations for
n/) the Directors of the Board in 2020
7. Proposal on Remunerations for
the Supervisors in 2020
8. Proposal on the Forecast of Daily
Related Party Transactions in 2021
9. Proposal on Developing Foreign
Exchange Derivatives Trading
Business in 2021
10. Proposal on the 2021 Guarantee
Program
11. Proposal on Applying for
General Credit Limit from BanksANNUAL REPORT
202161
and Other Financial Institutions
12. Proposal on Re-employing the
Accounting Firm
13. Proposal on Buying Liability
Insurance for Directors of the
Board Supervisors and Senior
Executives
The First July Announcement on July 14 Proposal on Investing to Construct
Interim 13 Resolution of the First 2021 the Project of Functional Polyester
General 2021 Interim General Film and Functional Plastics with
Sharehold Meeting in 2021 of an Annual Output of 800 kt
ers’ Hengli Petrochemical
Meeting in (Announcement No.:
2021 2021-057) on
Shanghai Stock
Exchange website
(http://www.sse.com.c
n/)
The Nove Announcement on Novembe Proposal on Registering and
Second mber Resolution of the r 27 2021 Issuing Short-term Financing
Interim 26 Second Interim Bonds
General 2021 General Meeting in
Sharehold 2021 of Hengli
ers’ Petrochemical
Meeting (Announcement No.:
in 2021 2021-079) on
Shanghai Stock
Exchange website
(http://www.sse.com.c
n/)
III. Information on Board Meetings during the Reporting Period
Meeting session Date of Meeting Meeting resolutions
The 16th March 1 2021 1.The Fifth Phase of the Employee Stock Ownership
meeting of the Plan of Hengli Petrochemical Co. Ltd. (Draft)
8th Board of (Revised) and its Abstract (Revised)
Directors 2. Management Method on the Fifth phase of
Employee Stock Ownership Plan of Hengli
Petrochemical Co. Ltd. (Revised)
3. Proposal on Signing the Trust Contract of the Trust
Plan for Pooled Funds of the Fifth Phase of Employee
Stock OwnershipANNUAL REPORT
202162
The 17th April 12 2021 1. 2020 Annual Report on the Work of the General
meeting of the Manager
8th Board of 2. 2020 Annual Report on the Work of the Board of
Directors Directors
3. 2020 Annual Report and its Abstract
4. 2020 Annual Reports on Final Accounts
5. 2020 Profit Distribution Plan
6. 2020 Internal Control Evaluation Report
7. Proposal on Remunerations for the Directors of the
Board and Senior Executives in 2020
8. Proposal on Achievement of Performance
Commitment of Hengli Investment (Dalian) Co. Ltd.
9. Proposal on the Forecast of Daily Related Party
Transactions in 2021
10. Proposal on Developing Foreign Exchange
Derivatives Trading Business in 2021
11. Proposal on Developing Futures Hedging
Business
12. Proposal on Entrusted Wealth Management and
Investment Plan in 2021
13. Proposal on the 2021 Guarantee Program
14. Proposal on Applying for General Credit Limit
from Banks and Other Financial Institutions
15. Proposal on Accounting Policy Changes
16. Proposal on Re-employing the Accounting Firm
17. Proposal on Buying Liability Insurance for
Directors of the Board Supervisors and Senior
Executives
18. Proposal on Convening the 2020 Annual General
Meeting
The 18th April 21 2021 1. Full text and main text of the 2021 First Quarter
meeting of the Report
8th Board of 2. Report on the Impairment Test by the end of 2020
Directors on Underlying Assets of Material Assets
Reorganization
The 19th June 24 2021 1. Proposal on Investing to Construct the Project of
meeting of the Green Multi-functional Textile New Materials with an
8th Board of Annual Output of 1500 kt
Directors 2. Proposal on Investing to Construct the Project of
PBS Biodegradable Plastics with an Annual Output of
450 kt
3. Proposal on Investing to Construct Supporting
Chemical Program for New Materials
4. Proposal on Investing to Construct the Project ofANNUAL REPORT
202163
Functional Polyester Film and Functional Plastics
with an Annual Output of 800 kt
5. Proposal on Convening the First Interim General
Shareholders Meeting in 2021
The 20th August 16 2021 Full text and abstract of the 2021 Interim Report
meeting of the
8th Board of
Directors
The 21st October 27 2021 2021 Third Quarter Report
meeting of the
8th Board of
Directors
The 22nd November 5 2021 1. Proposal on Share Repurchase by Means of
meeting of the Centralized Bidding
8th Board of 2. Proposal on Authorizing the Senior Management to
Directors Handle Matters Related to the Share Repurchase
The 23rd November 10 1. Proposal on Registering and Issuing Short-term
meeting of the 2021 Financing Bonds
8th Board of 2. Management System of Debt Financing Instruments
Directors Information Disclosure of Hengli Petrochemical Co.Ltd.
3. Proposal on Convening the Second Interim General
Shareholders Meeting in 2021
The 24th December 30 1. Proposal on the Purchase of Assets by Affiliated
meeting of the 2021 Companies and Related Party Transactions
8th Board of 2. Proposal on Convening the First Interim General
Directors Shareholders Meeting in 2022
Ⅳ. Information on the Special Committees under the Board of
Directors
(I) Members of the special committees under the Board of Directors
Special committee Members
Audit Committee Fu Yuanlue Cheng Longdi Li Feng
Nomination Committee Li Li Cheng Longdi Liu Dunlei
Remuneration and
Li Li Fu Yuanlue Gong Tao
Appraisal Committee
Strategy and Investment
Fan Hongwei Cheng Longdi Li Feng
Committee
(II) The Audit Committee convened seven meetings during the reporting period
Date of Meeting content Material OtherANNUAL REPORT
202164
Meeting comments performanc
and e of duties
suggestions
April 7 2021 Convened the second communication meeting to Nil Nil
exchange views on the preliminary audit opinions
proposed by the annual audit accountants on the
Company’s financial statements
April 12 Deliberated the 2020 Annual Financial Statements Nil Nil
2021 Summary Report of the Audit Committee of the Board
of Directors on the Audit Work in 2020 the Proposal on
Re-employing the Accounting Firm 2020 Annual
Report and its Abstract and the Proposal on the
Forecast of Daily Related Party Transactions in 2021
April 21 Reviewed the 2021 First Quarter Report and issued Nil Nil
2021 written opinions
August 16 Reviewed the 2021 Interim Report and issued written Nil Nil
2021 opinions
October 27 Reviewed the 2021 Third Quarter Report and issued Nil Nil
2021 written opinions
December Convened a communication meeting with annual audit Nil Nil
10 2021 accountants in advance of the 2021 Annual Report
December Deliberated the Proposal on Purchase of Assets by Nil Nil
30 2021 Affiliated Companies and Related Party Transactions
(III) The Remuneration and Appraisal Committee convened one meeting during
the reporting period
Material
comments Other
Date of
Meeting content and performanc
Meeting
suggestio e of duties
ns
April 7 Deliberated the Proposal on 2020 Remunerations of Directors Nil Nil
2021 of the Board and Senior Executives
(IV) The Strategy and Investment Committee convened two meetings during the
reporting period
Material
comments Other
Date of
Meeting content and performanc
Meeting
suggestio e of duties
ns
June 23 Deliberated the Proposal on Investing to Construct the Nil Nil
2021 Project of Green Multi-functional Textile New Materials
with an Annual Output of 1500 kt the Proposal onANNUAL REPORT
202165
Investing to Construct the Project of PBS Biodegradable
Plastics with an Annual Output of 450 kt the Proposal
on Investing to Construct Supporting Chemical Program
for New Materials and the Proposal on Investing to
Construct the Project of Functional Polyester Film and
Functional Plastics with an Annual Output of 800 kt
Novembe Deliberated the Proposal on Registering and Issuing Nil Nil
r 9 2021 Short-term Financing Bonds
V. Plan of Profit Distribution or Converting Capital Reserve into New
Shares
During the reporting period there was no adjustment to the Company’s cash
dividend policy. The Company strictly complied with related provisions of the Articles
of Associations and the Five-year Plan for Shareholder Return (2020-2024) to
implement the policy.The Company deliberated and passed the 28th meeting of the 8th Board of Directors
of the Company profit distribution in 2021 was proposed as follows: the Company
planned to distribute cash dividends of RMB10.10 (including tax) for every 10 shares
based on the total share capital on the date of record (excluding the Company’s share
repurchase by cash). The proposal would be implemented after being submitted for
deliberation to the 2021 General Shareholders’ Meeting.VI. Notes on and Impacts of the Company’s Equity Incentive Plan
Employee Stock Ownership Plan and Other Employee Incentive
Measures
Event Index
The revision of the fifth Please refer to details in the Announcement on the Fifth Phase of the
phase of the Company’s Employee Stock Ownership Plan of Hengli Petrochemical Co. Ltd.employee stock (Draft) (Revised) disclosed on the Shanghai Stock Exchange website on
ownership plan draft March 2 2021
The completion of stock Please refer to details in the Announcement on the Completion of Stock
purchase of the fifth Purchase of the Fifth Phase of the Employee Stock Ownership Plan of
phase of the Company’s Hengli Petrochemical Co. Ltd. (Announcement No.: 2021-012)ANNUAL REPORT
202166
employee stock disclosed on the Shanghai Stock Exchange website on March 16 2021
ownership plan
VII. Information on the Internal Control Audit Report
In accordance with the Basic Norms for Company Internal Control and its
supporting guidelines and other internal control regulatory requirements also based
on the Company’s internal control system and evaluation methods the Company
evaluated the effectiveness of its internal control based on daily and special
supervisions over internal control. In accordance with the format content and
requirements stipulated by China Securities Regulatory Commission and Shanghai
Stock Exchange the “2021 Annual Internal Control Evaluation Report” was
formulated.The Company’s external auditor Zhonghui Certified Public Accountants (special
general partnership) issued a standard unmodified internal control audit report for the
Company.ANNUAL REPORT
202167
Chapter Ⅴ Environmental and Social
Responsibility
The Company pays great heed to environmental protection and strictly acts upon
the Environmental Protection Law of the People’s Republic of China the Law of the
People’s Republic of China on Promoting Clean Production and the Law of the
People’s Republic of China on the Prevention and Control of Environmental Pollution
by Solid Wastes and other relevant laws and regulations. The key pollutant
discharging companies and their subsidiaries mainly include Hengli Chemical Fiber
Susheng Thermal Power Deli Chemical Fiber Hengke New Material Kanghui New
Material Hengli Petrochemical (Dalian) Chemical Hengli Refining and Chemical
and Hengli Petrochemical.During the reporting period each pollutant discharging subsidiary carried out
self-monitoring of their environmental impact and engaged professional third parties
to test various pollutant factors. The test results showed that the emission
concentrations of various pollutants were in compliance with national and local
pollutant discharge standards and other relevant standards. The total discharge of
pollutants is under the required limit as outlined by operation permits. (Due to the
switch between old and new pollutant discharge licenses there were some changes in
the approved total annual pollutant discharge amount and discharge calculation
methods of some key pollutant discharge subsidiaries.)
The specific pollutant discharge is as follows:
1. Hengli Chemical Fiber
During the reporting period Hengli Chemical Fiber commissioned Jiangsu
Guoce Testing Technology Co. Ltd. Suzhou Huanyou Testing Co. Ltd. Suzhou
Guotai Testing Co. Ltd.and Suzhou Changhe Environmental Monitoring Co. Ltd. to
test various pollutants. The test results showed that the emission concentrations of
various pollutants were in line with the national and local pollutant discharge
standards or other relevant standards. The total discharge of pollutants is under the
required limit as outlined by operation permits.ANNUAL REPORT
202168
Wastewater No excessive emission
Excessive
emission Exhaust gas No excessive emission
Noise No excessive emission
The total amount of wastewater (tons per year)
Wastewater COD Ammonia Total Total phosphorus nitrogen
Amount of discharge
during the reporting 67311 1.57 0.018 0.027 0.727
period
Total Approved amount of
discharge (year) / 8.623 0.675 0.0684 5.748 emission
Total amount of exhaust gas (tons per year)
Sulfur Nitrogen dioxide oxides PM VOCs
Amount of discharge during the
reporting period 14.183 115.713 13.587 0.273
Approved amount of discharge
(year) 152.25 201.13 30.16 1.9008
2. Susheng Thermal Power
During the reporting period Susheng Thermal Power installed the boiler exhaust
gas online self-monitoring equipment in accordance with the governmental
environmental regulations and technical specifications adopted a combination of
manual and automatic monitoring approach. Suzhou Zhenghe Chemical
Environmental Protection Co. Ltd. outsourced the continuous emission monitoring
equipment and system for maintenance and operation. The plant boundary noise and
fugitive exhaust gas emission monitoring the manual quarterly monitoring of flue gas
and the daily monitoring of industrial and desulfurization waste water are outsourced
to Suzhou Shengze Environmental Monitoring Co. Ltd. Suzhou Shengze tested
various pollutant factors and the test results showed that the emission concentrations
of various pollutants met the national and local pollutant emission standards or other
related standards. The total discharge of pollutants is under the required limit as
outlined by operation permits.Wastewater No excessive emission
Excessive
emission Exhaust gas No excessive emission
Noise No excessive emission
Total Total amount of wastewater (tons per year)
emission Wastewater COD Ammonia Total SuspendedANNUAL REPORT
202169
phosphorus solids
Amount of discharge
during the reporting 33070 / / / /
period
Approved amount of
discharge (year) 98550 / / / /
Total amount of exhaust gas (tons per year)
Sulfur Nitrogen Smoke Acetalde Ethylene dioxide oxides hyde glycol NMHC
Amount of discharge
during the reporting 83.564 216.101 13.163 / / /
period
Approved amount of
discharge (year) 434.337 868.674 173.735 / / /
3. Deli Chemical Fiber
During the reporting period Deli commissioned Jiangsu Hengyu Environmental
Protection Technology Co. Ltd. Jiangsu Cishi Environmental Protection Technology
Co. Ltd. and Jiangsu TST Testing Technique Co. Ltd. to test various pollutant
factors. The test results showed that the emission concentrations of various pollutants
were in line with national and local pollutant emission standards or other related
standards. The total discharge of pollutants are under the required limit as outlined by
operation permits.Wastewater No excessive emission
Excessive
emission Exhaust gas No excessive emission
Noise No excessive emission
Total amount of wastewater (tons per year)
Wastewater COD Ammonia Total Suspended phosphorus solids
Amount of
discharge during
the reporting 69433 3.167379 0.158088 0.060942 0.795731
period
Approved
Total amount of 105160 45.54 0.502 0.094 /
emission discharge (year)
Total amount of exhaust gas (tons per year)
Sulfur Nitrogen Acetal Ethylene dioxide oxides Smoke dehyde glycol NMHC
Amount of
discharge during
the reporting 2.94429 25.438522 0.412249 / / 0.198922
period
Approved
amount of 39.20 33.75 6.75 / / /ANNUAL REPORT
202170
discharge (year)
4. Kanghui New Material
During the reporting period Kanghui commissioned Dalian Boyuan Testing and
Evaluation Center Co. Ltd. to test various pollutant factors. The test results showed
that the emission concentrations of various pollutants met the national and local
pollutant emission standards or other related standards. The total discharge of
pollutants met the requirements of the total discharge permits.Wastewater No excessive emission
Excessive
emission Exhaust gas No excessive emission
Noise No excessive emission
Total amount of wastewater (tons per year)
Wastewater COD Ammonia
Amount of discharge during
the reporting period 461821 11.0448 0.0902
Approved amount of
discharge (year) 961800 23.21 2.318 Total emission
Total amount of exhaust gas (tons per year)
Sulfur dioxide Nitrogen oxides Smoke
Amount of discharge during
the reporting period 7.297 21.521 3.364
Approved amount of
discharge (year) 20.23 89.71 50.591
5. Hengke New Material
During the reporting period Hengke commissioned Suzhou Huace Testing
Technology Co. Ltd. to test various pollutant factors during the reporting period. The
test results showed that the concentrations of various pollutants was in compliance
with the national and local pollutant discharge standards or other related standards.The total discharge of pollutants is under the required limit as outlined by operation
permits.Wastewater No excessive emission
Excessive
emission Exhaust gas No excessive emission
Noise No excessive emission
Total Total amount of wastewater (tons per year)
emission Wastewater COD Ammonia Total phosphorusANNUAL REPORT
202171
Amount of discharge
during the reporting period 841124 15.068 1.319 0.662
Approved amount of
discharge (year) / 381.95 6.05 0.92
Total amount of exhaust gas (tons per year)
Sulfur dioxide Nitrogen oxides Smoke NMHC
Amount of discharge
during the reporting period 5.385 26.973 1.257 5.249
Approved amount of
discharge (year) 279.51 349.39 52.41 28.86
6. Hengli Petrochemical (Dalian)
During the reporting period Hengli Petrochemical (Dalian) tested various
pollutant factors. The test results showed that the emission concentrations of various
pollutants were in compliance with national and local pollutant emission standards or
other related standards.Wastewater No excessive emission
Excessive
emission Exhaust gas No excessive emission
Noise No excessive emission
Total amount of wastewater (tons per year)
Wastewater COD Ammonia Total nitrogen
Amount of discharge
during the reporting period 12377385.21 367.77 2.33 109.84
Approved amount of
Total discharge (year) / 559 111.8 240.05
emission Total amount of exhaust gas (tons per year)
Sulfur dioxide Nitrogen oxides Smoke NMHC
Amount of discharge
during the reporting period 232.64 453.09 44.51 520.95
Approved amount of
discharge (year) 598 821.77 405.981 /
7. Hengli Petrochemical Refining
During the reporting period Hengli Petrochemical Refining commissioned
Dalian Hyseen Testing Technology Co. Ltd. and Dalian Huaxin Jiance Co. Ltd. To
conduct tests on various pollutant factors and the test results showed that the
emission concentrations of various pollutants complied with national and local
pollutant emission standards or other related standards. The total discharge of
pollutants is under the required limit as outlined by operation permits.ANNUAL REPORT
202172
Wastewater No excessive emission
Excessive
emission Exhaust gas No excessive emission
Noise No excessive emission
Total amount of wastewater (tons per year)
Wastewater COD Ammonia Total Suspended nitrogen solids
Amount of discharge
during the reporting 2350139 38.0881 0.3604 0.301679 34.703315
period
Approved amount of
Total discharge (year) 12620000 249.23 19.86 / /
emission Total amount of exhaust gas (tons per year)
Sulfur Nitrogen Smoke Acetal Ethylene dioxide oxides dehyde glycol NMHC
Amount of discharge
during the reporting 1176.995 2805.204 83.562 / / 2824.695
period
Approved amount of
discharge (year) 2121.7 5064.92 965.78 / / 3274.58
8. Hengli Petrochemical Chemical
During the reporting period Hengli Petrochemical Chemical Hengli
Petrochemical Refining commissioned Dalian Hyseen Testing Technology Co. Ltd. to
conduct tests on various pollutant factors and the test results showed that the
emission concentrations of various pollutants complied with national and local
pollutant emission standards or other related standards. The total discharge of
pollutants is under the required limit as outlined by operation permits.Wastewater No excessive emission
Excessive
emission Exhaust gas No excessive emission
Noise No excessive emission
Total amount of wastewater (tons per year)
Wastewater COD Ammonia
Amount of discharge during the
reporting period 2140278.2 39.8409 0.4478
Total Approved amount of discharge (year) 4660000 204.3 32.7
emission Total amount of exhaust gas (tons per year)
Sulfur Nitrogen dioxide oxides Smoke NMHC
Amount of discharge during the
reporting period 35.0183 433.2057 135.88 135.88
Approved amount of discharge (year) 116.5 974.4 149 736.088ANNUAL REPORT
202173
During the reporting period the above companies who discharged pollutants all
built their pollutant control facilities following the requirements for environmental
impact assessment of the construction project. Currently the facilities are under
normal operation. The companies carry out daily maintenance of the facilities to
ensure their efficient and stable operations of keeping emissions within the standards.The company’s key pollutant discharging subsidiaries have formulated their
environmental monitoring plan in accordance with relevant national standards and
environmental management system requirements. They have applied for the pollutant
discharge permits and filed with the environmental regulative organ of their
jurisdiction. The company’s environmental monitoring station regularly tested various
pollutants at the sewage outlets of each plant. If a company were unable to conduct
tests it would commission third-party agencies with environmental monitoring
qualifications to conduct discharge tests of the special pollutants such as wastewater
and exhaust gas. The Company will appoint special personnel to check and
summarize pollutant indicators every day analyze the data and submit feedback to
relevant departments for reference to adjust technical parameters all to ensure
emission compliance.The Company attaches great importance to environmental protection strictly acts
in line with the Environmental Protection Law of the People’s Republic of China and
complies with national and local environmental protection laws and regulations
industry technical specifications and government regulations and actively
implements daily environmental protection management work. The non-production
affiliates to the Company exert less impact on the environment and the consumption
and discharge of energy and resources are mainly concentrated in daily operations and
office activities. Other subsidiaries of the Company actively undertake the main
responsibility for corporate environmental protection stringently abide by various
environmental protection policies and effectively carry out environmental protection
measures.Hengke New Material has been pushing ahead with R&D and application of PV
power generation projects since 2015. Through PV construction technological
transformation innovation and upgrading it reduces carbon emissions and achieves
energy-saving and environmentally friendly production. As of the date of this
announcement the Phase Four of the PV projects of Hengke New Material have allANNUAL REPORT
202174
been put into operation with a total installed capacity of about 60 MW and a
long-term planned installed capacity of 100 MW. According to the statistics of
Hengke New Material the cumulative PV power generation in 2021 is 305.94 million
kwh making it the largest distributed PV power generation project in Jiangsu
Province.Hengli Chemical has implemented APC control on the whole process of the
ethylene cracker greatly improving the stability of the operation increasing the yield
of diene reducing the consumption of fuel gas steam the use of energy from the
source and carbon emissions. After the implementation of APC control the fuel gas
consumption of the ethylene cracking furnace can be saved by 3.7 t/h saving about 31
kt of fuel gas and 13 kt of CO2 emission every year.The 20000 kta refining and chemical integration project of Hengli
Petrochemical Refining realizes high value-added recycling and utilization of C2
components in refining and chemical dry gas reducing carbon emission by about
1590 kta. By full recovery and utilization of all the excess hydrogen through ethylene
if the annual surplus hydrogen is calculated as 51 kt and the carbon emission intensity
of coal-to-hydrogen as 11t CO2/t of hydrogen the carbon emission reduction to be
achieved is about 560 kta.During the reporting period for the Company’s construction projects
environmental impact assessment reports (forms) or approval forms have been
prepared by qualified bodies and have received the approval of the corresponding
environmental protection authorities. The project incorporates environmental
protection into the project “design construction and production simultaneously”. The
completed projects and supporting facilities have all passed final inspections from the
environmental protection organs and the projects under production have obtained
their relevant administrative permits.ANNUAL REPORT
202175
Chapter Ⅵ Share Changes and
Shareholders
I. Changes in Shares
Unit: Share
Before the After the
Increase/decrease from the change (+ -)
change change
Shares
New Bonu Num
Number Percen converted Perce
issue s Sub-t ber of
of tage from Others ntage
of share otal share
shares (%) capital (%)
shares s s
reserve
I. Shares
with -240
240716-2407164
trading 34.20 7164 0 0
4177177
restriction 177
s
1.
State-own
ed shares
2.
State-own
ed legal
person
shares
3. Shares
held by -240
240716-2407164
other 34.20 7164 0 0
4177177
domestic 177
entities
Incl.:
Shares
held by
-152
domestic 152105 -1521058
21.61105800
non-state- 8208 208
208
owned
legal
person
Shares 886105 12.59 -8861059 -886 0 0ANNUAL REPORT
202176
held by 969 69 1059
domestic 69
natural
persons
4. Shares
held by
foreign
entities
Incl.:
Shares
held by
overseas
legal
person
Shares
held by
overseas
natural
persons
II.Circulatin
g shares 2407 7039
4631932407164100.0
without 65.80 164 0997
56091770
trading 177 86
restriction
s
1. RMB 2407 7039
4631932407164100.0
ordinary 65.80 164 0997
56091770
shares 177 86
2.
Domestic
listed
foreign
shares
3.
Overseas
listed
foreign
shares
4. Others
III. Total 7039
703909100.0
number of 100.00 0 0 0997
97860
shares 86
On February 8 2021 2407164177 restricted shares due to the Company’s materialANNUAL REPORT
202177
asset reorganization were listed and circulated.II. Changes in Shares with Trading Restrictions
Increase Number
Number of in shares of shares
Numbers of Date of
shares with with with
shares released Reasons shares
Name of trading trading trading
from trading for released
sharehold restrictions at restrictio restrictio
restrictions restriction from
ers the beginning of ns during ns by the
during the s trading
the reporting the end of the
reporting period restriction
period reporting reporting
period period
Fan 886105969 886105969 0 0 Shares February
Hongwei acquired 8 2021
Hengneng 1498478926 1498478926 0 0 as a result February
Investmen of 8 2021
t (Dalian) reorganiza
Co. Ltd. tion shall
Hengfeng 22579282 22579282 0 0 not be February
Investmen transferre 8 2021
t (Dalian) d within
Co. Ltd. 36 months
from the
listing of
such
shares
Total 2407164177 2407164177 0 0 / /
III. Information of Security Issuance and Listing
1. Securities
The 2019 corporate bonds (first tranche) publicly issued by the Company were
listed on the Shanghai Stock Exchange on October 15 2019 and were available for
trading by qualified investors. The bond is abbreviated as “19 Hengli 01” with a bond
code of “155749” and raised RMB1000 million. The coupon rate is 6.30% with a
duration of 3 years. The bond provides investors with a put option by the end of the
second year and the issuer with an option to adjust the coupon rate.During the reporting period the Company exercised the option to adjust theANNUAL REPORT
202178
coupon rate based on the reality and the current market environment. It decided to cut
the coupon rate for one interest-bearing year after the duration of the bond by 380
basis points i.e. the coupon rate of the bond from September 27 2021 to September
26 2022 is 2.50%. During the period for exercising a bond put option (August 26
2021 August 27 2021 August 30 2021 August 31 2021 September 1 2021) a
bondholder can file to exercise the put option. According to the statistics of the
Shanghai Branch of China Securities Depository and Clearing Corporation 1 million
lots were filed and repurchased at the price of RMB1000 million. The Company did
not resell the repurchased bonds. The value of retired bonds was RMB1000 million.In accordance with relevant provisions of the bond prospectus on September 27
2021 the Company has fully paid the remaining principal and corresponding interests
dated from September 27 2020 to September 26 2021 and delisted the bond from the
Shanghai Stock Exchange on October 14 2021 ahead of the schedule.
2. Short-term Financing Bonds
The Company held the 23rd meeting of the 8th Board of Directors and the 2nd
Interim General Shareholders Meeting in 2021 on November 10 2021 and November
26 2021 respectively to deliberate and pass the Proposal on Registering and Issuing
Short-term Financing Bonds which allowed the Company to apply to the National
Association of Financial Market Institutional Investors for registration and issuance of
short-term financing bonds with an amount not exceeding RMB3000 million
(including RMB3000 million).By the end of the reporting period the short-term financing bonds have not been
issued yet.IV. Controlling Shareholders and Actual Controllers
(I) Controlling Shareholders
Name Hengli Group Co. Ltd.Responsible person or legal Chen Jianhua
representative
Date of Establishment January 16 2002
Main Business production and sales of textile and paper packaging materialsANNUAL REPORT
202179
(excluding printing); sales of chemical fiber materials plastics of the Listed Company
electromechanical devices instruments and apparatus ash Domestic and overseas listed Chen Jianhua and Fan Hongwei are the actual controllers of
PTA and MEG; industrial investment; textile material new companies controlled by the actual Guangdong Songfa Ceramics Co. Ltd. listed on Shanghai
products R&D; import and export of self-operated and agency controllers in the past ten years Stock Exchange (stock abbreviation: Songfa Stock stock
goods and technologies. The following business are limited to code: 603268) and Suzhou Wujiang Tongli Lake Tourist
be operated by branches: thermal power generation and steam Resort Co. Ltd. listed on the National Equities Exchange and
production and supply (Business activities subject to legal Quotations (stock abbreviation: Tongli Lvyou stock code:
approval can only be carried out upon approval by relevant 834199).authorities). (IV) Property Rights and Control Relations between the Company and the Actual
Controlling and participating shares Hengli Group is the controlling shareholder of Guangdong Controllers
of the controlling shareholder in Songfa Ceramics Co. Ltd. listed on Shanghai Stock Exchange
other domestic and overseas listed (stock abbreviation: Songfa Stock stock code: 603268) and
companies during the reporting Suzhou Wujiang Tongli Lake Tourist Resort Co. Ltd. listed on Chen Jianhua and Fan Hongwei (Spouses)
period the National Equities Exchange and Quotations (stock
abbreviation: Tongli Tourism stock code: 834199).Other information Nil Hengfeng Investment Hailaide International Suzhou Huaer Suzhou Shenglun
(Dalian) Co. Ltd. Investment Co. Ltd. Investment Co. Ltd. Investment Co. Ltd.
(II) Property Rights and Control Relations Between the Company and the
Controlling Shareholder Hengneng Investment Tak Shing Li Hengli Group Co. Ltd. Jiangsu Hegao
(Dalian) Co. Ltd. International Holdings Investment Co. Ltd.
Hengli Group Co. Ltd. Ltd.Hengli Petrochemical Co. Ltd.
29.84%
Hengli Petrochemical Co. Ltd.When calculating the shareholding ratio of the controlling shareholder HengliGroup the number of shares indirectly held through the “Hengli Group-SouthwestSecurities-21 Hengli E1 special guarantee and trust property account” is also
included.(III) Actual Controllers
Name Chen Jianhua and Fan Hongwei (Couple)
Nationality China
Whether the actual controllers have No
obtained the right of residence in
other countries or regions
Main occupations and positions Chen Jianhua is the Chairman and General Manager of Hengli
Group Co. Ltd. the controlling shareholder of the Listed
Company; Fan Hongwei is the Chairman and General ManagerANNUAL REPORT
202180
of theo Lf itshteed L Cisotemdp Canoym pany
DomeDstoicm aensdti co vaenrds eoavse lrissetaesd listed Chen CJihaennh uJaia nanhdu aF aannd H Foanng wHeoin garwee tih aer ea ctthuea la cctounatlr oclolenrtsr oollfe rs of
compacnoimesp acnoinetsr oclolendtr boyll etdh eb ayc tthuea la ctuGalu angGduoanngg dSoonngg fSa onCgefraa mCiecrsa mCoic.s LCtod.. lListtde.d liosnte dS hoann gShhaai nghai
controclolenrtsr oinll etrhse ipna tshte t epna syte taerns years StockS tEoxcckh aEnxgceh a(nstgoec k( staobcbkr evaibabtiroevni:a tSioonn:g fSao nSgtofac kS tostcokck stock
code: co6d0e3:2 6680)3 2a6n8d) Saunzdh oSuu zWhouuj iaWngu jiTaonngg lTi oLnagklie LTaokuer isTt ourist
ResorRt Cesoo.r tL Ctdo.. l iLsttedd. loisnt etdh eo nN athtieo nNaalt iEoqnuailt iEeqs uEitxicehs aEnxgceh aanndg e and
QuotaQtiuoontsa t(isotnosc k( satobcbkr evabiabtrioenv:i atTioonn:g lTi oLnvgylio uL vsytoouck sctoocdke : code:
83419893)4.199).
(IV) (PIrVo)p Perrotyp eRritgyh Rtsi gahntds Canodn tCrooln Rtreolla Rtioenlast iboentsw beeetnw teheen C thome Cpaonmyp aanndy tahned A thcteu Aalc tual
ContCroolnletrros llers
Chen CJihaennh uJiaa nanhdu aF aannd H Foanng Hwoeni g(Swpeoiu (sSepso) uses)
HengfeHnge nIgnfveensgtm Inenvte stment HailaidHe aIniltaeirdnea tIinotnearnl ational SuzhouS Huzuhaoeur Huaer SuzhouS Suhzehnogul uSnh englun
(Dalian()D Caoli.a nL)t dC.o . Ltd. InvestmInenvte sCtmo.e nLtt dC.o . Ltd. InvestmInenvte sCtmo.e nLtt dC.o . Ltd. InvestmInenvte sCtmo.e nLtt dC.o . Ltd.
HengneHnegn Ignnveensgtm Inenvte stment Tak ShTinagk L Sih ing Li Hengli HGernogulpi CGoro.u Lpt dC.o . Ltd.J iangsuJ iHaneggasuo Hegao
(Dalian()D Caoli.a nL)t dC.o . Ltd. InternatIinotnearnl aHtioolndainl gHso ldings InvestmInenvte sCtmo.e nLtt dC.o . Ltd.
Ltd. Ltd.HenglHi Penegtrloi cPheetmroicchael mCioc.a lL Ctdo.. Ltd.ANNUAL REPORT
202181
Chapter Ⅶ Relevant Information of Bonds
(I) Basic Information of Corporate Bonds
Unit: RMB
Name of bond Public issuance of corporate bonds of 2019 by Hengli Petrochemical Co.Ltd. (First Tranche)
Short name 19 Hengli 01
Code 155749.SH
Date of issuance From September 25 2019 to September 27 2019
Value date September 27 2019
Maturity date October 14 2021
Bond balance 0
Interest rate 2.5%
Principal and interest Simple interest will be calculated and interest will be paid on an annual
payment basis and no compound interest will be applied. Interests will be paid
once a year and the principal is repaid in a lump sum when the bond is
due. The last installment of interest will be paid together with the
repayment of the principal.Trading venue Shanghai Stock Exchange
Whether there is risk No
of termination of
listing
The Company has paid interests of “19 Hengli 01” dated from September 27
2020 to September 26 2021 in full on September 27 2021 and the bond registration
date was September 24 2021. Please refer to the Announcement of 2021 Interest
Payment for the Publicly Issued Corporate Bonds in 2019 (First Tranche) by Hengli
Petrochemical Co. Ltd. disclosed on the Shanghai Stock Exchange bond information
website.
(1) Exercising of the issuer’s option to adjust the coupon rate.
In accordance with provisions regarding the option to adjust the coupon rate in
the Prospectus of the Public Issuance of 2019 Corporate Bonds of Hengli
Petrochemical Co. Ltd. (Available for Qualified Investors First Tranche) (hereinafter
as “the Prospectus”) the Company (namely the Issuer) has the right to decide theANNUAL REPORT
202182
coupon rate for one interest-bearing year after the duration of this tranche of bonds at
the end of the second interest-bearing year of the publicly issued 2019 corporate
bonds (first tranche) of Hengli Petrochemical Co. Ltd.The Company disclosed the Announcement on the Adjustment of Coupon Rate of
the Publicly Issued 2019 Corporate Bonds (First Tranche) on August 26 2021 and
based on the actual situation and the current market environment the Company
decided to cut the coupon rate for one interest-bearing year after the duration of the
bond by 380 basis points i.e. the coupon rate of the bond from September 27 2021
to September 26 2022 is 2.50% (simple interest is used to calculate interest on an
annual basis and no compound interest will be used).
(2) Exercising of the investors’ put option.
In accordance with provisions regarding the investors’ put option set in the
Prospectus of the Public Issuance of 2019 Corporate Bonds of Hengli Petrochemical
Co. Ltd. (First Tranche Available for Qualified Investors) investors have the right to
register during the period of application for exercising a bond put option to sell all or
part of the 2019 corporate bonds publicly issued by Hengli Petrochemical Co. Ltd.(first tranche hereinafter as “the tranche of bonds) they held back to HengliPetrochemical Co. Ltd. (hereinafter as “the issuer) at par or choose to continue tohold the tranche of bonds.The Company disclosed the Announcement on Repurchasing the Publicly Issued
2019 Corporate Bonds (First Tranche) on August 26 2021 that it would repurchase
all or part of “19 Hengli 01” held by bondholders at par (RMB100 per bond) within
the period of application for exercising the bond put option (August 26 2021 August
27 2021 August 30 2021 August 31 2021 September 1 2021). The issuer did not
resell the repurchased bonds.The Company disclosed the Announcement on the Result of Repurchasing the
Publicly Issued 2019 Corporate Bonds (First Tranche) on September 3 2021.According to the statistics of the Shanghai Branch of China Securities Depository and
Clearing Corporation on the repurchase of the tranche of bonds the registered volume
of “19 Hengli 01” (bond code: 155749) during the application for exercising the bondANNUAL REPORT
202183
put option was 1 million lots which were repurchased at the price of RMB1000
million. The issuer did not resell the repurchased bonds. The value of retired bonds
was confirmed as RMB1000 million. The payment date for the repurchase was
September 27 2021.The original maturity date of “19 Hengli 01” was September 26 2022. The
Company disclosed the Announcement on Delisting the Publicly Issued 2019
Corporate Bonds (First Tranche) ahead of the Schedule on September 28 2021. The
“19 Hengli 01” bonds were fully repurchased and retired and were delisted ahead of
the schedule on October 14 2021.(II) Accounting Data and Financial Indicators of the Company in the
Previous Two Years by the End of the Reporting Period
Unit: million RMB
Reasons
Key indicators 2021 2020 Flux (%) for
changes
Net profit excluding
14520.6979712812874.3241465012.79
extraordinary profit and loss
Current ratio 0.67 0.61 9.84
Quick ratio 0.24 0.38 -36.84
Debt-to-assets ratio (%) 72.75 75.38 -2.63
Total debt-to-EBITDA ratio 0.2191 0.2052 6.77
Interest coverage ratio 4.93 4.31 14.39
cash flow interest coverage
4.733.4437.50
ratio
EBITDA-to-interest coverage
6.745.5820.79
ratio
Loan repayment rate (%) 100.00 100.00 0
Interest coverage rate (%) 100.00 100.00 0