Chapter IChapter IChapter IIIChapter IVChapter VChapter VIChapter VIIChapter VIIIChapter IXChapter X
De?nitionMain Financial IndicatorsDiscussion and Analysis from the ManagementCorporate GovernanceEnvironmental and Social ResponsibilityImportant ItemsShare Changes and ShareholdersRelevant Information of Preferred SharesRelevant Information of BondsFinancial Report
Contents
I. De?nition
In this report, the terms listed below are de?ned as follows, unless the context otherwise implies:
De?nition of Frequently-Used Terms
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From 1 January 2021 to 30 June 2021Hengli Petrochemical Co., Ltd.China Securities Regulatory Commission
Tak Shing Li International Holdings Ltd., person acting-in- concertwith controlling shareholder of the listed companyJiangsu Hegao Investment Co., Ltd., person acting-in-concert withcontrolling shareholder of the listed companyHengneng Investment (Dalian) Co., Ltd., person acting-in- concert withcontrolling shareholder of the listed companyHengfeng Investment (Dalian) Co., Ltd., person acting-in- concert withcontrolling shareholder of the listed companyJiangsu Hengli Chemical Fiber Co., Ltd., subsidiary to the listedcompanyJSuzhou Susheng Thermal Power Co., Ltd., subsidiary to the HengliChemical Fiber, sub-subsidiary to the listed companyJiangsu Hengke Advanced Materials Co. Ltd, subsidiary to the HengliChemical Fiber, sub-subsidiary to the listed companyJiangsu Hengke Advanced Materials Co. Ltd, subsidiary to the HengliChemical Fiber, sub-subsidiary to the listed companyFormerly known as Yingkou Kanghui Petrochemical Co., Ltd., subsidiary to thelisted company, now renamed as Kanghui New Material Technology Co., Ltd.Hengli Petrochemical (Dalian) Chemical Co., Ltd., subsidiary to thelisted company
Shanghai Stock ExchangeHengli Group Co., Ltd., controlling shareholder of the listed companyHailaide International Investment Ltd., person acting-in- concert withcontrolling shareholder of the listed companyacting-in- concert withcontrolling shareholder of the listed company
Company, the Company,or Hengli Petrochemical
CSRC
SSE
Tak Shing LiHegao InvestmentHengneng InvestmentHengfeng InvestmentHengli Chemical FiberSusheng Thermal PowerHengke Advanced Materials
Deli Chemical FiberKanghui New MaterialHengli Petrochemical Chemical
Hengli Group
Hailaide
Reporting Period
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Hengli Investment (Dalian) Co., Ltd., subsidiary to the listed companyHengli Petrochemical (Dalian) Co., Ltd., subsidiary to the Hengli Investment,sub-subsidiary to the listed companyHengli Petrochemical (Huizhou) Co., Ltd., subsidiary to the HengliInvestment, sub-subsidiary to the listed company
A hydrocarbon containing a benzene ring structure in its molecule. Aromatichydrocarbons, mainly including benzene, methylbenzene, xylene, etc., are one ofthe most important basic raw materials for the production of petrochemicals.A compound consisting of two carbon atoms and four hydrogen atoms. Itis the basic chemical raw material of synthetic ?ber, synthetic rubber,synthetic plastic (polyethylene and polyvinyl chloride), synthetic ethanol(alcohol), and also used in manufacturing chloroethylene, styrene, ethyleneoxide, acetic acid, acetaldehyde, ethanol, and explosives, etc.A thermoplastic resin produced by polymerization of ethylene. Polyethylene isodorless and non-toxic and feels like wax, has excellent low-temperature resistance,good chemical stability, and resistance to erosion of most acid and alkali.A semi-crystalline synthetic resin material, with strong acid and alkaliresistance, excellent electrical insulation capacity, harder character, andhigher melting point than PE.An organic compound which is usually a colorless but aromatic liquid,mainly used in the production of plastic, resin, and rubber.An organic compound which is a colorless gas with a distinctive odor isthe main raw material in the production of synthetic rubber.A kind of aromatic hydrocarbon, which is a colorless and transparentliquid, and is a raw material in the production of puri?ed terephthalic acid(PTA), used for manufacturing plastic, polyester ?ber, and ?lm.A white crystal or powder at room temperature, non-toxic and ?ammable,which will burn as soon as catching ?re if mixing with air to a certain degree.A colorless, odorless, sweet, viscous liquid, mainly used in the productionof polyester ?ber, antifreeze, unsaturated polyester resin, lubricant,plasticizer, non-ionic surfactant, and explosive.An organic compound which is a colorless liquid with a pungent odor andis the raw material for the production of rayon, ?lmstrip, aspirin, etc.
Hengli Petrochemical (Dalian) Re?ning Co., Ltd., subsidiary to the listedcompanyCrude oil is petroleum directly exploited from an oil well without beingprocessed and is a dark-brown or dark-green viscous liquid or semisolid?ammable substance that is composed of various hydrocarbons.
Hengli Petrochemical (Dalian)Hengli Petrochemical (Huizhou)Hengli Petrochemical Re?ning
Aromatic Hydrocarbon
EthylenePolyethylenePolypropylene (PP)
StyreneButadieneParaxylene (PX)Puri?ed Terephthalic Acid (PTA)
Ethylene Glycol (MEG or EG)
Acetic Acid
Refers to
Polyethylene Terephthalate, or Polyester or PET, is a ?ber-forming polymermade from PTA and MEG through interesteri?cation or esteri?cation andcondensation polymerization. Fiber-grade polyester chips are used forproducing polyester staple ?bers and polyester ?lament yarn, while?lm-grade chips are used for producing all categories of ?lm products.
Polyester, Polyester Chip or PET
Refers to
Poly (butylene adipate-co-terephthalate), or PBAT, is a petrochemical-basedbiodegradable plastic with sound biodegradability and is an active material inbiodegradable plastic research with broad market application.PBAT
Crude Oil
Hengli Investment
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Polybutanediol succinate, or PBS, is polymerized from succinate acid andButane-1,4-diol (BDO), with sound thermal performance and mechanicalprocessing performance. It is a typical fully biodegradable material easy to bedecomposed and metabolized by a variety of natural microorganisms or enzymesin animals and plants and ?nally decomposed into carbon dioxide and water.
Balls wound by ?lament yarn of more than 1 km in length.PFY used for clothing and household textile.Polyester macro?ber in large denier with strong strength and highmodulus for industrial use.A new ?ber variety that is differentiated from normal varieties withevident breakthroughs on techniques or performance, or with certainspecial properties, mainly used for improving wearability, throughchemical modi?cation or physical deformation.Pre-oriented yarn, or partially oriented yarn (POY), is partially drawnPFY obtained by high-speed spinning with orientation between theunoriented yarn and the full drawn yarn.Draw textured yarn (DTY) is made of POY through drawing and falsetwist texturing, usually with certain elasticity and contractibility.Full Drawn Yarn (FDY), is a synthetic ?ber ?lament further prepared bythe spinning and drawing process. The ?ber has been fully drawn andcan be directly used for textile processing.
It is a condensation polymer of para toluic acid and Butane-1,4-diol, which can beprepared by the methods of transesteri?cation or direct esteri?cation throughpolycondensation. PBT and PET together are known as thermoplastic polyesters.
A synthetic ?ber made of polyester formed by polycondensation oforganic diacid and dihydric alcohol by spinning. The industrializedmassively produced polyester ?ber is made from PET and is known asdacron in China. It is the top major variety of synthetic ?ber at present.
BOPET has the characteristics of high strength, good rigidity, transparency, highgloss, etc., with excellent wear resistance, folding resistance, pinhole resistanceand tear resistance, minimal thermal shrinkage, and sound antistatic property.9,000-meter ?ber weighs 1 gram and is called 1 denier (D).
Polyester FiberPolybutylene Terephthalate
(PBT)
Polyester Filament Yarn (PFY)PFY for Civil Use, Textile Yarn
PFY for Industrial Use,
Industrial YarnDifferential Fiber
POYDTYFDY
Biaxially-Oriented Polyethylene
Terephthalate (BOPET)
Denier (D)
PBS
II. Main Accounting Data and Financial Indicators of the Company
Unit: 10,000 yuan Currency: CNYMain Accounting Data
The CurrentReporting Period(Jan.-Jun.)
The Same Period ofthe Previous Year
Increase/Decreaseover the Same Periodof the Previous Year (%)
The End ofCurrent Report-ing Period
The End ofPrevious Year
Increase/Decrease at theEnd of Current ReportingPeriod Compared to theEnd of Previous Year (%)
10,457,447.80
864,220.71826,613.641,618,009.23
6,735,793.52551,686.00
549,468.83
1,819,232.26
55.25
56.65
50.44
-11.06
Operating IncomeNet Pro?ts Attributable toShareholders of the ListedCompanyNet Pro?ts Attributable toShareholders of the ListedCompany after DeductingNon-recurring Gains and LossesNet Cash Flow fromOperating Activities
Net Assets Attributable toShareholders of the Listed
CompanyTotal Assets
5,013,805.0620,094,587.59
4,690,507.6919,102,872.66
6.89
5.19
Main Financial Indicators
The CurrentReporting Period
(Jan.-Jun.)
The Same Period of
the Previous Yea
Increase/Decreaseover the Same Periodof the Previous Year (%)
1.23
1.23
1.18
17.17
16.43
0.79
0.79
0.78
14.26
14.20
55.70
55.70
51.28
Up 2.91 Percentage PointsUp 2.23 Percentage Points
Basic EPS (Yuan/Share)Diluted EPS (Yuan/Share)Basic EPS after DeductingNon-Recurring Gains and
Losses (Yuan/Share)
ROEWA (%)ROEWA after Deducting Non-Re-
curring Gains and Losses (%)
Notes on Main Accounting Data and Financial Indicators of the Company
The increase in operating income during the reporting period is mainly attributed to the fact that the 1.5 million-tonneethylene project and the 2*2.5 million-tonne PTA project of the Hengli Petrochemical Chemical reached the targetoutput in the middle and latter half of the year 2020. The increase in net pro?ts and EPS during the reporting period ismainly attributed to the 1.5 million- tonne ethylene project and the upward trend of the industry cycle.
Unit: 1 yuan Currency: CNYNon-recurring Gains and
Losses Items
AmountNote (If Applicable)
8,775,715.262,671,926.8245,084,433.90-30,421,940.82376,070,742.65
4,523,942.28
255,116,975.93
90,319,689.28
Pro?t and loss of disposal of non-current assetsGovernment subsidies included in the pro?t and loss of thecurrent period, excluding those that are closely relevant to thenormal business operation of the Company, and continuouslyenjoyed by the Company in accordance with national policiesand regulations by a certain standard quota or quantityPro?t and loss of fair value changes incurred from trading?nancial assets, derivative ?nancial assets, trading ?nancialliabilities and derivative ?nancial liabilities of the Company, andincome on investment incurred from the disposal of trading?nancial assets, derivative ?nancial assets, trading ?nancialliabilities, and derivative ?nancial liabilities, and other debtinvestment, in addition to effective hedging business relevant tonormal business operation of the CompanyOther non-operating incomes and expense apart from theabove-mentionedOthers that conform to the de?nition of non-recurring gainsand losses itemsAmount subject to minority stockholder’s interestAmount subject to income taxTotal
Items and Amount of Non-recurring Gains and Losses
III. Discussion and Analysis from the ManagementNotes on Industrial Background and Main Business of the Company during the Reporting Period
1. Industrial Background of the Company
(1) Petrochemical
The Company has a petrochemical and production capacityof 20 million tonnes per year, mainly producing 4.5million-tonne PX, 1.8 million-tonne EG and 400,000-tonneacetic acid for downstream use of the Company. In addition,it produces 960,000-tonne puri?ed petroleum benzine,850,000-tonne PP, 720,000-tonne styrene, 400,000-tonnehigh-density PE, 140,000-tonne butadiene, and otherhigh-end chemical products with a shortage in supply andhigh additional value in China. As small-scale re?neries withhigher production costs and outmoded equipment arephased out gradually, centralization of the re?ning industryand competitiveness of newly-built large-scale re?neries willbe dramatically enhanced. With prominent advantages interms of policy support, process techniques, and industrialcollaboration, etc., the Company, compared with other petro-chemical businesses, has obvious characteristics of largepetrochemical scale, a high proportion of chemical products,complete supporting facilities, and low energy consumption,thus gaining strong market competitiveness.
(2) PTA
PTA is the direct upstream raw material of PET. China is thelargest producer and consumer of PTA in the world. Current-ly, the Company has a PTA production capacity of 11.6 milliontonnes per year and has 2 PTA production lines with a totalcapacity of 5 million tonnes under construction. The Compa-
ny has become the PTA production supplier with the largestproduction capacity, the most advanced techniques, and themost evident cost advantage in the world, and the onlycompany with a production capacity of more than 10 milliontonnes calculated by the shareholding ratio in the industry.
(3) Advanced Materials
One of the main businesses of the Company is R&D, produc-tion, and sales of products related to advanced polyestermaterials. Its main products cover PFY for civil use, PFY forindustrial use, functional ?lms, engineering plastics,PBAT/PBS, and other polyester and advanced chemicalmaterial products. The production capacity of PFY for civiluse ranks top ?ve in China, while that of PFY for industrialuse ranking second place across the country, making theCompany one of the manufacturers of PFY for both civil andindustrial use with the largest scale and the most advancedtechniques in China. In addition, the Company has an annualoutput of 266,000 tonnes of functional ?lms, 240,000tonnes of engineering plastics and 33,000 tonnes of degrad-able plastics. Meanwhile, 3 production lines of functional?lms (120,000 tonnes/year) and 4 production lines formodi?ed engineering plastics/PBS (30,000 tonnes/year)are under construction in Yingkou, which are expected to beput into operation successively in the second half of 2021.Projects of 450,000-tonne degradable plastics in ChangxingIsland of Dalian, and 470,000-tonne high-end functionalpolyester ?lms, 100,000-tonne special functional ?lms,150,000-tonne modi?ed PBT, and 80,000-tonne modi?edPBAT in Fen Lake of Suzhou are under construction.
2. Basic Information of Main Business of
the Company
The main business of the Company covers re?ning, petro-chemical, and production, R&D and sales of PX, acetic acid,PTA, EG, Polyester Chip, PFY for civil use, PFY for industrialuse, functional ?lms, engineering plastics, PBS /PBATbio-degradable advanced materials that relating to the wholeindustry chain of advanced polyester materials, includingdownstream, midstream and upstream business. It is the ?rstlisted company of advanced chemical materials in the indus-try with integration of the whole industry chain of “crude oil -aromatic hydrocarbon, alkene - PTA, EG - new polyestermaterials”.The Company has a production capacity of 4.5 million
tonnes of PX and 400,000 tonnes of acetic acid annually inthe upstream, and 11.6 million tonnes of PTA and 1.8 milliontonnes of ?ber-grade EG in the midstream. Its PTA and EGproducts are partially for private use, and the rest are formarket sales. In the downstream, it has extensive varieties ofadvanced chemical material products with complete speci?-cations, targeting the middle and high-end market, includingPFY for civil use, PFY for industrial use, BOPET, PBT, PBS/P-BAT, and other polyester and advanced chemical materialproducts, applied in textile, pharmaceutical, automobile,environment and new energy, electronics, PV, optical instru-ment and other industries with large scale, differentiationand high additional value and civil areas concerning basicnecessities of life with massive demands.As the world-class petrochemical and ethylene projects
concerning key production capacity and all categories ofscarce chemical raw materials in the upstream have beenfully put under operation, and the competitive advantages ofthe PTA business in the midstream keep expanding andcementing, the Company is accelerating its pace to sustain,
deepen and optimize the “major chemical” platform supportand raw material support for high-end advanced materialand ?ne chemical engineering business in the downstream,to continuously extend the value and industrial chain ofadvanced materials.
1. Leading Strategic Advantage in the
Whole Industry Chain DevelopmentThe Company is the earliest and fastest leading enterprise inthe industry to engage in the whole industrial chain strategicdevelopment of polyester advanced materials in China. It isactively promoting collaborated and balanced developmentof all business segments, vigorously expands high-endproduction capacity in both upstream and downstream,commits itself to creating a world-class development patternfor a listed platform with collaboration and integration of thewhole industrial chain covering “crude oil - aromatic hydro-carbon, alkene - PTA, EG - polyester - PFY for civil use, PFYfor industrial use, ?lms, plastics”. The Hengli 20 milliontonnes/year petrochemical integration project and the 1.5million tonnes/year ethylene project are under full produc-tion, which marks a strategic breakthrough of the Companyon key links in the petrochemical and production chain ofaromatic hydrocarbon and alkene, making the Companytakes the lead in the industry to actualize integration of thewhole industry chain of “crude oil - aromatic hydrocarbon,alkene - PTA, EG - new polyester materials”. In addition, withnew projects of PTA, advanced chemical materials, PBS/P-BAT bio-degradable advanced materials, etc., successivelybeing inaugurated and under operation, the Company isgradually upgrading and optimizing its industrial layout,consolidating and expanding its industrial strengths in alllinks, promoting the quantitative transition of its businessscope and qualitative transition of its business structure, tofoster strategic superiority of the Company in industrialcollaboration and integration, production capacity structureand quality, equipment scale and costs, accumulation ofprocess techniques, speed of project operation and develop-ment of the listed platform, in the environment of high-quali-ty competition of the whole industrial chain.
2. Comprehensive Operation Superiority
in Scale + Techniques + Support
The Company keeps introducing world-class productionequipment and mature technique packages for self-learning,absorption and application, and continuously engages intechnology and technique innovation and upgrade. It has
been equipped with the high-quality and ef?cient productioncapacity structure and public engineering supportingfacilities featuring “equipment upsizing, capacity scaling-up,structural integration, technique advancement, greennessand environmental-friendliness, and complete support” inthe whole industrial chain of advanced polyester materialcovering the upstream, midstream and downstream. Itsprocessing scale and technical level which are second tonone in the industry in terms of individual unit installation,total production capacity and process techniques, giving theCompany scale advantages and operation ef?ciency in unitinvestment costs, material and energy consumption conser-vation, unit processing costs, product delivery circle, productquality and diversi?cation, etc., and ensuring stable andpreeminent quality performance. In addition, with the mostcomplete supporting capacity in the industry, includingpower, energy, port, wharf, tank ?eld, warehouse andlogistics, the Company enjoys remarkable superiority incomprehensive operation covering comprehensive costsaving, service quality and performance, operation ef?cien-cy, etc. In the industrial park, oil re?ning, chemical engineer-ing and coal-based chemical processing are complementaryto, and mutually reliant on each other, with a balance of highef?ciency and cost control. The petrochemical business ofthe Company is equipped with the largest-scale coal-hydro-gen production facility across the country, generatinglow-cost pure hydrogen, methanol, acetic acid, syngas andother coal-based chemical products, which, together withthe Company’s advantages in storage and logistics of rawmaterials and products, dramatically improves the operation-al ?exibility and comprehensive cost advantage of theproject.
3. Superiority in Market Competition Driven
by Advanced R&D
The Company follows the development path laying equalstress on market differentiation, technology advancement,large-scale equipment, and business integration, upholdsthe innovation mechanism based on market-technologyinterconnectivity, creates internationalized R&D teams, setsup high-level platforms for scienti?c and technological R&Dand that for innovation of new products, has the ability
Analysis of Core Competitiveness During Reporting Period
to make quick response to the latest change of marketdemand, and has stable mid-to-high-level client resources.Four business entities under the Company, i.e., Hengli Chem-ical Fiber, Deli Chemical Fiber, Hengke Advanced Materials,and Kanghui New Material, are all national high and new techbusinesses. Thanks to ?ne management and upgradingtechniques in the production, the Company hasindependently developed a series of differentiated andfunctional products based on research, held patents of alarge number of products, and won widespread marketrecognition. It enjoys superiority over peers in quality andstability of products, as the only company in China with thecapacity for mass production of 7D FDY products, thecompany covering more than 65% of the total output ofMLCC release liners in China, and the ?rst company in China,as well as the second in the world, with the capacity foron-site production of 12-nanometer silicon-coated releaselaminated protective ?lms for lithium batteries. The absolutetechnological superiority and technical experience in the?elds of functional ?lms and PFY for civil use have put theCompany in an invincible position in an industrial competi-tion that is dif?cult to replicate in the short run.
4. The Advantages of Smart, Lean and
Ef?cient ManagementWe are committed to promoting the idea of “deep integrationof the Internet, big data, Arti?cial Intelligence (AI) and thereal economy”, by developing advanced manufacturingcapacity and regenerating internal driving force. In achievingthis goal, we take the “intelligent interconnection” as a keystarting point for industrial upgrading and transformation,through “replacing humans with machines”, “replacing
machines with automatic machines”, “replacing one machinewith a complete set of machines” and “replacing digitaliza-tion with intelligentization”, thus facilitating the gradualtransition from “strength in human resources” to “strength intechnology” in our development pattern. By means of theintegrated application of intelligent manufacturing, theInternet, the Internet of things, and other technologies, weare constantly promoting the level of intelligent manufactur-ing throughout the entire process. Product traceability andfull-process control are realized through a self-developedproduct detection system, automatic bar code system,intelligent warehouse management system, and salessystem, together with the seamless integration with the ERPsystem, thus promoting the integration of key links such ascorporate control, R&D, manufacturing, business manage-ment, and ?nancial connection, facilitating the transitionfrom “manufacturing” to “smart manufacturing”, andtransforming from single business management tohighly-coordinated operation of the industrial chain.
5. Continuously-accumulated Talent Management Advan-
tagesWe have formed a multi-disciplinary and multi-professionscienti?c and technological team, including re?ning, petro-chemical, polymer materials, chemical ?ber engineering,textile engineering, electrical engineering, etc. Besides, ourscienti?c research and development capabilities are aheadof our domestic counterparts. While introducing externaltalents, we also attach great importance to the cultivation ofour internal talents at the same time, by providing ouremployees with a smooth career development channel. Inaddition, we have also established a complete internaltraining system and trained a large number of key personnel,covering various aspects, including R&D, production, sales,management, etc.
In the ?rst half of 2021, “The global epidemic still continuesto evolve and the external environment becomes morecomplex and severe.” Under the context of globally normal-ized epidemic prevention and control, the world economy isslowly bottoming out and recovering amid the repeatedtwists and turns of the epidemic, the intensi?cation ofcon?icts among major powers, and the restructuring ofinternational supply and demand. With the continuation ofvarious stimulus policies, the world economy has witnesseda shortage economy in which a certain degree of demandgrows faster than the supply recovery. However, the ongoingevolution of the current overseas epidemic situation hasundoubtedly increased the uncertainty of the globaleconomic growth, which may also make it dif?cult forcountries to withdraw from targeted policies such as mone-
tary easing and economic stimulus in the short term. At thesame time, the global gap in vaccine supply is intensifyingthe divergence between regulatory effectiveness andeconomic development. Globally, major developed econo-mies and some emerging countries and regions are workinghard to accelerate the pace of COVID-19 vaccine R&D andvaccination coverage, in an aim to win the tough ?ghtagainst virus mutations. Looking forward to the second halfof the year, from the perspective of the international environ-ment, it is expected that the production and consumptiondemand in major global markets will still remain in the statusof gradual recovery and improvement under the acceleratedpopularization of vaccines and the stalemate situation of theepidemic control. Coupled with the impetus of the accelera-tion of global material consumption demand stimulation and
Discussion and Analysis of Our Business Performance
the repeated re?ux of overseas trade orders, enterprises inthe industry are facing interference factors, including therepeated external epidemic and complex trade environment.However, based on the expectation and foundation for theoverall improvement of global consumer demand andef?cient and stable domestic production capacity supply, theenterprises in the industry are expected to maintain a soundmomentum of business development in the second half ofthe year.Domestically, in 2020 and the ?rst half of 2021, the targetedand ef?cient approach in epidemic prevention and controladopted by China has minimized the negative impact of theepidemic on the macroeconomy both at home and abroad,thus the quality and level of domestic economic growth havealways maintained at the forefront among the world’s majoreconomies. The steady growth of household consumptionand the policy of “?lling in the gaps in foreign demands”continue to play a prominent role as the “ballast” and “lubri-cant” of the economic growth. After realizing dynamic andeffective epidemic control in China, domestic consumptionhas stabilized rapidly and turned for the better, and the policyof “tapping the potential of the domestic market” continuesto be implemented, all of which has become the leadingfactor and driving force in boosting the domestic cycle andoffsetting the external ?uctuations. Based on and promotedby the huge growth of domestic consumption and theupgrading of consumption structure, and with the accelerat-ed upgrading of China’s economic structure toward a neweconomy, new driving forces, new manufacturing, andgreen, low-carbon, energy-ef?cient, and environ-ment-friendly production and consumption, the high-endmanufacturing and high-tech integration of the industrialchain composed of the scienti?c and technological innova-tive industrial entities including the new energy, 5G, photo-electric chips, integrated circuits, biotechnology, industrialInternet and arti?cial intelligence will usher in strong growthin terms of consumption resilience and innovation vitality.“New consumption” and “cutting-edge technology” areinteracting with each other and moving towards furtherdevelopment with great momentum in obvious trends, whichwill also outline the strategic direction for the future of theindustry in terms of advanced production capacity layoutand application scenario extension based on advancedmaterials.Looking back at the industry, against the backdrop of global-ly normalized epidemic prevention, businesses are not onlyfaced with unexpected risks and challenges, but are alsotaking initiatives to turn risks into opportunities, and hasachieved stable operation and smooth production andmarketing based on a stable and ef?cient supply of industrialchain products and market stability and ?exibility. In the ?rsthalf of this year, from the perspective of the overall internaland external environment, the industry has bene?ted fromthe increase of the international crude oil price and terminal
consumption recovery driven by steady domestic economicgrowth. With the recovery of external demands and repeatedre?ux of international orders due to vulnerable supply capac-ity resulted from the epidemic, the prices and price differen-tials of main chemical products produced by upstreamre?ning, coal-gasi?cation, and ethylene plants, such as PX,pure benzene, acetic acid, polypropylene, ethylene glycol,styrene, polyethylene, butadiene, etc., have generallymaintained and kept ?uctuating within a strong range, thusleading to stable pro?tability. Similar to upstream enterpris-es, downstream new chemical material products alsobene?ted from the increase of raw material costs and termi-nal demands recovery, the pro?tability of polyester yarn forcivil use and polyester yarn for industrial use is rapidly return-ing to normal, and functional thin ?lms, engineering plastics,biodegradable materials, and other under-supply materialshave maintained higher prices and greater pro?tability. In theface of the turbulent external environment, the integratedoperation of industrial chain with high value-added anddiverse products and combined supply of products will bebetter prepared against an oil price decline and will showstronger pro?tability resilience when oil prices rise anddemands restore, which will stabilize and boost businesspro?tability to the maximum extent.In addition to the impacts brought by the above-mentionedfactors, including crude oil and raw materials costs andevolving traditional stock demands, it should be highlynoticed that the demand and structure of advanced materialchemical products, serving as an important pole of advancedmaterials, will bene?t from and be boosted by new consump-tion and cutting-edge technology at an exponential speedafter entering the “14th Five-Year Plan” period. And it isexpected to develop and create more high value-addedadvanced-material consumption and technology productswith large capacity within a foreseeable time based on localchemical advanced-material supply system, such as newbiodegradable materials in the ?eld of green consumption,semiconductor and optical ?lm, and functional membrane inthe ?eld of consumer electronics, lithium separator,battery-grade DMC and PVDF materials in the ?eld of newenergy power battery, EVA and POE ?lm in the ?eld of photo-voltaic module, PBT, ABS, PC engineering plastics in the?eld of new energy vehicle lightweight and charging pile.The new market and new demands in the advanced materialindustry can achieve rapid growth with the explosivelygrowing demand of “new consumption” and “new manufac-turing” in the downstream. The potentially visible blue oceanmarket will also become the strategic commanding heightsfor leading enterprises in the industry in future development,
especially the high-end advanced material chemical importsubstitution market which has been hampered by manybottlenecks. At the same time, the “carbon peak and carbonneutrality” goal has also become important guidance andpriority direction for enterprise business development. This
goal includes not only accelerating the structural changesadapted to the residents’ consumer demand for low-carbonand environmental protection, but also involves meeting thematerial needs of the national industrial green transforma-tion and upgrading, as well as the optimization and adjust-ment of the operation of the industry itself under the“double-carbon” mode. These will promote the industryenterprises to actively transform from “energy + chemicalindustry” to “platform-based + advanced materials”, and from“scale economy-led” to a “green cycle-driven” businessoperation model.It can be said that advanced materials, as the “foundation” ofthe manufacturing industry development, are of majorstrategic signi?cance for promoting technological innova-tion, breaking through the “bottleneck” technology andsupply chain blockade, maintaining the independent control-lability of the industrial chain, and supporting high-qualitydevelopment. Looking forward to the “14th Five-Year Plan”,the global advanced chemical material consumption indus-try, especially this industry in China has enjoyed a extremelybroad market and development potential. On the one hand,unlike other material industries, the core demand andultimate driving force of advanced chemical material linksare seeking a more rigid and engaging residential terminalconsumption ?eld. During the “13th Five-Year Plan” period,the supply-side reform of the petrochemical industry inChina has achieved signi?cant results, the systematicoptimization of the supply structure and the signi?cantdownward shift of the cost curve have greatly promoted theimprovement of the quality and its category as well as theef?ciency and cost of the range economy. Facing the “newconsumption” area, the continuous upgrading of the supplystructure and the continuous improvement of the additionalconsumption is implemented to drive the expansion of thesocial demand value and the total capacity. In this way, it hasbecome the theme of new supply and demand trends adapt-ing to high technology, high added value, low carbonenvironmental protection, and individualized customization,and promote the market research and development ofmodi?cation and application in advanced chemical materialsfor new consumption scenes in the future. On the otherhand, as the global industrial sectors in new energy,semiconductors, 5G, intelligentization, and other newtechnologies and new manufacturing production scenariosaccelerate their transfer to China or take China as the coremarket for further development, the development momen-tum and scale capacity of the high-end ?ne chemicals andadvanced chemical materials market for industrial manufac-turing are also expected to continue to increase and expandalong with the acceleration of the implementation of “carbonpeak and carbon neutrality”, industrial upgrading, infrastruc-ture transformation and changes in the consumptionstructure. In this sense, driven by scienti?c and technologicalinnovation and technological R&D, the industrial application
market of differentiated, functional, and high-end advancedchemical materials will make a great difference.Back to the enterprise level, during the 13th Five-Year Planperiod, the main logic and driving force of our developmentwere to base on the expansion and strengthening of down-stream polyester advanced materials for a vertical andintegrated breakthrough “from the bottom to the up” tobreak the monopoly and “bottleneck” of overseas productioncapacity on upstream raw materials like aromatics andole?ns, and upgrade to a platform of “major chemical” withre?ning, chemical and coal as industrial carriers and to theupstream ?elds of strategic scarcity. Eventually, we haverealized the comprehensive improvement in key productioncapacity of the industry, process equipment, equipmentintelligence, and the integrated cooperation of industry.Entering the new period of the “14th Five-Year Plan”, with theupstream breakthrough, the leading enterprises have great-er operating content, development space and growth possi-bility under the operation mode which allows in-depthcoordination and complementary operation between theplatform of “major chemical” and the extension of advancedmaterials throughout the whole industry chain. Meanwhile,faced with the exponential growth and huge gap in thedemand for advanced chemical materials caused by therapid development of “new consumption” and “Key&CoreTechnology” in the future, we should make full use of thecontinuous empowerment of the “major chemical” platformupstream and the accumulated development of advancedmaterials downstream for the “top - bottom” development ofthe new markets of downstream chemical materials, whichwill become the historical mission and core driving force forthe development of industrial enterprises in the next ?ve oreven ten years, and is expected to promote leading enter-prises’ chemical-materials-based building of industrial chainand the improvement of scarce production capacity, so as toserve the country in upgrading advanced manufacturing andconsumption, to achieve an explosive breakthrough and a“secondary growth curve” of long-term development underthe effect of core technology, manufacturing technology andlarge-scale overwhelmingness.“The advanced materials industry is not only a strategic andbasic industry but also a key area of high-tech competition.We must work hard to catch up.” Undergoing profoundchanges unseen in a century, “scienti?c and technologicalself-reliance and self-improvement” has become the subjectof the times, calling for great breakthroughs and great devel-opment of sci-tech innovative enterprises. Hengli Petro-chemical is a private advanced materials enterprise that hasfought and honed all the way from downstream despite the?erce market competition. Beginning with the downstreampolyester advanced materials industry, Hengli climbedvertically along the petrochemical industry chain and brokethrough the upstream development bottleneck one afteranother to acquire a systematic industrial pattern of both
“major chemical” platform and “advanced materials exten-sion”. When dealing with the reform and upgrading ofconsumption structure and industrial system, Hengli also hasa more unique and comprehensive advantage of platformintegration and industry-driven ability. After strategicallycompleting the key production capacity in the last round of“major chemical” platform, the listed company took advan-tage of the further optimization and consolidation of theproduction capacity in the midstream and downstream. Now,entering the new development period of the “14th Five-YearPlan”, with questions like how to rely on the advantages ofthe upstream platform to deeply tap the potential ofadvanced materials, how to further expand the leadingadvantage of the competitiveness in the whole industrychain, how to further enhance the bene?ts of large-scaleintegration and the added value of product technology, aswell as how to further deepen and broaden the strong moatbuilt by technology, cost, management, ef?ciency andinnovation, the strategic choice of “improving the upstreamwhile strengthening the downstream” has become inevita-ble.On the one hand, by expanding and improving the industriallayout in the midstream and upstream, we will further use theindustrial support and basic role played by the high-endchemical raw materials to actively “complement andstrengthen the chain” with “R&D innovation”, while constant-ly guarantee the platform function and operation ef?ciencyof the “major chemical” industry upstream to reserve spaceand pave a path for the continuous expansion of variousadvanced materials business downstream in the future. On
the other hand, through re?nement and strengthening thedownstream, we focus on speci?c technological R&D lineswith more unique skills, leading products, and professional?elds, so as to achieve ef?cient penetration and deepconnection from raw materials to processes, and to themarket. Aiming at the new application direction and newmarket of polyester and polyester-like products downstreamof aromatics, as well as ?ne chemicals and special advancedmaterials downstream of ole?ns, so as to consolidate theadvantages of the traditional market. At the same time, weshould focus on the key advanced materials and ?elds thathave breakthroughs due to the development and upgradingof “new consumption” and “Key&Core Technology”, and“look for opportunities and driving forces for developmentfrom green development”. We will actively embrace and helpour country in its goal of peaking carbon dioxide emissionsand achieving carbon neutrality and adhere to the path of“participating in the industries we understand, developingthe industries we are familiar with, and keeping growingstrong, bigger, and better in the professional ?eld.” Throughactive measures including external introduction, joint R&D,joint venture and cooperation, and internal innovation, wewill continue to develop advanced materials business growthpoints with advantages of scale and leading levels, so as toensure that every project and industry developed by Henglishould become a global benchmark and the best of theindustry, and ensure that we will not lag behind in the nextdecade or more. with our continuous pace towards an enter-prise with the world-class platform of advanced chemicalmaterials R&D and manufacturing.
First, continuously strengthening the support and develop-ment function of the upstream “major chemical” platformwith “re?ning + ethylene + coali?cation” as the carrier tomake full use of the advantages of systematic coupling andcomplete raw material resources produced by the integra-tion of oil, coal, and chemical, while speeding up theconstruction of advanced materials supporting projects forHengli, as well as the planning and improvement of the deepprocessing and radiation capacity of advanced materials inthe C2-C4 ole?n industry chain.
1. The current development of the
upstream “major chemical” platform:
since 2010, through forward-looking plans and highstandards, we have worked hard for ten years to increase ourstrength. In Dalian Changxing Island Petrochemical IndustrialPark, one of the top seven petrochemical industrial parks inChina, we have concentrated and ef?ciently built four major
capacity clusters: re?ning and chemical integration projectat a capacity of 20 million tonnes/year, modern coal chemi-cal plant at a capacity of 5 million tonnes/year, world'slargest single ethylene project at a capacity of 1.5 milliontonnes/year, and 5 sets of industry's largest single PTA plantwith a total capacity of 11.6 million tonnes/year. In this way,we have successfully broken through the “bottleneck” inbusiness links and raw material supply in the upstream andformed a strategic support platform of “major chemical” witha combination of “world-class chemical re?neries + moderncoal chemical plants” and integration of oil, coal, and chemi-cal. Meanwhile, as the listed companies have 100%wholly-owned shares in both Hengli Re?ning and HengliChemical, our re?ning and chemical integration project is theonly self-built private wholly-owned project in the industry.Owning 100% of the equity and production capacityguarantees that the pro?ts of our re?ning, ethylene, and coalchemical businesses and the output of important chemicalraw materials can all be owned by listed companies and
During the reporting period, the key tasks of listed companies are as follows:
shareholders. This effectively ensures the pro?tability oflisted companies and the ability to control the upstream“major chemical” development platform.At present, the business plate of listed companies in themidstream and upstream has been built with a processingcapacity of 20 million tonnes of crude oil and 5 milliontonnes of raw coal. The main production is: in the aromaticsprocess, an annual output of 4.5 million tonnes of PX, 1.2million tonnes of pure benzene, and 16.6 million tonnes ofPTA (of which 5 million tonnes come from the Huizhou basewhich is under construction); in the ole?n process, annualproduction of 1.8 million tonnes of ?ber-grade ethyleneglycol, 850,000 tonnes of polypropylene, 720,000 tonnesof styrene, 400,000 tonnes of high-density polyethyleneand 140, 000 tonnes of butadiene; and in the coal chemicalprocess, an annual output of 750,000 tonnes of methanol,400,000 tonnes of acetic acid, 300,000 tonnes of purehydrogen and 126,000 tonnes of liquid nitrogen. We havereserved and transported high-end chemicals that are highvalue-added and domestically scarce, as well as midstreamand upstream raw materials and additional gases to the
advanced materials industry chains downstream. At thesame time, we were fully equipped with the industry’s top520MW high-power self-provided power plant (providing alarge amount of low-cost electricity and steam for self-use),self-provided crude oil terminal (2 terminals at a handlingcapacity of 300,000 tonnes), the country’s largest re?neryself-provided crude oil tank area (storage capacity of 6million-tonne crude oil), and other utilities including ?nishedraw material terminal and tank area storage, which greatlyreduces the production and operation costs. The re?ningand chemical plant, coal chemical plant, ethylene plant,and PTA plant in Changxing Island base are all connectedthrough the pipeline, which saves a lot of intermediatecosts and transportation costs, forming a business strate-gic layout of the world-class petrochemical industry devel-opment platform, and a combination of matching integrat-ed capacity and top-equipped utility. This also lays a solidfoundation of raw materials and industrial supportingconditions for us to further develop the advanced chemicalmaterials business downstream of aromatics and ole?nswith scale advantages and market potential.
2. Speeding up the construction of Hengli
Chemical’s advanced materials support-ing projects:
we have started the construction of the advanced materialssupporting project of Hengli Chemical in Dalian ChangxingIsland with a total investment of 2.31 billion yuan. Reducingthe investment cost through sharing the utilities in there?ning and chemical park, we used pure benzene, hydro-gen, nitrogen, and carbon dioxide produced by our re?ning,ethylene, and coal chemical plants as the main raw materialsto produce products like adipic acid and food-grade carbon
dioxide. The core product of this project is the annualproduction capacity of 300,000 tonnes of adipic acid, whichwill further smooth out and improve our whole industry chainof degradable advanced materials of “crude oil - PTA, adipicacid - PBAT”. Adipic acid is also an important raw material forthe production of nylon 66. We will also purify the carbondioxide exhaust gas of concentration higher than 95%emitted by low-temperature methanol washing equipment to
99.99% food grade. This not only recovers carbon dioxide,
an industrial waste gas but also increases our bene?ts. Thisadvanced material supporting project makes full use of theraw material resources provided by the upstream to furtheradd and optimize the raw material supply structure of the
“major chemical” platform, enhancing our products’ outputvalue and added value. The project also further improves ourwhole industry chain business system. This project marks asubstantial and important step for listed companies towardsre?ning and chemical industry, ?ne chemicals downstream ofole?ns, and deep processing of advanced materials industry.
3. Improving the C2 - C4 deep processing
chain:
in addition to the PX, benzene, and part of polypropyleneproduced from improved processes and hybrid dehydroge-nation facility, the company’s production of the main upperstream raw materials and production output were from the
1.5 million-tonne ethylene pipeline. The ethylene processing
cluster includes a 1.5 million tonnes/year steam cracker, a400,000 tonnes/year high-density polyethylene (HDPE)plant, 2 200,000 tonnes/year polypropylene (PP) plants, a720,000 tonnes/year styrene monomer (SM) plant, 2900,000 tonnes/year ethylene glycol (EG) plants, a 140,000tonnes/year butadiene extraction unit, a 350,000 tonnes/-year pyrolysis gasoline hydrogenation unit and a 170,000tonnes/year C4 hydrogenation plant. These facilities werebuilt with equipment from the world’s top three suppliers,with some of the industry’s best unit investment costs andprocessing and operating costs. The steam cracker plantuses the pipeline from Technip S&W, the EG plant adoptedtechnology from SD, the HDPE uses the Lyondell Basel(Germany) process, and Badger provides the SM facilitytechnology. The technology providers are either globalleaders or newcomers with signi?cant catch-up potential.Over 98% of raw materials related to the ethylene unit weresupplied by the upstream re?ning and chemical plant, fulluse of the diversi?ed high-quality ethylene provided by there?nery through dry gaseous ethane cracking, LPG crack-ing, and precision naphtha cracking. The designed yield ofdiene is 48% and diene 60%. These yields are the highest
in the current domestic storage facilities, resulting fromHengli fully taking advantage of its integrated large-scaleone-stop chemical processing production process.Hengli’s ethylene downstream is currently dominated by bulkchemical raw material products, such as polypropylene,polyethylene, ethylene glycol, styrene monomer, and butadi-ene, providing the potential and the industrial basis for morediverse downstream chemicals production and the advance-ments of advanced chemical materials and products. Thenewly-built Hengli Advanced Materials Project with anannual output of 300,000 tonnes of adipic acid is anotherpractical deployment to build the “major chemical” platform.Moving forward, Hengli will continue to rely on its existingraw material processing assets, outsourced resources, andequipment optimization potentials while emphasizing ouradvanced material businesses which have shown scalingadvantages and leadership positions in the industry. Ourtarget will be the key advanced materials focusing on devel-oping and upgrading “new consumption” and “cutting-edgetechnology”. The plan is to permeate the high-growth andhigh-potential advanced material verticals such as thedegradable advanced materials, lithium-ion batteries, photo-voltaics, and new engineering plastics. We will continue toupgrade our systems and carry out the technical transforma-tion, process optimization, and advanced processing equip-ment construction to improve our C2 - C4 ethylene line,including downstream polystyrene (PS) production capacityof SM, acrylonitrile production capacity downstream of PP,ABS capacity through styrene monomer and butadiene,downstream battery-grade dimethyl carbonate (DMC),phenol, acetone, and bisphenol A production capacity ofpropylene, ethylene oxide, methanol and benzene, andfurther downstream polycarbonate (PC) capacity, as well asthe capacity of polyether polyol (EO/PO polyether) produc-tion. The “major chemical” platform will continuously invigo-rate and support the downstream advanced material indus-try chain through these strategies.
CrudeOil
RawCoal
AromaticHydrocarbonSectorAlkeneCompoundSectorDehydroge-nationCoal ChemicalIndustrySector
Online Coating Si-containingLithium-ion Battery Protective Film
MLCC Release Film
POY
“High-EndPolyester”Industrial Chain
“Lithium Battery”Industrial Chain“EngineeringPlastics” Industrial“Polyurethane”Industrial Chain
“Lithium Battery”Industrial Chain“Photovoltaic”Industrial Chain“Biodegradable Plastics”Industrial Chain
FDYDTYPBT EngineeringPlastics
BOPET FilmPXPTAPetrobenzeneEthylenePropyleneButadieneEthylene glycolPolyethylenePolypropylenePropyleneIsobutylenePolypropyleneMTBEIsooctanMethanolAcetic AcidHydrogen,Oxygen, NitrogenSyngasThe existing “major chemical” platform provides a rich“chemical raw materials database”.
The industrial chain of high-end advanced chemical materials is planned and laid out relying onthe platform of “major chemical” platform
Optica FilmPhotovoltaic MembranePBAT Biodegradable PlasticAcetone
Lithium Electricity FilmPolyoxymethyleneNylon 66ABSPolyether PolyolsPolymer PolyolPhenolAcrylonitrilAdipic AcidEpoxy EthaneEpoxy Propane
The existing industrial chain of advanced chemical materials relies on the “major chemical” platform
PET Polyester
Fibre
Bisphenol AFormaldehydHexamethylenediamin
DMCPC
Second, Hengli continues to expand, deepen and re?ne itsdownstream advanced chemical material business with thesupport of the upstream “major chemical” platform andHengli’s “innovative R&D Gene”, which provides the groupwith the necessary speed and ef?ciency. At the same time,we continue to improve the R&D wing of the company’sdownstream sectors and carried out horizontal expansionsinto new technologies, new processes, and new productsleveraging existing similar productions. For Hengli, thecurrent downstream advanced material sector is mainlydistributed in high R&D businesses such as differentiatedpolyester ?bers, functional polymer thins, engineeringplastics, and PBS/PBAT biodegradable advanced materi-als. With its upstream platform and downstream stock,Hengli targets the ever-growing demands in the advancedconsumption and technological material markets, showinggreat potential for scaled production and high-end differen-tiation. Hengli is bringing its existing rapid and ef?cientprocesses and product development models into theadvanced material vertices to permeate these markets. Tothis end, we have already established three major materialsresearch institutes: the Fiber Research Institute, Petro-chemical Research Institute, and Advanced MaterialsResearch Institute, dedicated to the R&D and the businessexpansion of our advanced chemical materials products.
1. The differential polyester ?ber sector:
Our subsidiary companies Hengli Chemical Fiber, DeliChemical Fiber, and Hengke Advanced Materials, are themain producers of our polyester ?ber business (home-usePET ?ber and industrial PET ?ber). These subsidiaries arenational high-tech companies with solid technical support,rich talent pools, and market reserves. The Hengke iscurrently building a phase II textile yarn project with a 1.35million tonne capacity. A 600,000 tonne PET Resin facilitywas added to the project in the second half of last year, andits downstream ?ber spinning facility was completed in the?rst half of this year, increasing 250,000 tonnes of DTYcapacity and 350,000 tonnes of POY capacity.
At the same time, the Hengke started construction on thenew Jiangsu Xuanda Green Multifunctional AdvancedTextile Materials Project (Hengke Phase III) with a capacityof 1.5 million tonnes. Located in Nantong, Jiangsu, theproject accrued a total investment of 9 billion yuan. Mainproject capacity includes 150,000 tonnes of new elastic?bers, 150,000 tonnes of environment-friendly ?ber,300,000 tonnes of cationic POY, 300,000 tonnes offull-dull POY, and 600,000 tonnes of differential ?ber(300,000 tonnes/year POY, 300,000 tonnes/year FDY).After completed, the project will bring more advancedtechnology and added value to our home-use businessarsenal, further enhancing our listed subsidiary’s presence.In addition, the new production capacity of 1.2 milliontonnes of textile yarns in Deli Phase II and 1.4 million tonnesof industrial yarns in the Suzhou headquarters are also intheir planning phase and will start construction pendinggovernment approval and other related preparatory condi-tions.In polyester yarn for civil use and for industrial use, Hengli iscurrently the only Chinese producer that can mass-pro-duce FDY products of 7D or below. In the R&D of micro?ber,the company has been at the forefront of the industry.During this reporting period, Deli Chemical Fiber beganmass production of ultra?ne 0.2 denier (D) mono?lamentwith the speci?cation of 15D/72f, ranking it one of the?nest mass-produced ultra?ne ?bers in China. Thehigh-density fabric ultra?ne ?ber 5D/6f independentlydeveloped by the Hengke Advanced Materials has China’ssmallest total linear density suited for the IT industry, suchas mobile circuit boards and electromagnetic waves shield-ing fabrics. Hengli Chemical Fiber’s 200,000 tonnes/yearindustrial ?ber project demonstrates that Hengli’s researchtransformed into major high-tech production. The projecthas been put into full production, for the ?rst time, allowingspecialized downstream industry, such as oil and gas explo-ration and offshore engineering, to use domesticallyproduced ?bers, effectively breaking the industry technolo-gy monopoly and the “choke-hold” of key technologies inhigh-performance industrial yarn
2. The functional polyester ?lms and engi-
neering plastics sectors:
The company’s wholly-owned subsidiary, Kanghui NewMaterial, is the main producer of differentiated andhigh-performance polyester ?lms with environment-friend-ly nature and new plastic materials of the group and anational high-tech enterprise. Through nearly a decade’sresearch and rapid development, Kanghui has improved itsindustrial competitiveness in mid-to-high-end functionalpolyester ?lms and advanced plastic materials and is nowranked among China’s ?rst-class level. At present, Kanghuihas an annual production capacity of 240,000 tonnes inPBT engineering plastics at its Yingkou Base, making it thelargest PBT manufacturer in China. Its PBT is mainly usedfor auto parts, polymer alloys, optical cable protectivesleeves, electronic appliances, and other industrialapplications. It has a capacity of 266,000 tonnes ofBOPET functional polyester ?lms, and it is committed toful?lling functions such as electronic and electrical ?lmsubstrates, environment-friendly new energy substrates,and precision inline coating products. Kanghui plans tolaunch three ?lm production lines into operation by the endof this year, which will increase its capacity to 385,000tonnes. Kanghui has the largest domestic PBAT annualproduction capacity of 33,000 tonnes by single set, devel-
oped using independent IP, and was put into operation atthe end of last year, reaching full production early this year.The PBAT production is recyclable, easily recoverable,non-toxic, and highly stable, and is suitable for the applica-tion to ?ll the supply gap in domestically produced degrad-able food-grade products.Kanghui’s presence covers the industrial chain and employs ahighly professional R&D team, aiding the company toovercome various technical challenges. From the perspectiveof market segmentation, Kanghui has become the largestdomestic manufacturer of mid-to-high-end MLCC releasebase ?lm, with a domestic market share of over 65%. Ithas broken foreign monopoly and ?lled the gap in themarket. Its products have been exported to Japan, SouthKorea, and other high-end overseas markets. Kanghui’shigh-smooth MLCC release base ?lm has been mass-pro-duced, and the ultra-smooth MLCC release base ?lmprocess has been ?nalized. Kanghui has also receivedcerti?cation from Japanese and South Korean authorities,and small batch production has begun. The ultra-smoothMLCC release base ?lm has passed the technical veri?ca-tion of Japanese and South Korean authorities and willreach mass production quickly. Additionally, Kanghui is theonly company in China and the second in the world achiev-ing inline production of the 12μm silicon-coated releaselaminated aluminum ?lm for lithium batteries.
Kanghui New Material (Yingkou) Industrial Park
Planed Panoramic of the Kanghui NewMaterial (Fenhu) Industrial Park
In addition to the Yingkou base, Kanghui New Materials isspeeding up its overall design and construction of theFenhu base and Kunshan base in Suzhou, JiangsuProvince. Once the above two bases are fully put intoproduction, it is equivalent to the capacity of two upgradedKanghui. The company will also become the world’s largestproduction base for functional polyester ?lms, functionalplastics, and biodegradable advanced materials. Inresponse to the rapid growth of domestic environ-ment-friendly consumption and advanced manufacturingmarket for functional polyester ?lms, Kanghui and theGerman Brückner Group lately signed a contract totogether build 24 of the most advanced functional polymerthin ?lm production lines with an annual output of morethan 800,000 tonnes in the Fenhu and Kunshan basesrespectively; Kanghui also signed contracts with BarmagHuitong and SUMEC Juyou to build plants capable ofproducing 900,000 tonnes of biodegradable plastics,which will be constructed in the Changxing Island andYingkou bases; and Kanghui invested greatly in the R&D ofPBT/PET/PBAT plastics modi?cation, and began to buildfour pilot modi?cation production lines to strengthenfurther the R&D capabilities of material modi?cation basedon the masterbatch, base ?lm, and Steel Sections.At present, Hengli has launched a 450,000-tonne PBSbiodegradable plastic project of Kanghui Dalian New Mate-rial following previous overall corporation productioncapacity plans. The project is built on Changxing Island,Dalian. With a total investment of 1.798 billion yuan, theproject features 450,000 tonnes of PBS/PBAT degradableadvanced material capacity. The project will expand thecapacity and scale of the company’s biodegradableadvanced material sector and increase the market share ofbiodegradable plastics. In addition, under the “carbon peakand carbon neutrality” goal, new energy materials will bean important part of the extended industrial chain. Thecompany is exploring the demand-depth of the alternativeenergy sector for advanced chemical materials. It hasalready rapidly deployed the Lithium-ion battery separator?lm business based on the strategic support of its chemi-cal platform and years of accumulation in the downstreamhigh-end membrane market. The company is currentlypreparing to construct new Lithium-ion battery separator?lms, including separator ?lms equipment purchase nego-tiations and core talent recruitment. The goal is to proceedwith the highly ef?cient “Hengli speed”.The company also started constructing the Jiangsu Kang-hui New Material Project with an annual output of 800,000tonnes of functional polyester thin ?lms and functionalengineering plastics. The construction site Fenhu of Jiang-su is in the Yangtze River Delta Eco-Green IntegratedDevelopment Demonstration Zone. The total investment is
11.12 billion yuan. The construction includes 470,000
tonnes of high-end functional polyester ?lm, 100,000tonnes of special available polyester ?lms, 150,000 tonnesof modi?ed PBT, and 80,000 tonnes of modi?ed PBAT.For the 470,000 tonnes of high-end functional polyester?lm, thickness speci?cations span 2um to 350um, and issuited for general use in electronic and electrical equip-ment (125,000 tonnes), products include electrical insula-tion ?lm, release ?lm, inline silicone coated release ?lm,capacitor ?lm, electronic tape Film and switch ?lm; opticalmaterials (76,000 tonnes), including products of ?lm forX-ray, OCA release base ?lm, AB adhesive main ?lm,re?ective ?lm, diffusion ?lm, brightness enhancement ?lm,hardened ?lm, explosion-proof ?lm, polarizing ?lm,?at-panel display protective ?lm, and optical adhesive/-sticker/hot melt adhesive protective ?lm.; informationtechnology (76,000 tonnes), including products ofelectronic shelf label ?lm, ceramic capacitor ?lm, ITO ?lm,high integrated circuit board photosensitive dry ?lm, andantistatic ?lm.; new decoration (82,000 tonnes), includingproducts of bronzing transfer ?lm, laser ?lm, re?ective ?lm,gold wire drawing ?lm, steel ?lm, matte ?lm, and colored?lm.; new energy vehicles (41,000 tonnes), includingproducts of lithium battery protective ?lm, glass window?lm, and anti-fog ?lm.; packaging materials (70,000tonnes), including products of aluminized ?lm, aluminizedreinforced ?lm, printed packaging ?lm, reinforced ?lm,transparent vapor deposition ?lm, twist wrap ?lm, heatshrinkable ?lm, card protection ?lm, medicine coating ?lm,and TTR ?lm.The 100,000-tonne special functional polyester ?lmsuse of?ine coating technology to modify the surface ofthe base ?lm to introduce special functions. The prod-ucts mainly include functional polyester ?lm, tempera-ture-resistant lithium battery separator ?lm, and photo-voltaic backsheet ?lm. The 150,000-tonne modi?ed PBTis mainly used in the automobile manufacturing ?eld,including carburetor components, distributors, ignitorcoil frames, insulating covers, bumpers, instrumentpanels, and clutch pedals; electronic and electrical ?eld,including connectors, transformer frames, householdappliances, and energy-saving lamps; industrial machin-ery ?eld, including transmission gears, mechanicalparts, shaft sleeves, motor end covers, and outdoor?tness equipment. The 80,000 tonnes of modi?ed PBATis made from self-produced PBAT resin, natural starch,and calcium carbonate through proprietary starch plasti-cization technology, inorganic powder dispersion treat-ment, and customized blending and melting twin-screwextrusion line modi?cation. It is mainly used in biode-gradable plastic bags, biodegradable glue, biodegrad-able melt-blown materials, 3D printing consumables,cigarette pack materials, foam materials, biodegradableagricultural ?lms, and other ?elds.
In this report, the terms listed below are de?ned as follows, unless the context otherwise implies:
1. Main Business Analysis
Changes of Accounts from Financial Statements
Unit: 10,000 yuan Currency: CNYAccount Item
Amount for thereporting period
Amount for the same
period of theprevious year
Flux (%)10,457,447.808,860,615.7011,215.5892,987.70
6,735,793.525,425,672.6454,258.7187,069.26
55.25
63.31
-79.33
6.80
RevenueCost of salesSelling expensesAdministrativeexpenses
285,675.2442,300.521,618,009.23-573,639.45-870,173.24
282,004.1237,909.881,819,232.26-2,048,216.71639,647.14
1.30
11.58
--11.06N/A-236.04
Financial expensesR&D expensesNet cash ?ow fromoperating activitiesNet cash ?ow frominvesting activitiesNet cash ?ow from?nancing activities
Explanation of the reasons for changes in revenue:
revenue increase was primarily due to target output reached by the 1.5 million-tonne ethylene project and 2*2.5million-tonne PTA project of Hengli Petrochemical in the middle and the second half of 2020
Explanation of the reasons for changes in cost of sales:
the increase was primarily due to the comparable increase in revenue
Explanation of the reasons for changes in selling expenses:
the change was primarily due to the accounting transfer of transportation expenses into cost of sales
Explanation of the reasons for changes in administrative expenses:
no big changes compared with the same period of last year
Explanation of the reasons for changes in ?nancial expenses:
the change was primarily due to increase in interest expensesExplanation of the reasons for changes in R&D expenses:
the change was primarily due to the Company’s increasing investments in R&D
Explanation of the reasons for changes in net cash ?ow from operating activities:
value-added tax, consumption tax and corporate income tax all increased during the reporting period due toincrease in revenue; other cash paid relating to operating activities also increased
Explanation of the reasons for changes in net cash ?ow from investing activities:
cash paid to acquire long-term assets decreased signi?cantly during the reporting period
Explanation of the reasons for changes in net cash ?ow from ?nancing activities:
cash repayment of debts increased signi?cantly during the reporting period
Unit: yuan
8,695,979,681.75
89,789,811.14377,707,343.81685,929,126.58
4.33
0.04
0.19
0.34
60.99
-58.43
2.83
0.00
0.00
0.86
5,401,458,679.01
1,650,130,008.46
Contract liabilities
Primarily due to increase in revenues received in advanceAccording to the newly implemented lease accounting standards,the new account of lease liabilities is used to recognize theamount of lease payments outstanding from the lesseePrimarily due to the new futures brokerage business during thereporting periodPrimarily due to decreases in bank wealth management productsand structural deposits held by the end of the reporting period
Lease liabilitiesMargin receivableTrading ?nancial
assets
Account Item
Amount at theend of thereporting period
Percentageof amount atthe end ofthe report-ing period intotal assetsin thereportingperiod (%)
Amount at theend of thesame period ofthe previousyear
Percentage ofpercentage ofAmount at the endof the same periodof last year in totalassets in the sameperiod of last year(%)
Flux (%)
Explanations
416,922,134.6926,547,232,372.126,145,331,822.15728,965,845.32
0.21
13.21
3.06
0.36
-69.42
34.82
46.47
0.71
10.31
2.20
1,363,602,415.1019,691,123,430.814,195,710,084.65
Accounts receivable
Primarily due to decreasing accounts receivable balance fromcustomers with high credit rating by the end of the reportingperiodPrimarily due to increasing raw materials and ?nished goods atthe end of the reporting period to address increasing sales duringthe reporting periodPrimarily due to the new auxiliary building project of HengliRe?ningAccording to the newly implemented lease accounting standards,the new account of right-of-use asset is used to recognize theoriginal price of the right-of-use assets held by the lessee
InventoriesConstruction in
progressRight-of-use asset
2. Assets and Liabilities Analysis
Asset and Liabilities
11,376,562,617.868,176,832,270.881,112,797,638.724,000,000.002,356,307.17-174,801,353.8350,131,635.93
5.66
4.07
0.55
0.00
0.00
-0.09
0.02
45.76
1,862.34
54.74
-96.76-74.50
N/A-35.38
4.09
0.22
0.38
0.06
0.00
-0.05
0.04
7,805,074,070.85416,688,235.50719,118,891.93123,322,260.339,240,902.12-100,823,962.53
77,581,307.23
Notes payable
Primarily due to increases in letters of credit issued by the endof the reporting periodHengli Group issued exchangeable corporate bonds; theCompany borrowed funds raised from the issuance fromHengli Group to repay interest-bearing debts; this was in linewith the use purpose of the funds raisedPrimarily due to increases in pending output tax by the end ofthe reporting periodAccording to the newly implemented lease accountingstandards, outstanding lease payments from the lessee arerecognized in the lease liabilities accountPrimarily due to decreases in taxable temporary differences bythe end of the reporting periodPrimarily due to cash ?ow hedging reserve after the settlement ofthe hedging business in the beginning of the reporting periodPrimarily due to increases in costs of safety production duringthe reporting period
Other payablesOther current
liabilitiesLong-termpayableDeferred incometax liabilitiesOther comprehen-sive incomeSpecial reserve
10,050,136.793,591,094,480.711,287,875,315.0279,830,909.39178,101,446.15519,032,545.13329,312,832.40
0.01
1.79
0.64
0.04
0.09
0.26
0.16
80.06
60.36
62.65
270.02
0.00
1.04
0.42
0.00
0.06
0.00
0.05
1,994,374,678.13803,130,210.03
109,496,755.14
88,999,293.44
Primarily due to new futures related business during thereporting periodPrimarily due to increases in advance payment for materialpurchases by the end of the reporting periodPrimarily due to increases in futures margin by the end of thereporting periodDue to goodwill by premiums paid to acquire Hengli FuturesPrimarily due to increases in deductible temporary differenc-es by the end of the reporting periodDue to the new futures brokerage business during thereporting periodPrimarily due to increases in losses from crude oil futurescontracts held by the end of the reporting period
Settlementguarantee fund
receivableAdvance paymentOther receivables
GoodwillDeferred income
tax assetsMargin payableTrading ?nancial
liabilities
Asset size
Of which: overseas asset 1,111,627.66 (Unit: 10,000 yuan Currency: RMB), accounting for 5.53% of the total assets.
3. Assets with restrictions by the end of the reporting period
4. Investment Status Analysis
General Analysis on Foreign Equity Investment
Item
Closing BookValue (yuan)
Reasons for Restrictions5,812,604,555.57186,380,794.9019,938,262.80706,815,436.2293,427,684,296.261
666,726,906.133,544,743,915.42
224,866,998.61
Cash and cashequivalent
The Company pledged cash and cash equivalent inorder to obtain line of credit from ?nancial institutionsThe Company pledged cash and cash equivalent in
order to develop futures business
The Company pledged cash and cash equivalent inorder to invest in derivative ?nancial instruments
The Company pledged notes receivable in order toobtain line of credit from ?nancial institutionsThe Company mortgaged ?xed assets in order toobtain line of credit from ?nancial institutionsFixed assets obtained by the Company through leaseThe Company mortgaged intangible assets in order to
obtain line of credit from ?nancial institutions
The Company mortgaged construction in process inorder to obtain line of credit from ?nancial institutions
Cash and cashequivalentCash and cashequivalentAccounts receivable?nancingFixed assetsRight-of-use assetsIntangible assetsConstruction inprocess
(1)Signi?cant Non-equity Investment
During the reporting period, major projects invested by the Company are as follows:
1.The 1.5 million-tonne per year green multifunctional textile advanced materials project of Jiangsu Xuanda Polymer
Materials Co., Ltd.Total investment reached 9,000 million yuan. The project is located in the Hengli Textile Advanced Materials Indus-trial Park in the New Binjiang Area (Wujie County), Tongzhou District, Nantong City with a construction period of 2years. According to the feasibility study report, the project is expected to realize annual revenue of approximately18,618.87 million yuan with an annual net pro?t of approximately 1,300.27 million yuan after it reaches the targetoutput.
2.The PBS biodegradable plastics project with 450,000-tonne annual output of Kanghui Dalian New Material Tech-
nology Co., Ltd.Total investment reached 1,798.21 million yuan. The project is located in the western Industrial Zone of DalianChangxing Island Economic and Technological Development Zone with a construction period of 1 year. Accordingto the feasibility study report, the project is expected to realize annual revenue of approximately 10,058.18 millionyuan with an annual net pro?t of approximately 2,016.4 million yuan after it reaches the target output.
3.The functional polyester ?lm and functional plastics project with 800,000-tonne annual output of Jiangsu Kang-
hui New Material Technology Co., Ltd.Total investment reached 11,124.52 million yuan. The project is located in the factories of Jiangsu Kangkui NewMaterials 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 projectis expected to realize annual revenue of approximately 14,505.1 million yuan with an annual net pro?t of approxi-mately 2,906.32 million yuan after it reaches the target output.
4.The advanced material supporting chemical project of Hengli Petrochemical (Dalian) Chemical Co., Ltd.
Total investment reached 2,130.92 million yuan. The project is the industrial park of Hengli Petrochemical (Dalian)in Dalian Changxing Island with a construction period of 3 years. According to the feasibility study report, theproject is expected to realize annual revenue of approximately 3,517.8674 million yuan with an annual net pro?t ofapproximately 1,261.1812 million yuan after it reaches the target output.
(2)Financial Assets Measured at Fair Value
(3) Analysis of Major Holding and Participating Companies
Item
Beginning balanceEnding balance
361,733,852.0288,999,293.441,288,396,156.444,082,386,076.60
598,703,897.92329,312,832.4087,225,228.662,209,137,772.55
Derivative ?nancial assetsDerivative ?nancial liabilitiesBank wealth managementproducts and structural depositsAccounts receivable?nancing
Unit: yuan
ClosingBook Value
(yuan)
ClosingBook Value(yuan)
ClosingBook Value(yuan)
ClosingBook Value(yuan)
ClosingBook Value(yuan)
ClosingBook Value(yuan)ClosingBook Value(yuan)
99.83
99.99
175.96
58.9
41.7
22.08
8.31
1,192.10
58.9
41.7
22.08
8.31
322.35
123.78
69.84
58.71
25.08
52.42
-2.87
14.81
11.01
7.34
Hengli Petrochemical(Dalian) Re?ning Co., Ltd.
ManufacturingManufacturingManufacturingManufacturingManufacturing
Hengli Petrochemical
(Dalian) Co., Ltd.
Hengli Petrochemical(Dalian) Chemical Co., Ltd.
Jiangsu Hengli Chemical
Fiber Co., Ltd.
Kanghui New Material
Technology Co., Ltd.
Unit: 100 million yuan
Note: Hengli Petrochemical (Dalian) Re?ning Co., Ltd. includes its subsidiaries of Shenzhen Shengang TradingCo., Ltd., Hengli Petrochemical International Pte. Ltd., Hengli Oilchem Pte. Ltd., Hengli Re?ning Products Sales(Dalian) Co., Ltd., Hengli Aviation Oil Co., Ltd., Hengli Shipping International Pte. Ltd., Hengli Offshore Oil Petro-chemical Co., Ltd., Hengli Energy (Jiangsu) Co., Ltd., Hengli Energy (Suzhou) Co., Ltd., Hengli Oilchem (Suzhou)Co., Ltd., Hengli Logistics (Dalian) Co., Ltd., Hengli Energy (Hainan) Co., Ltd., Hengli Oilchem (Hainan) Co., Ltd.,Nanjing subsidiary of Hengli Oilchem (Hainan) Co., Ltd.Hengli Petrochemical (Dalian) Co., Ltd. includes its subsidiaries of Hengli Shipping (Dalian) Co., Ltd., Hengli Petro-chemical Co., Limited and Shenzhen Ganghui Trading Co., Ltd.Hengli Petrochemical (Dalian) Chemical Co., Ltd. includes its subsidiary of Hengli Petrochemical (Dalian) Ad-vanced Materials Technology Co., Ltd.Jiangsu Hengli Chemical Fiber Co., Ltd. includes its subsidiaries of Jiangsu Hengke Advanced Materials Co. Ltd.,Nantong Teng’an Logistics Co., Ltd., Jiangsu Xuanda Polymer Materials Co., Ltd., Jiangsu Deli Chemical FiberCo., Ltd., Suqian Deya Advanced Materials Co., Ltd., Hengli Futures Co., Ltd., Suzhou Susheng Thermal PowerCo., Ltd., Suzhou Deya Textile Co., Ltd., Suzhou Binglin Trading Co., Ltd., Sichuan Hengli Advanced Materials Co.,Ltd. and Hengli Advanced Materials (Suqian) Co., Ltd.Kanghui New Material Technology Co., Ltd. includes its subsidiaries of Lijin (Suzhou) Trading Co., Ltd., SuqianKangkui New Material Co., Ltd., Jiangsu Kanghui New Material Technology Co., Ltd. Kangkui Kunshan New Mate-rial Technology Co., Ltd. and Kangkui Dalian New Material Technology Co., Ltd.
1. Risk of industry cyclical ?uctuations
The development of the polyester ?ber and petrochemical industry is in?uenced by industry demands and its owndevelopment status, thus featuring a certain level of cyclicity. Changes of the macro environment, such as China’snational economy and export policy, would bring risks of cyclical ?uctuations to the industry. During adjustmentcycles, falling product prices, insuf?cient utilization of capacity and decreasing pro?tability would occur.
2. Risk of raw material price ?uctuations
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 and procurement management and price adjustment ofdownstream product market cannot effectively reduce or absorb the impact of price ?uctuations of raw materials,the Company's operation, production and business performance could be adversely impacted.
3. Foreign exchange risk
If the RMB continues to ?uctuate substantially, it would cause great uncertainties to the Company’s exchange gainor loss, export product prices dominated 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 theexchange rate hedging mechanism and reduce the amount of foreign currency receipts and payments in order toreduce the impact of exchange rate changes on the Company’s pro?tability.
4. Environmental and safety Risk
With the enhancement of environmental awareness and stricter environmental protection requirements from thegovernment, the Company proactively takes environmental protection measures, increase corresponding invest-ments, strictly complies by relevant laws and regulations and production speci?cations in its daily management andestablishes strict standard operation procedures; however, environmental or safety production accidents causedby human errors or accidents still could not be eliminated, which could affect the Company's normal business activ-ities. Therefore, there is a certain level of environmental protection and safety production risk.
Potential Risks
IV. Corporate GovernancePreplans of pro?t distribution or transfer from capital reserve
Preplans of pro?t distribution and transfer from capital reserve to common shares forthe reporting period
The Company’s equity incentive plan, employee stock ownership plan or other employeeincentive initiatives and their impactsRelevant equity incentive matters have been disclosed in interim announcements and therehas been no progress or changes in the subsequent implementation
Distribution/transfer?
No
Number of bonus shares per 10 common shares(share)Number of dividends (yuan) (tax included) per 10common sharesNumber of shares converted by capitalreserve per 10 common shares (share)Explanations for the preplans of pro?t distribution or transfer from capital reserve to common shares
OverviewIndexing
Draft of the Company’s ?fth phase of theemployee stock ownership plan—RevisedStock purchase completion under theCompany’s ?fth phase of the employeestock ownership plan
Please refer to The Fifth Phase of the Employee Stock Ownership Plan ofHengli Petrochemical (Draft) (Revised) and other relevant announcementsof the Company disclosed on the website of the Shanghai StockExchange on March 2, 2021Please refer to the Announcement of Hengli Petrochemical on theCompletion of Stock Purchase under the Fifth Phase of the EmployeeStock Ownership Plan (Announcement No. 2021-012) disclosed on thewebsite of the Shanghai Stock Exchange on March 16, 2021
V. Environmental and Social ResponsibilityPreplans of pro?t distribution or transfer from capital reserve
Hengli pays great heed to environmental protection and strictly adheres to the Environmental Protection Law of thePeople’s Republic of China, the Law of the People’s Republic of China on Promoting Clean Production, and the Lawof the People’s Republic of China on the Prevention and Control of Environmental Pollution by Solid Wastes andother relevant laws and regulations. The key pollutant discharging enterprises and their subsidiaries mainly includeHengli Chemical Fiber, Susheng Thermal Power, Deli Chemical Fibre, Hengke Advanced Materials, Kanghui NewMaterial, Hengli Petrochemical (Dalian), Hengli Re?ning and Chemical, and Hengli Petrochemical.During the reporting period, each pollutant discharging subsidiary carried out self-monitoring of their environmen-tal impact and hired professional third parties to test various pollutant factors. The test results showed that theconcentration of various pollutants complied with national and local pollutant discharge standards and otherrelevant standards. The total discharge of pollutants is under the required limit as outlined by operation permits.The speci?c pollutant discharge is as follows:
1. Hengli Chemical Fiber
Hengli Chemical Fiber commissioned Jiangsu Guoce Testing Technology Co., Ltd., Suzhou Huanyou Testing Co.,Ltd., and Suzhou Shengze Environmental Monitoring Co., Ltd. to test various pollutants. The test results showedthat the emission concentrations of various pollutants were in line with the national and local pollutant dischargestandards or other relevant standards. The total discharge of pollutants is under the required limit as outlined byoperation permits.
Total amount of exhaust gas (tonnes/year)
Sulfur dioxide?Amount of dischargeduring the reporting
periodApproved amountof discharge (year)
Nitrogen oxides?PMVOCs
7.55646
152.25
64.97321
201.13
8.98913
30.16
0.04004
1.9008
Exceeding
WastewaterExhaust gas
NoiseThe total amount of wastewater (Tonnes/year)
Amount ofdischarge during thereporting periodApproved amountof discharge (year)
WastewaterCODAmmonia
Total nitrogenTotal phos-
phorus
Totalemission
No excessive emissionNo excessive emissionNo excessive emission
0.79492
8.623
34073
/
0.00900
0.675
0.01363
0.0684
0.36799
5.748
2. Susheng Thermal Power
During the reporting period, Susheng Thermal Power installed the boiler exhaust gas online self-monitoring equip-ment in accordance with the governmental environmental management regulations and technical speci?cationsand adopted a combination manual-automatic monitoring approach. Suzhou Zhenghe Chemical EnvironmentalProtection Co., Ltd. outsourced the continuous emission monitoring equipment and system for maintenance andoperation. The plant boundary noise and fugitive exhaust gas emission monitoring, the manual quarterly monitor-ing of ?ue gas, and the daily monitoring of industrial and desulfurization wastewater are outsourced to SuzhouShengze Environmental Monitoring Co., Ltd. Suzhou Shengze tested various pollutant factors, and the test resultsshowed that the emission concentration of various pollutants met the national and local pollutant emissionstandards or other related standards. The total discharge of pollutants is under the required limit as outlined byoperation permits.
Exceeding
WastewaterExhaust gas
NoiseTotal amount of wastewater (tonnes/year)
Amount ofdischarge duringthe reporting period
WastewaterCODAmmonia
SuspendedsolidsTotal phos-
phorusTotalemission
No excessive emissionNo excessive emissionNo excessive emission
17661////Approved amountof discharge (year)Total amount of exhaust gas (tonnes/year)
Sulfur
dioxide
Nitrogenoxides
Smoke
Acetalde-hyde
Ethylene
glycol
Non-methanetotal hydrocar-bonsAmount of dischargeduring the reportingperiodApproved amountof discharge (year)
52.28211
434.337
116.67720
868.674
7.36915
173.735
//
//
//
98550////
3. Deli Chemical Fiber
During the reporting period, Deli commissioned Jiangsu Hengyu Environmental Protection Technology Co., Ltd. totest various pollutant factors. The test results showed that the emission concentrations of various pollutants werein line with national and local pollutant emission standards or other related standards. The total discharge of pollut-ants are under the required limit as outlined by operation permits.
Excessiveemission
WastewaterExhaust gas
NoiseTotal amount of wastewater (tonnes/year)
Amount of dischargeduring the reporting
period
CODAmmoniaTotal phosphorusTotalemission
No excessive emissionNo excessive emissionNo excessive emission
1.36380.04510.0258
45.460.094
Approved amountof discharge (year)
Total amount of exhaust gas (tonnes/year)
Sulfur dioxideNitrogen oxidesSmokeAmount of dischargeduring the reporting
periodApproved amountof discharge (year)
1.4731
39.2
11.54
33.75
0.165
6.75
0.502
4. Kanghui New Material
During the reporting period, Kanghui commissioned Dalian Boyuan Testing and Evaluation Center Co., Ltd. to testvarious pollutant factors. The test results showed that the emission concentration of various pollutants met thenational and local pollutant emission standards or other related standards. The total discharge of pollutants met therequirements of the total discharge permit.
Excessiveemission
WastewaterExhaust gas
NoiseTotal amount of wastewater (tonnes/year)
Amount of dischargeduring the reporting
periodApproved amountof discharge (year)Total amount of exhaust gas (Tonnes/year)
Wastewater
Sulfur dioxideAmount of dischargeduring the reporting
periodApproved amountof discharge (year)
Nitrogen oxidesSmoke
CODAmmonia
Totalemission
No excessive emissionNo excessive emissionNo excessive emission
224768.33961800
6.332
23.21
0.07
2.318
6.187
20.23
18.191
89.71
2.307
50.591
5. Hengke Advanced Materials
Hengke commissioned Suzhou Huace Testing Technology Co., Ltd. to test various pollutant factors during thereporting period. The test results showed that the concentration of various pollutants was in compliance with thenational and local pollutant discharge standards or other related standards. The total discharge of pollutants isunder the required limit as outlined by operation permits.
Excessiveemission
WastewaterExhaust gasNoiseTotal amount of wastewater (tonnes/year)
Amount of dischargeduring the reportingperiodApproved amountof discharge (year)Total amount of exhaust gas (Tonnes/year)
Wastewater
Sulfur dioxideAmount of dischargeduring the reportingperiodApproved amountof discharge (year)
Nitrogen oxidesSmoke
Non-methane totalhydrocarbons
CODAmmonia
Totalemission
No excessive emissionNo excessive emissionNo excessive emission
345205/
8.17087
381.95
0.11225
6.05
0.08125
0.92
2.80313
297.2
18.43627
423.2
0.08718
63.14
5.64
28.86
Total phosphorus
6. Hengli Petrochemical (Dalian)
Hengli Petrochemical (Dalian) tested various pollutant factors. The test results showed that the emission concen-trations of various pollutants were in compliance with national and local pollutant emission standards or otherrelated standards. The total discharge of pollutants is under the required limit as outlined by operation permits.
//
151.52
0.87
111.8
/
240.05
Total amount of exhaust gas (tonnes/year)
Sulfur dioxideAmount of dischargeduring the reportingperiodApproved amountof discharge (year)
Nitrogen oxides
Smoke
Non-methane total
hydrocarbons
120.80
121.61
821.77
4.47
248.54
176.09
155.7562
Excessiveemission
WastewaterExhaust gas
NoiseTotal amount of wastewater (tonnes/year)
CODWastewaterAmmoniaTotal phosphorus
Totalemission
No excessive emissionNo excessive emissionNo excessive emission
Amount of dischargeduring the reporting
periodApproved amountof discharge (year)
7. Hengli Petrochemical Re?ning
During the reporting period, Hengli Petrochemical Re?ning conducted tests on various pollutant factors, and thetest results showed that the emission concentrations of various pollutants complied with national and local pollut-ant emission standards or other related standards. The total discharge of pollutants is under the required limit asoutlined by operation permits.
106391112620000
21.94
249.23
0.141
19.86
7.80
70.90
Excessiveemission
WastewaterExhaust gas
NoiseTotal amount of wastewater (tonnes/year)
CODWastewaterAmmoniaTotal phosphorus
Totalemission
No excessive emissionNo excessive emissionNo excessive emission
Amount of dischargeduring the reporting
periodApproved amountof discharge (year)
Total amount of exhaust gas (tonnes/year)
Sulfur dioxideAmount of dischargeduring the reporting
period
Nitrogen oxides
Smoke
Non-methane totalhydrocarbons
605.561562.6243.271250.45Approved amountof discharge (year)
2121.705064.92965.783158.33
8. Hengli Petrochemical Chemical
During the reporting period, Hengli Petrochemical Chemical conducted tests on various pollutant factors, and thetest results showed that the emission concentrations of various pollutants complied with national and local pollut-ant emission standards or other related standards. The total discharge of pollutants is under the required limit asoutlined by operation permits.
1184773.44086000
22.3
204.3
0.292
32.7
9.746
61.3
Excessiveemission
WastewaterExhaust gasNoiseTotal amount of wastewater (tonnes/year)
CODWastewaterAmmoniaTotal phosphorus
Totalemission
No excessive emissionNo excessive emissionNo excessive emission
Amount of dischargeduring the reportingperiodApproved amountof discharge (year)Total amount of exhaust gas (tonnes/year)
Sulfur dioxideAmount of dischargeduring the reporting
period
Nitrogen oxides
Smoke
Non-methane totalhydrocarbons
18.5759212.07944.34584.511Approved amountof discharge (year)
116.5974.4149736.088
Construction and operation of pollution prevention facilities
The environmental impact assessment of construction projects and other administrativepermits on environmental protection
During the reporting period, the above companies who discharged pollutants all built their pollutant control facili-ties following the environmental impact assessment requirements of the construction project. Currently, the facili-ties are under normal operation. The companies carry out daily maintenance of the facilities to ensure theiref?cient and stable operations of keeping emissions within the standards.
Emergency plan for environmental incidents
During the reporting period, for the company’s construction projects, environmental impact assessment reports(forms) or approval forms have been prepared by quali?ed bodies and have received the approval of the corre-sponding environmental protection authorities. The project incorporates environmental protection into the project“design, construction and production simultaneously”. The completed projects and supporting facilities have allpassed ?nal inspections from the environmental protection organs, and the projects under production haveobtained their relevant administrative permits.
ItemItem
Item
Ending balance
320509-2019-038-M321302-2021-006-L320509-2020-043-M210881-2020-003-M320682-2020-057-M210281-2021-050-H210263-2020-001-H210263-2019-011-H
Hengli Chemical Fiber
The Environmental IncidentEmergency Plan of Jiangsu HengliChemical Fiber Co., Ltd.The Environmental IncidentEmergency PlanThe Environmental IncidentEmergency Plan of SuzhouSusheng Thermal Power Co., Ltd.The Environmental IncidentEmergency Plan of YingkouKanghui Petrochemical Co., Ltd.The Environmental IncidentEmergency Plan of Jiangsu HengkeAdvanced Materials Co. LtdThe Environmental IncidentEmergency Plan of HengliPetrochemical (Dalian) Re?ning
Co., Ltd.
The Environmental Incident
Emergency Plan of HengliPetrochemical (Dalian) Co., Ltd.
The Environmental Incident
Emergency Plan of HengliPetrochemical (Dalian) Chemical
Co., Ltd.
Wujiang Bureau of Environmental
ProtectionSuqian Bureau of Environmen-tal Protection Sucheng BranchWujiang Bureau of Environmental
ProtectionXianrendao Bureau of Environmen-
tal Protection, YingkouTongzhou Bureau of Environmental
ProtectionWafangdian (Changxing IslandEconomic Zone) Branch Bureau of
Environmental Protection, Dalian
Wafangdian (Changxing IslandEconomic Zone) Branch Bureau of
Environmental Protection, Dalian
Wafangdian (Changxing IslandEconomic Zone) Branch Bureau of
Environmental Protection, Dalian
Deli Chemical FiberSusheng Thermal Power
Kanghui New MaterialHengke Advanced Materials
Hengli Petrochemical
Re?ning
Hengli Petrochemical
(Dalian)
Hengli Petrochemical
Chemical
The environmental self-monitoring plan
The company’s key pollutant discharging subsidiarieshave formulated their environmental monitoring plan inaccordance with relevant national standards andenvironmental management system requirements.They have applied for the pollutant discharge permitand ?led with the environmental regulative organ oftheir jurisdiction. The company’s environmental moni-toring station regularly tested various pollutants at thesewage outlets of each plant. If a company were unable
to conduct tests, it would commission third-party agen-cies with environmental monitoring quali?cations toconduct discharge tests of the special pollutants suchas wastewater and exhaust gas. The companiesappoint special personnel to check and summarizepollutant indicators every day, analyzed the data, andsubmitted feedback to relevant departments for refer-ence during technical parameters adjustment, all toensure emission compliance.Measures and effects taken to reduce carbon emission during the reporting periodOur company actively responded to the national policyof “carbon peak and carbon neutrality”. We integratedthe upstream, midstream and downstream industriesdevelopment in the park and leveraged the resourceintegration and scale advantages. The contribution ofcarbon emission reduction brought by the company’sre?ning and chemical integration industrial chainmodel mainly came from the following ?ve aspects:
Reduced carbon emission from the chem-ical process and fossil fuel combustionthrough increased yield of products.In the re?ning and chemical integration project,upstream products can be used as feed for down-stream processing. This integration greatly raised theproduct utilization rate at each link and avoided thecarbon emission caused by direct or indirect wastethrough discharge or combustion (such as fuelcombustion) previously accrued due to the inability touse on-site directly or the high costs of transportationfor export. Our 20 million tonnes/year re?ning andchemical integration project adopt a full-range hydro-genation process. For the ?rst time in China, a compa-ny has used the ebullated-bed hydrocracking processto hydrocrack diesel, wax oil, and residual oil to maxi-mize light and heavy naphtha feed production. This canmeet the raw materials demand of the downstream 1.5million tonnes/year ethylene plant and the 4.5 milliontonnes/year aromatic plant. At the same time, propaneand isobutane are dehydrogenated to produce high
value-added propylene and alkylated oil. The C1 - C8components are used separately to truly realize molec-ular oil re?ning and molecular chemical engineering.The C2 components, hydrogen, and fuel gas producedduring the process can be ?exibly used in otherprocesses.
(1) High value-added recovery of C2 components in the
re?ning and chemical dry gasThe dry gas component of the re?ning and chemicalsector emission is about 3.6 to 3.8% hydrogen, 39 to42% C2, 31 to 32% C3 and C4, and 6.5 to 8% C5.Before ethylene production, these components andtheir high economic value are not fully utilized, mostlybeing used as fuel. After the company’s ethyleneproject is put into operation, the dry gas from the re?n-ing and chemical plants has supplied 1.229 milliontonnes per year to the recovery unit of the ethyleneplant. The dry gas in the re?nery is pressurized to
3.1MPaG to remove CO2 and water and cryogenically
separate methane and hydrogen. C2, C3/C4, and C5+are sent to the pyrolyzer as feed. Thus, the annualrecovery and utilization of C2 are about 541,000tonnes, C3 and C4 453,000 tonnes, C5 60,000tonnes, and the remaining gas after separationreturned to the pipeline as fuel is 17.1 million tonnes.The net value of ethylene feed gas is 1.06 milliontonnes of feedstock effectively utilized annually,accounting for about 27.8% of the ethylene plantcracking feedstock. The recycled of C2 componentsavoids burning emissions as fuel, and the carbon emis-sion reduction amounts to 1.59 million tonnes/year.
(2) Our re?ning and chemical project takes atmospher-
ic and vacuum-ebullated bed residual oil hydrocrackingas the mainline to realize the whole hydrogenationprocess. The amount of hydrogen used is quite high.Under full-load production capacity, the amount of purehydrogen used in aromatics is over 760,000 tonnes/-year, of which 510,000 tonnes is supplied by the re?n-ing and chemical sector itself, and the remaining issupplied by coal-to-hydrogen and ethylene. After theethylene plant is put into operation, it produces 51,000tonnes/year of hydrogen, of which the ethyleneproduction itself uses 44,000 tonnes, and 47,000tonnes is supplied to the re?ning and chemical sector.If there is no support for the integration project, thisexcess will become stagnant and unused. Through theconsumption and use of the re?ning and chemicalplants, the annual energy consumption is saved by51,700 tonnes of standard oil. The hydrogen produc-tion-saved from coal that initially supplies hydrogencan reduce the supply of hydrogen and produce moremethanol and acetic acid. Assume 51,000 tonnes ofsurplus hydrogen per year, and assuming a 11tCO2/tH2emission rate, the emission saved by the use of surplushydrogen reached 560,000 tonnes/year.
(3) All fuel gas in the industrial park is recycled and
usedIn the Hengli (Dalian Changxing Island) Industrial Park,the by-product methane and hydrogen from theethylene plant and the biogas from the PTA plant havebeen fully recycled, which not only reduces green-house gas emissions but also increases corporatebene?ts. The ethylene plant's annual by-product ofmethane and hydrogen is about 72,000 tonnes, andthe by-product of biogas by the PTA plant is about33,000 tonnes. Transmitted through the fuel gaspipeline in the industrial park, they are now used asfeed for re?ning and chemical use, which saves theamount of natural gas purchased by Hengli Re?ningand Chemical and also reduces the emission of green-house gases through inevitable leakage duringcombustion. The annual energy consumption forrecycling is equivalent to 95,100 tonnes of standard oil.According to a rough calculation of the carbon emis-sion intensity of the equivalent amount of natural gas,the carbon emission reduction brought by the recyclingand reuse of fuel gas is 120,000 tonnes/year.
Due to the closer connected productionstages and the optimization of logisticlinks, carbon emission in reheating andtransportation is reduced.
The Hengli re?ning and chemical integration modelmeans that the upstream and downstream processesare geographically closer together. This integrationdirectly supplies heated feeds between devices indifferent sections and reduce the energy consumptiondue to removing the need for reheating; additionally,aromatic, ethylene, PX, acetic acid, methanol, andother bulk chemical products or feeds can be producedand used within the facilities transported throughpipelines in the park. This can greatly save logistics,warehousing, and loss costs while avoiding carbonemission from long-distance transportation ofoutsourced raw feed.
(1) Direct supply of thermal materials between plants of
different sectorsHengli (Dalian Changxing Island) Industrial Park fullydesigned a mutual supply of materials betweenupstream and downstream sectors and plants andreduces storage area operations, to realize direct heatsupply of materials, reduce the energy loss caused bymaterial cooling and heating and save energyconsumption. By adjusting the production conditions
and optimizing the operations between upstream anddownstream materials in a timely manner, the re?ningand chemical integration project has realized the ?owof materials between different sectors and differentplants with less transfer to tanks and more directsupply to save energy.In the re?ning and chemical supply reforming ofaromatics, a light hydrocarbon recovery unit is installedin the re?ning and chemical plant to collectively recov-er lightweight components from atmospheric equip-ment and hydrogenation equipment to produce naph-tha. Hydrogenated naphtha with kerosene, isomerizeddewaxed naphtha of lubricating oil, and hydrocrackednaphtha of ebullated bed residue are used asfeedstock for the pre-hydrogenation of the aromaticsunit. Re?ned naphtha and diesel hydrocracking heavynaphtha, wax oil hydrocracking heavy naphtha is usedas reaction feed of catalytic reforming of the aromaticsunit. In 2020, the annual directly fed into the three sets
of reformers for re?ning and chemical hot materialswas nearly 9 million tonnes. The direct supply of hotfeed materials with signi?cant energy-saving effectsaccounted for about 92% of the total feed volume ofthe aromatics reforming equipment, and the annualenergy consumption was 5,800 tonnes of standard oil,reducing CO2 emission by about 17,000 tonnes.In the aromatics unit, benzene and p-xylene are direct-ly supplied to storage tanks as products. PX andbenzene products are changed from entering the dailyinspection tank to PX direct supplying the PTA rawmaterial storage tank and benzene directly supplyingthe benzene ?nished product storage tank. Due to lessintermediate transmission, the daily electricity saving is7,500kWh. According to China’s power system'scurrent carbon emission intensity (596g CO2/kWh),this change equals an annual CO2 emission reductionof about 20,000 tonnes.
(2) Reducing long-distance transportation of raw mate-
rialsThe carbon emission reduction brought about bydecreased long-distance transportation mainly comesfrom “PX - PTA” in the “crude oil - PX - PTA - PET”production chain. Integration greatly changes thesource of PX, the raw material for PTA production.Before integration, PX was mainly imported fromabroad, while after integration, PX can be directlyproduced in the park. In 2018, China’s external depen-dence on PX was as high as 61%; in 2019, with a largeincrease of domestic PX production capacity to 14.65million tonnes, the external dependence droppedsigni?cantly to 51%. Most of China’s new PX capacitywas in large-scale re?ning and chemical integrationprojects, and almost all of their PX output was directlyused for PTA production downstream of the park. Theopening of the “PX - PTA” chain in the large-scale re?n-ing and chemical integration projects has hugely cutdown the outsourcing of PX, and carbon emissioncaused by long-distance transportation has also beenavoided.China mainly imported PX from South Korea andJapan. In 2019, China imported 6.04 million tonnes ofPX from South Korea, accounting for 40% of totalimports; and 2.1 million tonnes from Japan, accountingfor 14%. South Korea's largest PX production capacitycomes from SK Chemicals in Ulsan and Incheon;
Japan’s comes from ENEOS Corporation who hasdistributed production capacity in Mizushima, Oita,Chiba, Kashima, Kawasaki, Natsu, and other places.Take the Hengli Dalian Changxing Island Project as anexample. Assume the 4.5 million tonnes/year PX feedis imported from Japan and South Korea instead ofproduced from the upstream plant of the integrationproject. According to the above percentages, calculat-ed based on the distance of South Korea’s main port tothe Dalian Port of about 500km and Japan about1,000km, the average transportation distance of 4.5million tonnes of PX per year can reach as long as630km. Milagewise, one-way transportation is equiva-lent to 30,000 km traveled for a 100,000-tonnecontainer ship. Assume a 30g CO2 emission per tonneper kilometer of the cargo ship; the transportationcarbon emission reduction due to the connection ofprocesses is 90,000 tonnes/year. Considering theactual import, the transportation distance is actuallylonger than the above calculation based on thedistance from Korea and Japan alone, and the contri-bution to carbon emission reduction is thus actuallylarger.
Reduction of carbon emission due toenergy cascade utilization.
The Hengli Re?ning and Chemicals Project has createdconditions for the cascaded utilization of energy withinthe park. The project’s re?ning, chemical, and coalhydrogen production processes have been combinedto achieve a mutual supply of materials and energypairs. The cascaded utilization of different energygrades saved signi?cant overall energy consumptionand reduced carbon emission caused by energy utiliza-tion. The deep thermal coupling between the oil re?n-ing and chemical production facilities circumvents thewaste from upstream cooling and downstream reheat-ing; additionally, the low-temperature heat source after
production in the park can also be used for otherpurposes besides the production of main products(power generation, desalination, etc.). This can furtherincrease economic bene?ts without additional carbonemissions.The carbon emission reduction of the Hengli Re?ning &Chemicals Project due to the cascaded utilization of
energy is demonstrated in four aspects. First, theHengli Industrial Park recovers low-parameter steamfrom two aromatics production lines in waste heatpower generation. The amount of power generationfrom waste heat is 120,000 kWh, saving 36.7t/h ofstandard coal and 308,000 tonnes of standard coalevery year. In low-temperature warm water waste heatrecovery, the park has 21,000t/h waste heat in the formof 95water. The water is now gathered and used forheating, seawater desalination, lithium bromide refrig-erator, and boiler deaeration, saving 75t/h and630,000 t/y of standard coal.Petrochemical production is a heavy water consumer.The Hengli Changxing Island Industrial Park takes itscoastal advantage and achieves the goal of producingfreshwater as a coastal factory without additional freshwater consumption by making full use of cascadedenergy. In high-temperature condensate waste heatrecovery, 100t/h of high-temperature condensatewater is produced, which is used to heat the make-upwater of the deaerator from 25 to 35 in the thermalpower plant, saving 64.4t/h and 540,000t/y ofstandard coal. In addition, the integrated model helpsoptimize the con?guration of a self-contained thermalpower plant. The thermal power plant boiler fully recov-ers the heat of ?ue gas through the waste heat utiliza-tion system, increases the inlet air temperature of thefurnace, reduces the exhaust gas temperature from140 to 90, raises the boiler ef?ciency 3 percentagepoints to 94%, and saves about 128,400 tonnes ofstandard coal annually. The thermal power plant adopts7 heating methods of different pressure grades, andthe backpressure unit is ef?ciently used. The coalconsumption for power generation is only 160g/kWh,which is 96.18g/kWh lower than the 266.18g/kWhindicator for one million thermal power units. Theannual power generation is about 5 billion kWh, saving281,200 tonnes of standard coal annually. Assuming astandard coal CO2 emission coef?cient of 0.67t/tce(recommended by the Energy Research Institute ofNational Development and Reform Commission), theabove measures help reduce carbon emission by 1.26million tonnes per year.
The scenario of large-scale application ofdecarbonization technology due tohigh-concentration carbon emission.
Hengli Petrochemical and Hengli Petrochemical Chem-ical produce a large amount of high-concentration CO2during production. Once captured in the park, it can beused as a raw material to produce chemical products.This allows production to use self-produced CO2 , aswell as reduce carbon emission. Chemical production isan organic conversion process with hydrogen andcarbon as the basic elements, in which hydrogen andCO2 are used as raw materials for synthesis reaction,and many major products in the chemical industry’svalue chain can be produced. The high concentrationof CO2 in the park creates a huge array of applicationscenarios for the future use of green hydrogen and CO2to produce methanol and its downstream chemicalproducts. Even if CO2 is not used as raw material, theintegrated park creates favorable conditions of sharedinfrastructure for carbon capture, transportation, andstorage, thereby greatly reducing costs and thedif?culty of implementation.At present, there have been domestic and foreignexamples of chemical production using green hydro-gen and CO2 . Fossil fuel is gradually decreasing in rawmaterials, and the CO2 generated in the originalproduction process is ?xed into the product to reduceemission. For example, the Iceland-based companyCarbon Recycling International (CRI) currently produc-es 4,000 tonnes of zero-carbon methanol per year withthe technology and plans to expand its capacity to40,000 tonnes. The carbon dioxide feed comes from ageothermal power plant, and the 5MW power of thewater electrolysis equipment used to produce hydro-gen also comes from geothermal energy. Japan’s MitsuiChemicals has also built a pilot plant to synthesizemethanol from hydrogen and carbon dioxide and hasconducted a feasibility study for industrial production.The re?ning and chemical integration industrial park isan ideal application scenario for coupling the disruptivetechnology of green hydrogen because its CO2 acquisi-tion cost is low, and the products that can be obtainedin large quantities with this technology path are also
needed as raw materials in the re?ning and chemicalintegration value chain.
The carbon emission reduction from thecircular economy by breaking the bound-aries of what is possible for auxiliary facil-ities.The sewage treatment plant is a representative auxilia-ry facility in the park. Compared with the traditionalmodel of separate treatment of sewage for each link,the recycling technology in the integrated embeddedsewage treatment plant can function with greaterresource recycling and carbon emission reduction. Inthe traditional model, the designer focuses only onwastewater and collects and treats the wastewater.However, when the boundary of sewage treatment isconsidered in its entirety and enlarged to the scope ofthe whole park scale, waste and the overall materialcan be balanced, some waste residues, waste gas orre?ning, and chemical by-products are possible to bereused in the sewage treatment process.Hengli’s new philosophy of “embedded sewage treat-
ment plant” has changed traditional sewage plants’passive reception and closed treatment model, fullyintegrated sewage treatment and petrochemicalprocesses into a whole, and established a modelingexample of the “embedded sewage treatment plant”.We have combined the sewage treatment design intothe design of the whole plant and implemented it withthe main process design simultaneously. Hengli Petro-chemical Re?ning has more than 40 petroleum andchemical production facilities, which discharge variouswastewater, waste gas, and waste residues. In theproject, to realize this philosophy, we have carefullyreviewed more than 40 individual petrochemical plantsand found 6 embedded points, which can achieve thegoal of using “waste” to control “waste” and becomingmutual resources between each other. Through thereview and analysis of the whole process and optimiza-tion of resource allocation, the sewage treatment plantis regarded as the core of the entire plant’s waste treat-ment in order to realize circular economy and greenproduction.
VI. Important Items
Delivery of Commitments
Commitments made by the actual controller, shareholders, related parties, purchasers, the Company and other relevant partiesduring or that continue through the reporting period
Background
Type ofCommitments
Committed byContent ofCommitments
Time andDuration
Whether there
is a time limitfor delivery
Whether thecommitmentsare delivered in astrict and timelymanner
Reasons in caseof failed delivery
Action plans incase of failedtimely delivery
Commitmentsrelated to materialasset reorganiza-tion
Trading restrictionsof shares
Fan Hongwei,Hengneng Invest-ment, Hengfeng
Investment
Shares of listedcompaniesacquired throughmaterial assetreorganization shallnot be transferredwithin 36 monthsfrom the date oflisting
From February2018 to February
2021
Yes
Yes
Unit: 100 million yuan Currency: CNY
Material guarantees performed or yet to be completed during the reporting period
Nil
Total amount guaranteed during the reporting period (excluding guaranteefor subsidiaries)
2,111.181,439.10
1,439.10
286.36
Total guarantee balance by the end of the reporting period (A) (excludingguarantee for subsidiaries)Guarantee for subsidiariesTotal amount guaranteed for subsidiaries during the reporting period
Total amount guaranteed (including guarantee for subsidiaries)Total amount guaranteed (A+B)Percentage of the total amount guaranteed in the Company’s net assets (%)
Total guarantee balance for subsidiaries by the end of the reporting period(B)
Situation of External Guarantee (excluding guarantee for subsidiaries)Theguarantor
Relation-shipbetweentheguarantorand thelistedcompany
Thewarantee
Amountguaranteed
Date ofguarantee
(date ofagreement)
Com-mencement
date
Maturity
date
Type ofguarantee
Principaldebt status
Object ofguarantee
(if any)
Whether
theguaranteehas beenperformed
Whether
theguaranteeis overdue
Overdueamount ofguarantee
Counterguarantee
situation
Whether
theguarantee
isperformedfor related
parties
RelatedRelation-
ship
0.98
1,121.351,122.33
During the reporting period, external guarantees of the Company performed were all for theCompany and its subsidiaries (sub-subsidiaries)
of which:
Amount of guarantee in excess of 50% of net assets (E)Total amount of the aforementioned three guarantees (C+D+E)
Amount guaranteed for shareholders, the actual controller and relatedparties (C)Amount of debt guarantee directly or indirectly for warrantees whoseasset-liability ratio exceeds 70% (D)
Explanation of unexpired guarantees that could bear joint and severalliabilities for satisfactionExplanation of guarantee status
Share Changes and ShareholdersChanges in shareholdings
2,407,164,177
2,407,164,1771,521,058,208
886,105,969
34.20
21.61
12.59
-2,407,164,177-1,521,058,208
-886,105,969
-2,407,164,177-1,521,058,208
-886,105,969
34.20-2,407,164,177-2,407,164,17700
Before the change
1. State-owned shares
I. Shares with tradingrestrictions
Number ofshares
Percentage (%)
New issue of
shares
Bonus shares
Sharesconverted fromcapital reserve
OthersSub-total
Number ofshares
Percentage (%)
2. State-owned legal
person shares
3. Shares held by other
domestic entities
Shares held by domes-tic natural persons
4. Shares held by other
foreign entitiesIncluding: Shares held by
overseas legal person
Including: Shares held
by domestic nonstate-owned legal
person
Increase/decrease from the changeAfter the change
Unitshare
65.80
4,631,935,60965.80
7,039,099,786100.00
2,407,164,1772,407,164,177
2,407,164,177
2,407,164,1777,039,099,786100.00
7,039,099,786100.00
7,039,099,786100.00
Shares held by overseasnatural personsII. Circulating shareswithout trading restric-
tions
1. RMB ordinary shares
4. Others
2. Domestic listed
foreign shares
III. Total number ofshares
3. Overseas listed
foreign shares
On February 8, 2021, the listing and circulating of 2,407,164,177 shares were restricted due to the Company’s material asset reorganization.
Changes in shares with trading restrictions
Total number of shareholders:
Total number of common shareholders as of the end of
the reporting period (shareholder)Total number of preferred shareholders with restored
voting rights as of the end of the reporting period
(shareholder)
128,295
Name ofshareholder
Number ofshares withtradingrestrictions atthe beginning
of thereportingperiod
Number ofsharesreleasedfrom tradingrestrictionsduring thereportingperiod
Increase insharessubject totradingrestrictionsduring thereportingperiod
Number ofsharessubject totradingrestrictions atthe end ofthe reportingperiod
Reasons forrestrictions
Date ofsharesreleasedfrom tradingrestrictions
Fan Hongwei886,105,969886,105,96900
Material assetreorganization
February 8,
2021HengnengInvestment
1,498,478,9261,498,478,92600
Material assetreorganization
February 8,
2021HengfengInvestment
22,579,28222,579,28200
Material assetreorganization
February 8,
2021Total2,407,164,1772,407,164,17700//
Unit: Share
Shareholdings of the top 10 shareholders and top 10 ?oating shareholders (or shareholdersholding shares without trading restrictions) as of the end of the reporting period
Name ofshareholder
(full name)
Hengli Group
Co., Ltd.HengnengInvestment(Dalian) Co.,Ltd.
Fan Hongwei
Tak Shing LiInternational
Holdings
Limited
HKSCC(Nominees)
Limited
Jiangsu
HegaoInvestment
Co., Ltd.
Hengli GroupSouthwestSecurities21 Hengli E1
specialguaranteeand trustproperty
account
Increase/de-crease duringthe reporting
period
Number ofshares as of theend of thereportingperiod
Percentage(%)
Number ofshares heldwith tradingrestriction
Nature ofshareholderStatus ofshares
QuantityPledged, marked orfrozen
-562,000,0001,538,612,34221.860Pledged656,580,000
Domesticnon-state-owned legalperson
01,498,478,92621.290Nil
Domesticnon-state-o
wned legalperson
0886,105,96912.590Nil
Domesticnaturalperson
0732,711,66810.410Nil
Overseaslegal person
-15,084,092147,154,1642.090NilOther
061,952,0650.880Nil
Domesticnon-state-o
wned legal
person
562,000,000562,000,0007.980Nil
Other
Unit: ShareShareholdings of the top 10 shareholders
HailaideInternationalInvestmentLimited
052,246,8380.740Nil
Overseas legal
person
Specialsecuritiesaccount for
agreedrepurchasetype securi-ties trading ofGuotai Junan
SecuritiesCompany
Limited
-1,330,00043,970,000
Hengli Group Co., Ltd.Hengneng Investment (Dalian)
Co., Ltd.Fan Hongwei
1,538,612,3421,498,478,926
886,105,969
RMB commonstockRMB commonstockRMB commonstock
1,538,612,3421,498,478,926
886,105,969
0.620NilOther
Tibet TrustCorporationLimitedTibet Trustthe fourthphase of theemployeestockownershippooled capitaltrust plan ofHengliPetrochemi-cal
-12,815,10037,378,1000.530NilOther
Shareholding of the top 10 shareholders of shares without trading restrictionsName of shareholder
Number of circulating shares without
trading restrictions
Class and quantity of sharesClassQuantity
Tak Shing Li InternationalHoldings LimitedHengli GroupSouthwest
Securities21 Hengli E1special guarantee and trust
property account
732,711,668
562,000,000
RMB common
stockRMB commonstock
732,711,668
562,000,000
HKSCC (Nominees) Limited147,154,164
RMB common
stock
147,154,164Jiangsu Hegao Investment Co.,
Ltd.
61,952,065
RMB commonstock
61,952,065Hailaide International Invest-
ment Limited
Explanations of buybackspecial securities accounts of
the top 10 shareholders
52,246,838
RMB commonstock
52,246,838Special securities account for
agreed repurchase typesecurities trading of GuotaiJunan Securities Company
Limited
43,970,000
RMB commonstock
43,970,000
Tibet Trust Corporation LimitedTibet Trustthe fourth phaseof the employee stockownership pooled capital trustplan of Hengli Petrochemical
Explanations of voting rights
proxy, entrustment andabstention of the aforesaidshareholders
Hengli Group assigned 562,000,000 share capital of company shares to the“Hengli GroupSouthwest Securities21 Hengli E1 special guarantee and trustproperty account” due to the issuance of exchangeable corporate bonds. Thespecial account is held in the name Southwest Securities Co., Ltd. SouthwestSecurities will deal with matters according to Hengli Group’s opinions withoutharming the interests of the holders of the exchangeable corporate bondswhen exercising the voting right.
Nil
Hengli Group, Hengneng Investment, Fan Hongwei, Tak Shing Li, HegaoInvestment and Hailaide are persons acting in concert among each other; theCompany has no information on whether there is related relationship amongother shareholders.
Explanations of relatedrelationship or concertedaction among the aforesaid
shareholdersExplanations of preferredshareholders with restoredvoting rights and the number of
shares held
37,378,100
The top 10 shareholders do not have a buyback special securities account.
RMB commonstock
37,378,100
VII. Relevant Information of Bonds
Basic information of corporate bonds
Unit: 100 million yuan Currency: CNY
Public issuance of corporate bonds of 2019 by Hengli
Petrochemical Co., Ltd. (?rst tranche)
19 Hengli 01155749.SHFrom September 25, 2019 to September 27, 2019
September 27, 2019September 27, 202
6.30
Interests will be paid once a year and the principal is repaid in a lump sumwhen the bond is due. The last installment of interest will be paid together
with the repayment of the principal.Shanghai Stock Exchange
155749.SH155749.SHNo
Name of bondShort name
CodeDate of issuance
Value dateMaturity dateBond balanceInterest rate (%)Principal and interest payment
Trading venueSuitability arrangement of investors (if any)Trading mechanismWhether there is risk oftermination of listing
Key accounting data and ?nancial indicators
Unit: yuan Currency: CNY
0.65
0.33
74.99
8,266,136,381.56
0.1213
4.91
6.64
6.53
100%100%
5,494,688,252.54
0.0905
3.48
6.94
4.62
100%100%
50.44
34.02
40.98
-4.30
41.33
0.00
0.00
0.61
0.35
75.38
6.56
-5.71-0.52
Key indicators
Net pro?t excludingextraordinary pro?t
and lossTotal debt-to-EBIT-
DA ratioInterest coverage
ratioCash ?ow interestcoverage ratioEBITDA-to-interestcoverage ratioLoan repayment
rate (%)Interest coveragerate (%)
Current ratioQuick ratioDebt-to-assets
ratio (%)
By the end of thereporting period
The reporting period
(January to June)
By the end of theprevious year
Same period of last
year
Flux (%)
Flux (%)
Reasons forchanges
Reasons forchanges
VIII. Financial ReportConsolidated Balance SheetJune 30, 2021
19,048,515,671.43 15,671,338,845.58
377,707,343.81
685,929,126.58 1,650,130,008.46
10,050,136.79
3,242,862.85 4,334,402.76416,922,134.69 1,363,602,415.102,209,137,772.55 4,082,386,076.603,591,094,480.71 1,994,374,678.13
ms receivable
1,287,875,315.02 803,130,210.03Interest receivables
26,547,232,372.12 19,691,123,430.81
5,962,724,839.36 6,844,803,825.4860,140,432,055.91 52,105,223,892.95
instruments
199,800,000.00 199,800,000.00current ?nancial
31,735,166.21 32,573,461.39120,509,211,988.31 121,850,294,763.69
6,145,331,822.15 4,195,710,084.65
728,965,845.327,394,787,235.12 7,188,503,385.13
79,830,909.392,741,922,227.32 3,085,329,048.29
Item NotesJune 30, 2021December 31, 2020Current assetsCash and bank balancesCurrency margin receivableProvision of settlement fundFunds lentTrading ?nancial assetsSettlement guarantee fundreceivableDerivative ?nancial assetsNotes receivablesAccounts receivablesReceivable ?nancingPrepaymentsInsurance premiums receivableCession premiuProvision of cession receivableOther receivablesIncludingDividend receivablesRecoursable ?nancial assetsacquiredInventoriesContract assetsAssets held for saleNon-current assets due withinone yearOther current assetsTotal current assetsNon-current assetsLoans and payments on behalfDebts investmentOther debts investmentLong-term receivablesLong-term equity investmentsOther equityinvestmentOther non-assetsInvestment propertiesFixed assetsConstruction in progressProductive biological assetsOil and gas assetsUsage right assetsIntangible assetsDevelopment expenditureGoodwillLong-term deferred expensesDeferred tax assets178,101,446.15 109,496,755.14
Prepared by: Hengli Petrochemical Co., Ltd. Unit: yuan Currency: CNY
Other non-current assets 2,795,757,245.96 2,261,795,258.47Total non-current assets 140,805,443,885.93 138,923,502,756.76Total assets 200,945,875,941.84 191,028,726,649.71Current liabilities
Short-term loans 41,817,234,796.04 49,879,420,683.06Currency margin payable 519,032,545.13Borrowing from the CentralBank
Deposit fundsTrading ?nancial liabilities 329,312,832.40 88,999,293.44Derivative ?nancial liabilitiesNotes payable 11,376,562,617.86 7,805,074,070.85Accounts payable 14,847,169,984.62 15,004,707,112.76Receipts in advanceContract liabilities 8,695,979,681.75 5,401,458,679.01Financial assets sold forrepurchase
Customer bank deposits anddue to banks and other ?nancialinstitutions
Funds received as agent ofstock exchange
Funds received as stockunderwriter
Employee compensationpayable
302,782,680.79 364,407,376.56Taxes payable 1,723,409,756.12 2,290,700,960.19Other payables 8,176,832,270.88 416,688,235.50Including: Interest payableDividend payable 3,932,100.00 3,977,100.00Handling charges andcommission payable
Reinsured accounts payableLiabilities held for saleNon-current liabilities maturingwithin one year
3,250,724,313.29 3,828,963,320.81
Other current liabilities 1,112,797,638.72 719,118,891.93Total current liabilities 92,151,839,117.60 85,799,538,624.11Non-current liabilities
Reserves for insurance contractLong-term loans 54,279,526,154.51 53,883,057,081.22Bonds payable 1,046,840,475.90 1,013,970,663.36Including: Preference sharesPerpetual bondsLease liabilities 89,789,811.14 -Long-term payables 4,000,000.00 123,322,260.33Long-term employeecompensation payable
ProvisionsDeferred income 3,116,983,109.17 3,175,206,156.76Deferred tax liabilities 2,356,307.17 9,240,902.12Other non-current liabilitiesTotal non-current liabilities 58,539,495,857.89 58,204,797,063.79Total liabilities 150,691,334,975.49 144,004,335,687.90
Owner’s equityorshareholder’s rights andinterests
Paid-in capitalor Sharecapital
7,039,099,786.00 7,039,099,786.00
Other equity instrumentsIncluding: Preference sharesPerpetual bondsCapital reserve 18,364,551,413.27 18,350,115,179.65Less: Treasury shares 228,626,593.18 324,811,781.18Other comprehensive income -174,801,353.83 -100,823,962.53Special reserve 50,131,635.93 77,581,307.23Surplus reserve 743,268,339.04 743,268,339.04Ordinary risk reserveUndistributed profits 24,344,427,409.50 21,120,648,008.95Total owner’s equity (orshareholder’s rights andinterests) attributable to theparent company
50,138,050,636.73 46,905,076,877.16Minority shareholders’ interestsand rights
116,490,329.62 119,314,084.65
Total owner’s equity (orshareholder’s rights andinterests)
50,254,540,966.35 47,024,390,961.81
Total liabilities and owner’sequity (or shareholder’s rightsand interests)
200,945,875,941.84 191,028,726,649.71Legal representative: Fan HongweiPerson in charge of ?nancial function: Liu XuefenPrepared by (person in charge of the accounting ?rm): Zheng Minxia
Parent Company’s Balance Sheet
Item Notes June 30, 2021 December 31, 2020Current assets
Cash and bank balances 9,476,416.03 27,650,112.58Trading ?nancial assetsDerivative ?nancial assetsNotes receivablesAccounts receivablesReceivable ?nancingPrepayments 137,552.16 404,850,661.55Other receivables 3,903,598.42 4,863,304,987.80IncludingInterest receivablesDividend receivables 4,829,955,000.00InventoriesContract assetsAssets held for saleNon-current assets due withinone year
Other current assets 82,343,157.18 28,175,701.13Total current assets 95,860,723.79 5,323,981,463.06
June 30, 2021Prepared by: Hengli Petrochemical Co., Ltd. Unit: yuan Currency: CNY
Non-current assets
Debts investment
Other debts investment
Long-term receivables
Long-term equity investments43,212,245,704.93 42,826,112,800.93Other equity instrumentsinvestment
Other non-current ?nancialassets
Investment properties
Fixed assets1,608,525,921.78 533,919.78
Construction in progress
Productive biological assets
Oil and gas assets
Usage right assets
Intangible assets1,415,094.34Development expenditure
Goodwill
Long-term deferred expenses
Deferred tax assets
Other non-current assets955,705,232.28Total non-current assets44,822,186,721.05 43,782,351,952.99Total assets44,918,047,444.84 49,106,333,416.05Current liabilities
Short-term loans
Trading ?nancial liabilities
Derivative ?nancial liabilities
Notes payable
Accounts payable460,000.00 4,534,800.00Receipts in advance
Contract liabilities
Employee compensationpayable
1,465,382.00Taxes payable3,809,547.00 2,416,483.11Other payables11,904,836,797.38 10,856,341,775.75
Including: Interest payable
Dividend payable
Liabilities held for sale
Non-current liabilities maturingwithin one year
Other current liabilities
Total current liabilities11,909,106,344.38 10,864,758,440.86Non-current liabilities
Long-term loans
Bonds payable1,046,840,475.90 1,013,970,663.36
Including: Preference shares
Perpetual bonds
Lease liabilities
Long-term payables
Long-term employeecompensations payable
Provisions
Deferred income14,000,000.00
Legal representative: Fan HongweiPerson in charge of ?nancial function: Liu XuefenPrepared by (person in charge of the accounting ?rm): Zheng MinxiaConsolidated Income StatementJanuary to June, 2021
Unit: yuan Currency: CNY
Deferred tax liabilitiesOther non-current liabilitiesTotal non-current liabilities 1,060,840,475.90 1,013,970,663.36Total liabilities 12,969,946,820.28 11,878,729,104.22Owner’s equityorshareholder’s rights andinterests
Paid-in capitalor Sharecapital
7,039,099,786.00 7,039,099,786.00Other equity instrumentsIncluding: Preference sharesPerpetual bondsCapital reserve 23,935,956,217.92 23,794,748,212.70Less: Treasury shares 228,626,593.18 324,811,781.18Other comprehensive incomeSpecial reserveSurplus reserve 1,270,353,247.78 1,270,353,247.78Undistributed pro?ts -68,682,033.96 5,448,214,846.53Total owner’s equity (orshareholder’s rights andinterests)
31,948,100,624.56 37,227,604,311.83
Total liabilities and owner’sequity (or shareholder’s rightsand interests)
44,918,047,444.84 49,106,333,416.05
Item Note Half year 2021 Half year 2020I. Total operating revenue104,574,477,968.28 67,357,935,162.99
IncludingOperating revenue104,574,477,968.28 67,357,935,162.99
Interest incomeEarned insurance premiumFee and commission incomesII. Total operating cost 93,870,777,498.52 59,891,056,010.27IncludingOperating cost88,606,157,035.69 54,256,726,443.98
Interest expensesFee and commission expensesRefunded premiumsNet amount of compensation payoutNet amount of allotment of reservesfor insurance liabilities
Policy dividend paymentReinsured expensesTaxes and surcharges 942,830,057.89 1,021,909,803.98Selling expenses 112,155,781.37 542,587,130.06Administrative expenses 929,877,003.94 870,692,615.21Research and development expenses 423,005,210.99 379,098,796.08Financial expense 2,856,752,408.64 2,820,041,220.96IncludingInterest expenses2,712,601,519.40 2,523,778,695.65
Interest income 58,911,453.98 62,440,582.53Add: Other income 255,643,642.92 123,425,202.30Investment gains (“-”for loss) -213,968,734.97 -4,192,185.35Including: Gains from investment inassociates and joint ventures
Income on derecognition of ?nancialassets at amortized cost (“-”for loss)
Foreign exchange gains (“-”for loss)Gains from net hedging exposure(“-”for loss)
Gains from changes in fair value(“-”for loss)
304,288,424.25 -53,659,648.69Credit impairment loss (“-”for loss) -25,703,092.89 -3,402,835.21Assets impairment loss (“-”for loss)Gains form disposal of assets (“-”forloss)
-39,515.06 -62,773.92III. Operating pro?t (“-”for loss) 11,023,921,194.01 7,528,986,911.85Add: Non-operating income 7,811,806.27 2,460,654.59Less: Non-operating expenses 6,472,626.14 29,666,546.07IV. Total pro?t (“-”for total loss) 11,025,260,374.14 7,501,781,020.37Less: Income tax expenses 2,385,409,708.11 1,955,723,792.72V. Net pro?t (“-”for net loss) 8,639,850,666.03 5,546,057,227.65(I) Classi?ed by continuity of operations
1.Net pro?t from continuing
operations“-”for net loss
8,639,850,666.03 5,546,057,227.65
2.Net pro?t from discontinued
operation“-”for net loss
(II) Classi?ed by attribution to ownership
1.Net pro?t attributable to
shareholders of the parent company(“-”for net loss)
8,642,207,124.21 5,516,860,000.15
2. Net pro?t attributable to minority
interests (“-”for net loss)
-2,356,458.18 29,197,227.50
VI. Other comprehensiveincome-after tax
-74,444,688.15 13,823,417.25(I) Other comprehensive income-aftertax attributable to owners of theparent company
-73,977,391.30 13,823,110.15
1. Other comprehensive income not
reclassi?ed into pro?t or losssubsequently
(1) Changes in remeasurement of
de?ned bene?t plan
(2) Share of other comprehensive
income of the equity methodinvestments not transferred to loss orbene?t
(3) Changes in fair value of other
equity instruments investment
(4) Changes in fair value of the
company’s own credit risks
2. Other comprehensive income that
will be reclassi?ed into pro?t or losssubsequently
-73,977,391.30 13,823,110.15
(1) Share of other comprehensive
Parent Company’s Income StatementJanuary to June, 2021 Unit: yuan Currency: CNY
income of the equity methodinvestments transferrable to pro?t orloss
(2) Changes in fair value of other
debts investment
(3) Resulted amount on
reclassi?cation of ?nancial assets inother comprehensive income
(4) Credit impairment reserve of
other debts investment
(5) Reserve for cash ?ow hedging -89,024,986.83
(6) Translation differences arising
from translation of foreign currency?nancial statements
15,047,595.53 13,823,110.15
(7) Other(II) Other comprehensiveincome-after tax attributable tominority interests
-467,296.85 307.10VII. Total comprehensive income 8,565,405,977.88 5,559,880,644.90(I) Total comprehensive incomeattributable to owners of the parentcompany
8,568,229,732.91 5,530,683,110.30
(II) Total comprehensive incomeattributable to minority interests
-2,823,755.03 29,197,534.60VIII Earnings per share(I) Basic earnings per share(yuan/share)
1.23 0.79
(II) Diluted earnings per share(yuan/share)
1.23 0.79
Item Note Half year 2021 Half year 2020I. Operating revenue530,229,675.19 2,135,481,201.37
LessOperating cost 530,229,675.11 2,134,214,917.37Taxes and surcharges 4,997,083.21 8,040.00Selling expensesAdministrative expenses 60,324,479.74 82,485,315.64Research and development expensesFinancial expense 39,827,355.22 46,094,050.07IncludingInterest expenses 37,047,554.95 46,076,428.19Interest income 199,390.78 157,737.87Add: Other income 1,248,904.41 608,910.87Investment gains (“-”for loss) 570,000,000.00Including: Gains from investment inassociates and joint ventures
Income on derecognition of ?nancial
For business merger involving enterprises under common control in this period, the net pro?t realized by themergered enterprise before merger date was RMB 0, and the net pro?t of the mergered in previous period was 0yuan.Legal representative: Hongwei FanPerson in charge of ?nancial function: Xuefen LiuPrepared by (person in charge of the accounting ?rm): Minxia Zheng
assets at amortized cost (“-”for loss)Gains from net hedging exposure(“-”for loss)
Gains from changes in fair value(“-”for loss)
Credit impairment loss (“-”for loss) 229,817.95Assets impairment loss (“-”for loss) 16,792.01Gains form disposal of assets (“-”forloss)
II. Operating pro?t (“-”for loss) -103,670,195.73 443,304,581.17Add: Non-operating incomeLess: Non-operating expensesIII. Total pro?t (“-”for loss) -103,670,195.73 443,304,581.17Less: Income tax expensesIV. Net pro?t (“-”for loss) -103,670,195.73 443,304,581.17(I) Net pro?t from continuingoperations (“-”for loss)
-103,670,195.73 443,304,581.17
(II) Net pro?t from discontinuedoperation (“-”for loss)
V. Other comprehensive incomeaftertax
(I) Other comprehensive income notreclassi?ed into pro?t or losssubsequently
1. Changes in remeasurement of
de?ned bene?t plan
2. Share of other comprehensive
income of the equity methodinvestments not transferrable to pro?tor loss
3. Changes in fair value of other equity
instruments investment
4. Changes in fair value of the
company’s own credit risks
(II) Other comprehensive income thatwill be reclassi?ed into pro?t or losssubsequently
1. Share of other comprehensive
income of the equity methodinvestments transferrable to pro?t orloss
2. Changes in fair value of other debts
investment
3. Resulted amount on reclassi?cation
of ?nancial assets in othercomprehensive income
4. Credit impairment reserve of other
debts investment
5. Reserve for cash ?ow hedging
6. Translation differences arising from
translation of foreign currency?nancial statements
7. OtherVI. Total comprehensive income -103,670,195.73 443,304,581.17VII. Earnings per share
Consolidated Cash Flows StatementJanuary to June, 2021 Unit: yuan Currency: CNY
Legal representative: Fan HongweiPerson in charge of ?nancial function: Liu XuefenPrepared by (person in charge of the accounting ?rm): Zheng Minxia
(I) Basic earnings per
share(RMB/share)
(II) Diluted earnings per
share(RMB/share)
Item Note Half year 2021 Half year 2020I. Cash ?ows from operatingactivities
Cash received from sale of goods orrendering of services
121,336,796,594.74 75,044,380,622.31
Net increase of deposits fromcustomers and other banks or ?nancialinstitutions
Net increase in borrowings fromcentral bank
Net increase of loans from other?nancial institutions
Cash received from receivinginsurance premium of originalinsurance contract
Net cash received from reinsurancebusiness
Net increase of policy holder depositsand investment funds
Cash received from interests, fees andcommissions
6,775,715.53Net increase of loans from other banksNet increase in repurchase businesscapital
Net cash received as securities tradingagency
Tax refund received 377,285,547.43 137,938,255.70Other cash received relating tooperating activities
4,680,550,279.24 5,648,618,722.34
Sub-total of cash in?ows in operatingactivities
126,401,408,136.94 80,830,937,600.35
Cash paid for goods and services 97,329,857,577.48 52,771,778,399.12Net increase of customer's loans andadvances
Net increase in deposits with centralbank and other ?nancial institutions
Cash paid for indemnity of originalinsurance contract
Net increase of loans to other banksCash paid for interests, fees andcommission
Cash paid for policy dividendsCash paid to and on behalf ofemployees
1,791,442,952.25 1,448,240,876.53
Payments of all types of taxes 4,850,929,047.89 3,342,096,708.89Other cash paid relating to operatingactivities
6,249,086,242.03 5,076,499,059.42Sub-total of cash out?ows inoperating activities
110,221,315,819.65 62,638,615,043.96
Net cash ?ows from operatingactivities
16,180,092,317.29 18,192,322,556.39
II. Cash ?ows from investingactivities:
Cash received from disposal ofinvestments
1,487,381,281.74 294,681,847.02Cash received from returns oninvestments
- 7,948,373.71
Net cash received from disposal of?xed assets, intangible assets andother long-term assets
22,511,819.35 313,987.66
Cash received from disposal ofsubsidiaries and other business units
Other cash received relating toinvesting activities
52,697,368.27 5,780,678,376.49Sub-total of cash in?ows ininvestment activities
1,562,590,469.36 6,083,622,584.88Cash paid to acquire ?xed assets,intangible assets and other long-termassets
6,131,235,998.99 21,451,791,614.04Cash paid to investments 409,610,909.09 558,665,655.99Net increase in pledge loansCash paid to acquire subsidiaries andother business units
Other cash paid relating to investingactivities
758,138,087.78 4,555,332,452.45
Sub-total of cash out?ows ininvestment activities
7,298,984,995.86 26,565,789,722.48
Net cash ?ows from investingactivities
-5,736,394,526.50 -20,482,167,137.60
III. Cash ?ows from ?nancingactivities
Cash received from capitalcontribution
350,000,000.00Include: Cash received frominvestment by minority interests
Cash received from borrowings 37,359,186,600.89 42,118,941,072.69Cash received relating to other?nancing activities
9,178,551,971.75 1,616,145,339.17
Sub-total of cash in?ows in ?nancingactivities
46,887,738,572.64 43,735,086,411.86
Cash repayments of amountsborrowed
45,649,179,138.01 31,314,021,139.92
Cash payments for interest expensesand distribution of dividends or pro?ts
7,674,059,813.50 5,326,006,707.76
Include: Dividend paid to minorityinterests of subsidiaries
12,998.00
Other cash payments relating to?nancing activities
2,266,232,032.93 698,587,182.80
Sub-total of cash out?ows in?nancing activities
55,589,470,984.44 37,338,615,030.48
Parent Company’s Cash Flows StatementJanuary to June, 2021
Unit: yuan Currency: CNY
Legal representative: Fan HongweiPerson in charge of ?nancial function: Liu XuefenPrepared by (person in charge of the accounting ?rm): Zheng Minxia
Net cash ?ows from ?nancingactivities
-8,701,732,411.80 6,396,471,381.38
IV. Effect of foreign exchange ratechanges on cash and cashequivalents
-244,791,212.05 -155,999,853.07V. Net increase in cash and cashequivalents
1,497,174,166.94 3,950,626,947.10Add: Opening balance of cash andcash equivalent
11,494,116,327.37 10,792,982,727.36VI. Closing balance of cash and cashequivalent
12,991,290,494.31 14,743,609,674.46
Item Note Half year 2021 Half year 2020I. Cash ?ows from operatingactivities
Cash received from sale of goods orrendering of services
599,164,314.00 1,524,685,093.21
Tax refund receivedOther cash received relating tooperating activities
999,488,574.88
767,592.14
Sub-total of cash in?ows in operatingactivities
1,598,652,888.88
1,525,452,685.35
Cash paid for goods and services 125,702,398.24 1,945,850,251.50Cash paid to and on behalf ofemployees
5,731,291.49
-2,875,501.22
Payments of all types of taxes 124,647,363.60 8,040.00Other cash paid relating to operatingactivities
540,140,214.92
9,632,318.79
Sub-total of cash out?ows inoperating activities
796,221,268.25
1,952,615,109.07
Net cash ?ows from operatingactivities
802,431,620.63
-427,162,423.72
II. Cash ?ows from investingactivities:
Cash received from disposal ofinvestments
Cash received from returns oninvestments
4,829,955,000.00 2,811,967,000.00Net cash received from disposal of?xed assets, intangible assets andother long-term assets
Cash received from disposal ofsubsidiaries and other business units
Other cash received relating toinvesting activities
29,000,000.00Sub-total of cash in?ows ininvestment activities
4,829,955,000.00
2,840,967,000.00
Cash paid to acquire ?xed assets,intangible assets and other long-term
666,681,248.56
32,123.89
Legal representative: Fan HongweiPerson in charge of ?nancial function: Liu XuefenPrepared by (person in charge of the accounting ?rm): Zheng Minxia
assetsCash paid to investments300,000,000.00 700,000,000.00Cash paid to acquire subsidiaries andother business units
Other cash paid relating to investingactivities
60,000,000.00Sub-total of cash out?ows ininvestment activities
966,681,248.56
760,032,123.89Net cash ?ows from investingactivities
3,863,273,751.44
2,080,934,876.11
III. Cash ?ows from ?nancingactivities
Cash received from capitalcontribution
Cash received from borrowingsCash received relating to other?nancing activities
733,525,358.55
3,240,000,000.00Sub-total of cash in?ows in ?nancingactivities
733,525,358.55
3,240,000,000.00Cash repayments of amountsborrowed
Cash payments for interest expensesand distribution of dividends or pro?ts
5,417,404,427.17 2,776,691,365.67Other cash payments relating to?nancing activities
2,138,970,332.73Sub-total of cash out?ows in?nancing activities
5,417,404,427.17
4,915,661,698.40
Net cash ?ows from ?nancingactivities
-4,683,879,068.62
-1,675,661,698.40
IV. Effect of foreign exchange ratechanges on cash and cashequivalents
V. Net increase in cash and cashequivalents
-18,173,696.55
-21,889,246.01
Add: Opening balance of cash andcash equivalent
27,650,112.58
82,052,267.79
VI. Closing balance of cash and cashequivalent
9,476,416.03
60,163,021.78
Consolidated Statement of Changes in EquityJanuary to June, 2021
Unit: yuan Currency: CNY
Item
I. Balance atthe end ofprevious yearAdd: Changesin accountingpolicies
Businessmerger undercommoncontrol
Correction of
errors inprevious period
OtherII. Balance in
beginningperiod ofthis year
Paid-inCapital(or Share
Capital)7,039,099,
786.00
Preferenceshares
Perpetual
bonds
OtherOther equity instruments
Capitalreserve18,350,115,179.65
Less:
Treasuryshares324,811,
781.18
Othercomprehensiveincome
Specialreserve
Surplusreserve
Ordinaryriskreserve
Undistributed
pro?ts
OtherSubtotal
Minorityinterests
Total owners'
equity
-100,823,962.53
77,581,
307.23
743,268,
339.04
21,120,648,008.95
46,905,076,
877.16
119,314,
084.65
47,024,390,
961.81
7,039,099,
786.00
18,350,115,179.65
324,811,
781.18
-100,823,962.53
77,581,
307.23
743,268,
339.04
21,115,446,970.05
46,899,875,
838.26
119,314,
084.65
47,019,189,
922.91
-5,201,038.90
-5,201,
038.90
-5,201,038.90
2021half yearEquity attributable to the parent company
III. Movementover the period( "- "fordecrease)
(I)Totalcomprehensive
income
(II)Shareholders'contributionsand decreaseof capital
1. Ordinary
sharescontributed by
shareholders
2. Capital
contribution by
holders ofother equityinstruments
3. Increase in
shareholder'sequity resultedfromshare-based
payments
4. Other
(III)Appropriation
of pro?ts
14,436,
233.62
-96,185,
188.00
-73,977,391.30
-27,449,
671.30
3,228,980,439.45
3,238,174,
798.47
-2,823,
755.03
3,235,351,
043.44
-73,977,391.308,642,207,124.21
8,568,229,
732.91
-2,823,
755.03
8,565,405,
977.88
14,436,
233.62
-96,185,
188.00
110,621,
421.62
110,621,
421.62
14,436,
233.62
-96,185,
188.00
110,621,
421.62
110,621,
421.62
-5,413,226,
684.76
-5,413,226,684.76
-5,413,226,
684.76
Appropriation
to surplus
reserves
2.allotmentof ordinaryrisk reserves
3.Distributions to
owners (orshareholders)
4Other(IV) Transferwithin equity
1.Capital
reservesconverting into
capital (orshare capital)
2.Surplus
reservesconverting into
capital (orshare capital)
3.Surplus
reserves
covering
the de?cit
4. Changes in
de?nedbene?ts plan
transferredto retained
earnings
-5,413,226,
684.76
-5,413,226,
684.76
-5,413,226,684.76
comprehensiveincometransferred to
retainedearnings6Other
(V) Special
reserve
Appropriationfor the period2Used forthe period(VI) Other
IV. Balance atthe end ofthe period
Item
2020 half yearEquity attributable to the parent companyPaid-inCapital (orShareCapital)
Other equity instrumentsPreferenceshares
Perpetualbonds
Other
Capitalreserve
Less:
Treasuryshares
Othercomprehensiveincome
Specialreserve30,392,
119.18
Surplusreserve
Ordinaryrisk reserve
Undistributed
pro?ts
OtherSubtotal
Minorityinterests
Totalowners' equity7,039,099,
786.00
18,272,
358,
450.99
224,841,
448.45
13,773,146.41
690,326,
989.68
10,511,894,102.60
36,333,
003,
146.41
405,784,
756.03
36,738,787,902.44
I. Balance at
the end ofprevious year
-27,449,
671.30
87,541,
421.06
114,991,
092.36
7,039,099,
786.00
18,364,
551,
413.27
228,626,
593.18
-174,801,353.83
50,131,
635.93
743,268,
339.04
24,344,427,
409.50
50,138,050,
636.73
116,490,
329.62
50,254,540,
966.35
-27,449,
671.30
87,541,
421.06
114,991,
092.36
-27,449,671.3087,541,421.06114,991,092.36
Add: Changesin accounting
policiesCorrection of
errors inprevious period
Businessmerger undercommon control
Other
II. Balance inbeginning period
of this yearIII. Movement
over theperiod ( "- "for
decrease)
(I)Totalcomprehensive
income(II) Shareholders'contributionsand decrease
of capital
1. Ordinary
sharescontributed byshareholders
2. Capital
contributionby holders
of other
7,039,099,
786.00
18,272,
358,
450.99
224,841,
448.45
13,773,146.41
30,392,
119.18
690,326,
989.68
10,511,894,
102.60
36,333,003,146.
405,784,756.
36,738,787,902.44144,312,
627.95
99,970,
332.73
13,823,110.15
57,375,
149.24
2,710,744,
692.95
2,826,285,
247.56
-323,759,388.
2,502,525,
859.18
144,312,
627.95
99,970,
332.73
44,342,
295.22
-352,956,
922.98
-308,614,
627.76
13,823,110.155,516,860,
000.15
5,530,683,110.
29,197,
534.60
5,559,880,
644.90
equityinstruments
3. Increase in
share-holder'sequity resulted
fromshare-based
payments
4. Other
(III)Appropriation
of pro?ts
Appropriationto surplus
reserves
2. allotment
of ordinaryrisk reserves
3. Distributions
to owners (or shareholders)4Other(IV) Transferwithin equity
1.Capital
reservesconverting intocapital(or share capital)
2.Surplus
reservesconverting into
144,312,
627.95
99,970,
332.73
44,342,
295.22
-352,956,
922.98
-308,614,
627.76
-2,806,115,
307.20
-2,806,115,
307.20
-2,806,115,
307.20
-2,806,115,
307.20
-2,806,115,
307.20
-2,806,115,
307.20
capital (or sharecapital)
3.Surplus
reserves
coveringthede?cit
4. Changes in
de?ned bene?tsplan transferredto retainedearnings
5. Other
comprehensiveincometransferred toretainedearnings
6Other
(V) Specialreserve
57,375,
149.24
57,375,1
49.24
57,375,149.
1Appropriationfor the period
70,130,
616.90
70,130,6
16.90
70,130,616.
2Used for theperiod
12,755,
467.66
12,755,4
67.66
12,755,467.
(VI) Other
IV. Balance atthe end of theperiod
7,039,099,786.
18,416,
671,078.94
324,811,
781.18
27,596,256.56 87,767,
268.42
690,326,989.68
13,222,638,79
5.55
39,159,2
88,393.9
82,025,36
7.65
39,241,313,
761.62
Parent Company’s Statement of Changes in EquityJanuary to June, 2021
Unit: yuan Currency: RMB
Item
2021 half yearPaid-inCapital(ShareCapital)
Other equity instruments
Capital reserve
Less: Treasuryshares
Othercomprehensiveincome
Specialreserve
Surplus reserve
Undistributedpro?ts
Total owners'equityPreferenceshares
Perpetualbonds
OtherI. Balance at theend of previousyear
7,039,099,786.00
23,794,748,212.7
324,811,781.18 1,270,353,247.7
5,448,214,846.53 37,227,604,311.8
Add: Changes inaccountingpolicies
Correction oferrors inprevious period
OthersII. Balance inbeginning periodof this year
7,039,099,786.00
23,794,748,212.7
324,811,781.18 1,270,353,247.7
5,448,214,846.53 37,227,604,311.8
III. Movementover the period(“-”for decrease)
141,208,005.22 -96,185,188.00 -5,516,896,880.4
-5,279,503,687.27
(I) Totalcomprehensive
-103,670,195.73 -103,670,195.73
income(II)Shareholders'contributionsand decrease ofcapital
141,208,005.22 -96,185,188.00 237,393,193.22
1. Ordinary
sharescontributed byshareholders
2. Capital
contribution byholders of otherequity
instruments
3. Increase in
shareholder’sequity resultedfromshare-basedpayments
4. Other 141,208,005.22 -96,185,188.00 237,393,193.22(III)Appropriation ofpro?ts
-5,413,226,684.7
-5,413,226,68
4.76
1Appropriation
to surplusreserves
2. Distributions
to owners (orshareholders)
-5,413,226,684.76
-5,413,226,684.763Other
(IV) Transferwithin equity
1.Capital
reservesconverting intocapital (or sharecapital)
2.Surplus
reservesconverting intocapital (or sharecapital)
3.Surplus
reservescovering thede?cit
4. Changes in
de?ned bene?tsplan transferredto retained
earnings
5. Other
comprehensiveincometransferred toretained earnings
6Other
(V) Specialreserve
1Appropriationfor the period
2Used for theperiod
(VI) Other
IV. Balance atthe end of period
7,039,099,786.00
23,935,956,217.9
228,626,593.18 1,270,353,247.7
-68,682,033.96 31,948,100,624.5
Item
2020 half yearPaid-inCapital(ShareCapital)
Other equity instruments
Capitalreserve
Less: Treasuryshares
Othercomprehensiveincome
Specialreserve
Surplusreserve
Undistributedpro?ts
Total owners'equityPreferenceshares
Perpetualbonds
OtherI. Balance at7,039,0 23,759,278,224,841,448.4 757,965,343,636,814,094.534,968,316,12
theend ofprevious year
99,786.
351.37 5 2.25 5 5.72
Add: Changesin accountingpolicies
Correction oferrors inpreviousperiod
OthersII. Balance inbeginningperiod of thisyear
7,039,099,786.
23,759,278,
351.37
224,841,448.4
757,965,34
2.25
3,636,814,094.5
34,968,316,12
5.72
III. Movementover the period(“-”fordecrease)
74,570,241.
99,970,332.73 -2,362,810,726.
-2,388,210,817.76(I) Totalcomprehensiveincome
443,304,581.17 443,304,581.1
(II)Shareholders’contributionsand decreaseof capital
74,570,241.
99,970,332.73 -25,400,091.73
1. Ordinary
sharescontributed byshareholders
2. Capital
contributionby holders ofother equityinstruments
3. Increase in
share-holder'sequity resultedfromshare-basedpayments
4. Other 74,570,241.
99,970,332.73 -25,400,091.73(III)Appropriationof pro?ts
-2,806,115,307.
-2,806,115,307.201Appropriation to surplusreserves
2 Distributionsto owners (orshareholders)
-2,806,115,307.
-2,806,115,307.20
3Other
(IV) Transferwithin equity
1.Capital
reservesconverting intocapital (orshare capital)
2.Surplus
reservesconverting intocapital (orshare capital)
3.Surplus
reservescovering thede?cit
4. Changes in
de?nedbene?ts plantransferred toretainedearnings
5. Other
comprehensiveincome
transferred toretainedearnings6Other
(V) Specialreserve
1Appropriation for theperiod
2Used for theperiod
(VI) Other
IV. Balance atthe end of theperiod
7,039,099,786.
23,833,848,
592.37
324,811,781.1
757,965,34
2.25
1,274,003,368.5
32,580,105,30
7.96
Legal representative: Fan HongweiPerson in charge of ?nancial function: Liu XuefenPrepared by (person in charge of the accounting ?rm): Zheng Minxia