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Letter to shareholders, partners and employees
Dear shareholders, partners and employees:
The passing years never linger, yet our
original aspirations endure. As seasons flow and
another year dawns, we are reminded that "there is
no winter that cannot be surpassed, and no spring
that will not arrive." Through arduous trials and
overcoming countless obstacles, we have braved
challenges and surmounted difficulties, once again
reuniting amidst this radiant springtime.
In the past year, our nation and homeland face great challengs. Geopolitical complexities
persist, global economy remains sluggish, and external circumstances have been tempestuous,
surpassing anticipated risks and challenges. Guided by the central leadership under the core of
Comrade Xi Jinping, the Party has steered the course, leading the entire nation to vigorously
accomplish the demanding tasks of reform, development, and stability, striving to turn the tide.
During this year, Hengli Petrochemical has also weathered numerous tests in its operations.
Crude oil prices soared and fluctuated dramatically, while the end-market witnessed weak
consumer demand and insufficient needs. The industry as a whole endured operational pressures
arising from narrowed price differentials and the inability to shift costs. In the latter half of the year,
the company"s operational performance declined alongside industry fluctuations, resulting in
losses. Confronted with formidable challenges, we have cut through thickets and advanced
toward the light, steadfastly growing amidst tremendous changes and uncertainty, resolute in our
forward pursuit.
"We venture into the most difficult challenges and strive for the farthest goals." Despite
the tremendous difficulties faced in 2022, we confronted them head-on and achieved some small
accomplishments. In terms of production and operation, we have implemented the "Dual
Excellence Strategy" of strengthening production management, optimizing production processes,
enhancing new product development, and optimizing product structure, resulting in improved
quantity and quality. In terms of industrial layout, we have relied on the integrated industrial system
of "oil, coal, and chemicals" and leveraged the accumulated research and development in "new
materials" in downstream sectors such as "fiber, membrane, and plastics" to consolidate our core
business and strengthen the foundations for future development. In terms of capital operation, we
have excavated highlights, extracted value, and comprehensively and vigorously promoted
investment and market value management through various channels and forms, yielding
noticeable results. In terms of safety and environmental protection, we have remained committed
to green and low-carbon development, and our efforts have been recognized with multiple
honors, including being awarded the national-level "Green Factory" and "National Low-Carbon
Enterprise in the Textile Industry".
Within the realm of life and the world, the path is long and perilous. Standing at another
historical juncture, we feel the howling winds of a century of upheaval: Geopolitical conflicts show
no signs of abating, inflation reaches historic highs in Europe and America, and the "triple
pressure" of shrinking demand, supply shocks, and weakening expectations remains heavy.
Tearing apart and integrating, upheaval and reconstruction, all indicate that this year may yet be an
extraordinary one. Undoubtedly, the recovery of demand cannot happen overnight, and the
economic revival may be a lengthy healing process.
With hope in our hearts and stars in our sights, despite the immense uncertainty that lies
ahead and the potential for unexpected factors to disrupt, we, united as one with our country and
homeland, will navigate through treacherous waters and embark on an era of vast possibilities
with tremendous resilience. We will continue to uphold the patience and determination to fight a
tough battle, with the resolve and conviction to achieve victory, and address the essential
questions that belong to Hengli people.
Strength in action leads to greater progress, and deep understanding leads to more effective
action. Regardless of the ever-changing world, we remain steadfast and unwavering. Hengli
continues to be a company that perseveres through hard work and steadfast dedication, and
Hengli people remain pioneers who willingly explore and firmly believe that even a tiny stream can
break through towering cliffs. With an unwavering commitment to our original aspirations and
unwavering determination, in the new year, we will continue to focus on "one goal, two strategic
implementations, three fundamental foundations, four key industries, and six comprehensive
systems, " upholding our craftsmanship spirit and striving for upward advancement.
After enduring hardships, the mountains and rivers regain their radiance. Each trial and
tribulation, each callus and scar left behind from countless storms and tempests, is a testament to
our growth and a gift from time. Recognizing our inadequacies, we forge ahead, gazing at distant
mountains while taking determined steps. We are more acutely aware that only by "putting forth
efforts that are no less than anyone else"s" and courageously advancing can we persist amidst the
storms and flourish.
Catching up with a great era, the grand journey of Chinese-style modernization has begun.
Achieving grand visions and far-reaching goals requires passing through obstacles together with
millions of like-minded individuals and the diligent perseverance of countless unsung heroes. Each
one of us is both a witness and a participant.
"With a heart reaching beyond the sky and a body committed to the present." The stars will
not disappoint those who strive forward. We believe that the journey we embark on will not be in
vain! The winds and waves will carry us forward, and we will meet again in the vast blue expanse,
farther and wider than ever before!
Chairman:
Content
Financial statements signed and sealed by the legal representative,
person in charge of accounting, and person in
charge of the accounting organization (accounting supervisor).
Reference File Directory Original audit report sealed by the accounting firm and signed and sealed
by a certified public accountant.
Original copies of all company documents and announcements
publicly disclosed during the reporting period.
Chapter 1 Definitions
I. Definition
In this report, the terms listed below are defined as follows, unless the context otherwise
implies:
Definition of Frequently-Used Terms
Reporting Period Refer to From 1/1/2022 to 31/12/2022
Company, the Company, Refer to Hengli Petrochemical Co., Ltd.
or Hengli Petrochemical
CSRC Refer to China Securities Regulatory Commission
Ministry of Industry and Refer to Ministry of Industry and Information Technology of the
Information Technology People’s Republic of China
SSE Refer to Shanghai Stock Exchange
《Company Law》 Refer to 《Company Law of the People’s Republic of China》
《Securities Law》 Refer to 《Securities Law of the People’s Republic of China》
《Articles of Refer to 《Hengli Petrochemical Co., Ltd. Articles of Association》
Association》
Hengli Group Refer to Hengli Group Co., Ltd., controlling shareholder of the
listed company
Hailaide Refer to Hailaide International Investment Ltd., person acting-
inconcert with controlling shareholder of the listed
company
Tak Shing Li Refer to Tak Shing Li International Holdings Ltd., person acting-
inconcert with controlling shareholder of the listed
company
Hegao Investment Refer to Jiangsu Hegao Investment Co., Ltd., person acting-
inconcert with controlling shareholder of the listed
company
Hengneng Investment Refer to Hengneng Investment (Dalian) Co., Ltd., person acting-
inconcert with controlling shareholder of the listed
company
Hengfeng Investment Refer to Hengfeng Investment (Dalian) Co., Ltd., person acting-
inconcert with controlling shareholder of the listed
company
Hengli Chemical Fiber Refer to Jiangsu Hengli Chemical Fiber Co., Ltd., subsidiary to the
listed company
Susheng Thermal Power Refer to Suzhou Susheng Thermal Power Co., Ltd., subsidiary to
the Hengli Chemical Fiber, sub-subsidiary to the listed
company
Hengke Advanced Refer to Jiangsu Hengke Advanced Materials Co. Ltd., subsidiary
Materials to the Hengli Chemical Fiber, sub-subsidiary to the listed
company
Deli Chemical Fiber Refer to Jiangsu Deli Chemical Fiber Co., Ltd., subsidiary to the
Hengli Chemical Fiber, sub-subsidiary to the listed
company
Kanghui New Material Refer to Kanghui New Material Technology Co., Ltd., subsidiary to
the listed company
Hengli Petrochemical Refer to Hengli Petrochemical (Dalian) Chemical Co., Ltd.,
Chemical subsidiary to the listed company
Hengli Investment Refer to Hengli Investment (Dalian) Co., Ltd., subsidiary to the
listed company
Hengli Petrochemical Refer to Hengli Petrochemical (Dalian) Co., Ltd., subsidiary to the
(Dalian) Hengneng Investment, sub-subsidiary to the listed
company
Hengli Petrochemical Refer to Hengli Petrochemical (Huizhou) Co., Ltd., subsidiary to
(Huizhou) the Hengneng Investment, sub-subsidiary to the listed
company
Hengli Petrochemical Refer to Hengli Petrochemical (Dalian) Refining Co., Ltd.,
Refining subsidiary to the listed company
Crude Oil Refer to Crude oil is petroleum directly exploited from an oil well
without being processed, and is a dark-brown or dark-
green viscous liquid or semisolid flammable substance
that is composed of various hydrocarbons.
Aromatic Hydrocarbon Refer to A hydrocarbon containing a benzene ring structure in its
molecule.Aromatic hydrocarbons, mainly including
benzene, methylbenzene, xylene, etc., are one of the
most important basic raw materials for the production of
petrochemicals.
Ethylene Refer to A compound consisting of two carbon atoms and four
hydrogen atoms. It is the basic chemical raw material of
synthetic fiber, synthetic rubber, synthetic plastic-
(polyethylene and polyvinyl chloride), synthetic ethanol
(alcohol), and also used in manufacturing chloroethylene,
styrene, ethylene oxide, acetic acid, acetaldehyde,
ethanol, and explosives, etc.
Polyethylene Refer to A thermoplastic resin obtained by polymerization of
Ethylene. Polyethylene is odorless, non-toxic, feels like
wax, has excellent low temperature resistance, good
chemical stability, and is resistant to most acids and
alkalis.
POLYPROPYLENE (PP) Refer to A semi-crystalline synthetic resin material with strong acid
and alkali resistance, excellent electrical insulation
performance, harder and higher melting point than PE.
Styrene Refer to An organic compound, usually a colorless, aromatic liquid,
used primarily in the production of plastics, resins, and
rubber.
Butadiene Refer to An organic compound, a colorless gas with a special
smell, the main raw material for the production of
synthetic rubber.
PARAXYLENE (PX) Refer to A kind of Aromatic Hydrocarbon, a colorless transparent
liquid, is one of the raw materials for the production of
purified terephthalic acid (PTA), which is used to produce
plastics, Polyester Fiber and films.
PURIFIED Refer to It is white crystal or powder at normal temperature, non-
TEREPHTHALIC ACID toxic, flammable, if mixed with air within a certain limit, it
(PTA) will burn when exposed to fire.
METHYLENE GLYCOL Refer to Colorless, odorless, sweet, viscous liquid, mainly used in
(MEG OR EG) the production of Polyester Fiber, antifreeze, unsaturated
polyester resin, lubricants, plasticizers, non-ionic
surfactants and explosives.
BDO, 1, 4-Butanediol Refer to Colorless oily liquid, flammable, miscible with water.
Soluble in methanol, ethanol, acetone, slightly soluble in
ether.
Acetic Acid Refer to Organic compound, a colorless liquid with a pungent odor.
It is the raw material for the manufacture of rayon, film,
aspirin, etc.
Polyester, Polyester Chip Refer to Polyethylene terephthalate (referred to as polyester) is a
or PET fiber-forming high polymer prepared from PTA and MEG
as raw materials through transesterification or
esterification and polycondensation reactions. Fiber-grade
polyester chips are used to make polyester staple fiber
and Polyester Filament Yarn (PFY), and film-grade chips
are used to make various film products.
PBAT Refer to Polybutylene terephthalate-adipate, a petrochemical-
based biodegradable plastic, has excellent
biodegradability. It is very active in the research of
biodegradable plastics and one of the best degradable
materials in the market.
PBS Refer to Polybutylene succinate, polymerized from succinic acid
and 1, 4-butanediol (BDO), has good thermal
performance and mechanical processing performance,
and is easily destroyed by various microorganisms in
nature or animals and plants. Enzyme decomposes,
metabolizes, and finally decomposes into carbon dioxide
and water, which is a typical fully biodegradable material.
Polyester Fiber Refer to Synthetic fiber obtained by spinning polyester obtained by
polycondensation of organic dibasic acid and dibasic
alcohol. Industrialized mass-produced Polyester Fiber is
made of polyethylene terephthalate, and the trade name
in China is polyester. It is the largest variety of synthetic
fibers at present.
Polybutylene Refer to Also known as polytetramethylene terephthalate, it is a
Terephthalate (PBT), condensation polymer of terephthalic acid and 1, 4-
PBT butanediol. It can be obtained by polycondensation
through transesterification or direct esterification.
Together, PBT and PET are known as thermoplastic
polyesters.
Biaxially-Oriented Refer to Biaxially-Oriented Polyethylene Terephthalate (BOPET)
Polyethylene has the characteristics of high strength, good rigidity,
Terephthalate (BOPET), transparency, high gloss, excellent wear resistance,
BOPET folding resistance, pinhole resistance and tear resistance,
etc.; heat shrinkage is extremely small and has good
antistatic properties.
Denier (D) Refer to A fiber of 9, 000 meters in length weighs 1 gram and is
called 1 Denier (D).
Polyester Filament Yarn Refer to Filament with a length of more than one kilometer, the
(PFY) filament is wound into a ball.
PFY for Civil Use, Textile Refer to Polyester Filament Yarn (PFY) for apparel or home
Yarn textiles.
PFY for Industrial Use, Refer to It is a polyester long fiber with high strength, high modulus
Industrial Yarn and large denier used in industrial fields.
Differential Fiber Refer to Through chemical modification or physical deformation,
mainly to improve the wearing performance, there are
great innovations in technology or performance, or new
fiber varieties with certain characteristics that are different
from conventional varieties.
POY Refer to Polyester pre-oriented yarn, full name PRE-ORIENTED
YARN or PARTIALLY ORIENTED YARN, is an
incompletely drawn Polyester Filament Yarn (PFY)
obtained by high-speed spinning with an orientation
degree between the unoriented yarn and the drawn yarn.
DTY Refer to Stretched textured yarn, also known as polyester
stretched yarn, full name DRAW TEXTURED YARN, is
made of POY as raw yarn, stretched and false twisted,
and often has a certain degree of elasticity and shrinkage.
FDY Refer to Full drawn yarn, also known as polyester drawn yarn, full
name FULL DRAWN YARN, is a synthetic fiber filament
further prepared by spinning and drawing process. The
fiber has been fully drawn and can be directly used for
textile processing.
Chapter 2 Company Profile and Key Financial Indicators
I. Company information
Company"s Chinese Name 恒力石化股份有限公司
Abbreviation of Chinese Name 恒力石化
Company"s Foreign Name HENGLI PETROCHEMICAL CO., LTD.
Legal representative of the Company Fan Hongwei
II. Contacts and contact information
Secretary of the Board Securities Affairs Representative
Name Li Feng Wang Shan, Duan Mengyuan
Contact Floor 31, Building B, Victoria Plaza, No. Floor 31, Building B, Victoria Plaza, No. 52
address 52 Gangxing Road, Renmin Road Street, Gangxing Road, Renmin Road Street,
Zhongshan District, Dalian City, Liaoning Zhongshan District, Dalian City, Liaoning
Province Province
Telephone 0411-39865111 0411-39865111
Fax 0411-39901222 0411-39901222
E-mail wangshan@hengli.com
lifeng@hengli.com
duanmengyuan@hengli.com
III. Basic information
Registered address OSBL Project-Public Office Building, No. 298, Changsong Road,
Lingang Industrial Zone, Changxing Island, Dalian City, Liaoning
Province
Company office address Floor 31, Building B, Victoria Plaza, No. 52 Gangxing Road, Renmin
Road Street, Zhongshan District, Dalian City, Liaoning Province
Postal code of the 116001
Company"s business
address
Company website hengliinc.com
E-mail hlzq@hengli.com
IV. Information disclosure and location
Media name and website of the Company’s China Securities Journal, Shanghai Securities
annual report disclosure News, Securities Times, Securities Daily
Website of the stock exchange where the www.sse.com.cn
company discloses the annual report
The place where the Company"s annual Office of the Company"s board of directors
report is ready for inspection
V. Company stock profile
Company stock profile
Stock category Stock exchange Stock abbreviation Stock code Stock abbreviation
before change
A shares Shanghai Stock Hengli 600346 Hengli Stock
Exchange Petrochemical
VI. Other relevant information
Name Zhonghui Certified Public Accountants (Special
General Partnership)
Accounting firm Office address Room 601, Building A, Hualian Times Building, No. 8
engaged by the Xinye Road, Jianggan District, Hangzhou
Company (Domestic) Name of Han Jian, Fang Sai
signing
accountant
VII. Key accounting data and financial indicators in the past three years
(I) Key Accounting Data
Unit: ten thousand yuan Currency: RMB
Increase/decre
Key Accounting Data 2022 2021 2020
ase (%)
Revenue from
operations
Net profit attributable
to shareholders of 231, 830.32 1, 553, 107.67 -85.07 1, 346, 178.57
listed company
Net profit attributable
to shareholders of
listed company after
deduction of non-
recurring gains and
losses
Net cash flows from
operating activities
Net assets
attributable to
shareholders of listed
company
Total assets 24, 143, 047.46 21, 029, 622.56 14.80 19, 102, 872.66
(II) Key Financial Indicators
Increase/decrease
Key Accounting Data 2022 2021 2020
(%)
Basic earnings per share
(Yuan/Share)
Diluted earnings per share
(Yuan/Share)
Basic earnings per share after
deducting non-recurring gains 0.15 2.07 -92.75 1.83
and losses (Yuan/Share)
Weighted average return on Reduced by 25.77
equity (%) percentage points
Weighted average return on Reduced by 26.17
equity after deducting non- 1.94 28.11 percentage points 31.13
recurring gains and losses (%)
Note of the key accounting data and financial indicators of the company in the prior three
years at the end of the reporting period
During the Reporting Period, the prices of crude oil and other major raw materials rose
rapidly and oscillated at high levels and in a wide range. The prices of products near crude
oil also rose sharply due to the impact of crude oil prices. At the same time, the traditional
demand for the company"s main products such as chemicals, functional films, civilian yarns,
and industrial yarns related to terminal consumption and infrastructure real estate is at a low
market level. The weak recovery of market demand in the industry, the delayed transmission
of upstream and downstream product prices, and the company"s double operating squeeze
of historically high operating costs and low industry demand are the main reasons for the
company"s revenue from operations growth but profit decline. Secondly, the company
implemented a refinery overhaul in the second half of 2022, which affected the overall load
rate and processing cost level of the refining and chemical integration unit, and in
accordance with the requirements of accounting standards, the inventory loss caused by
the periodic decline in the international crude oil price has been accounted for, which has
further affected the company"s annual profitability.
VIII. Main financial data by quarter in 2022
Unit: ten thousand yuan Currency: RMB
First quarter Second Third quarter Fourth quarter
(January to Quarter (April- (July- (October-
March) June) September) December)
Revenue from operations 5, 339, 665.19 6, 575, 862.87 5, 120, 188.76 5, 196, 641.58
Net profit attributable to
shareholders of listed 422, 268.92 380, 346.92 -193, 946.96 -376, 838.56
company
Net profit attributable to
shareholders of listed
company after deducting 411, 359.48 330, 324.85 -262, 602.68 -374, 553.14
non-recurring gains and
losses
Net cash flows from
operating activities
IX. Non-recurring gains and losses items and amount
Unit: yuan Currency: RMB
Item of non-recurring gains and losses 2022 2021 2020
Gain or loss on disposal of non-current assets -8, 794, 1, 788, -2, 353,
Government subsidies included in the current
profit and loss, except for government subsidies
that are closely related to the company"s normal 1, 594, 250, 760, 570, 937, 331,
business operations, comply with national policies 334.30 495.82 851.91
and regulations, and are continuously enjoyed in
accordance with certain standards or quantities
Gain on investment costs in acquisition of
subsidiaries, associates and joint venture less 79, 415,
than the fair value of identifiable net assets of the 493.16
investees
Except for the effective hedging business related
to the Company"s normal business operations,
-46, 001, 375, 366, -158, 168,
income from the holding of trading financial
assets, Derivative financial assets, Trading
financial liabilities, and derivative financial
liabilities generates changes in fair value gains
and losses, and the disposal of Trading financial
assets, Derivative financial assets, Trading
Investment income from financial liabilities,
derivative financial liabilities and other debt
investments
Other non-operating income/(expenses), net 10, 695, -5, 096, -11, 127,
Other gain or loss items met the definition of non- 45, 080, 1, 561,
recurring item 477.29 440.57
Less: Impact on income tax 360, 240, 183, 394, 200, 533,
Impact on minority interests (after tax) -16, 064, -20, 752,
Total
X. Items measured at fair value
Unit: ten thousand yuan Currency: RMB
Impact on profit
Beginning Closing Changes in the
Item for the current
balance balance period
period
Derivative financial 45, 675.63
assets
Derivative financial -50, 022.39
liabilities
Wealth management 243.05
products and structured 2, 000.00 6, 500.00 4, 500.00
deposits
Receivable financing 341, 995.77 228, 727.12 -113, 268.65 -
Fund trust and asset -150.78
management products
Treasury bond reverse 59.41
repurchase
Total 469, 613.63 325, 305.54 -144, 308.09 -4, 195.08
Chapter 3 Management Discussion and Analysis
I. Business discussion and analysis
In 2022, under the impact of complex geopolitical conflicts, deep adjustments in global
supply chains, and frequent major climate disasters, prices of commodities such as energy,
industrial metals, and food continued to rise, leading to a global surge in inflation. Weaker
global economic fundamentals further intensified financial market volatility, prompting
central banks in developed economies to swiftly and significantly tighten monetary policies,
resulting in a phase of capital outflows. The central banks of some emerging markets and
developing economies took a more aggressive stance in raising interest rates, greatly
weighing down their economic growth. The global economic growth rate significantly
declined in 2022, and the divergence in the recovery became more pronounced. As
geopolitical influences deepen, the subsequent effects of rapid interest rate hikes by major
central banks, and inflationary pressures, the world economy may face even greater
challenges in its recovery in 2023. The International Monetary Fund predicts a global
economic growth rate of only 2.9% in 2023.
From a domestic perspective, "China"s economy maintains strong resilience, has great
potential, and remains vibrant, with the long-term positive fundamentals unchanged." Faced
with a complex and challenging situation, China adheres to the principle of seeking progress
while maintaining stability, efficiently coordinates economic and social development, and has
achieved positive results, stabilizing the overall macroeconomic situation. In 2022, China"s
gross domestic product (GDP) reached 121.02 trillion yuan, an increase of 3.0% compared
to the previous year. It outpaced the growth rates of other major economies in the world,
maintaining a continuous expansion of the overall economic size and solidifying its
development foundation. However, despite this, the international situation remains complex
and challenging, and the Chinese economy still faces significant "contractions in demand,
supply shocks, and weakened expectations, " with a fragile foundation for economic
recovery. In 2023, the Central Economic Work Conference made it clear that it will adhere
to the principle of seeking progress while maintaining stability, vigorously boost market
confidence, emphasize stable growth, employment, and prices, promote overall
improvement in economic performance, and strive for qualitative and quantitative
improvements. "Placing the restoration and expansion of consumption in a prioritized
position, " adopting multiple measures to promote stable consumption growth, enhance
residents" consumption capacity, improve the consumption environment, and cultivate new
drivers of consumption growth. "Persisting in making the focus of economic development on
the real economy and promoting new industrialization." Cultivating and expanding emerging
industries, continuously focusing on key areas such as 5G, artificial intelligence,
biomanufacturing, industrial internet, intelligent connected vehicles, green and low-carbon
sectors, and constantly enriching and expanding new application scenarios.
In our industry, in 2022, affected by the slowdown in macroeconomic growth, rising
energy prices, weak terminal consumption, and a continued decline in the real estate sector,
the industry as a whole faced the dual pressures of high costs and insufficient demand,
resulting in a general decline in profitability. From the cost side, the high prices of major
energy sources such as crude oil and natural gas have increased production costs for
enterprises. International crude oil prices experienced fluctuations after an initial increase.
According to monitoring data from the China Petroleum and Chemical Industry Federation,
in 2022, the average spot price of Brent crude oil was $101.2 per barrel, a year-on-year
increase of 43.0%, and the average spot price of WTI crude oil was $94.5 per barrel, a year-
on-year increase of 39.1%. From the demand side, insufficient terminal consumer demand
and ineffective price transmission between upstream and downstream products have led to
lower product price increases compared to upstream raw materials, further squeezing
enterprise profit margins. In the aromatics-PTA-polyester fiber industry chain, downstream
textile and apparel are important terminal consumer markets. In 2022, due to factors such
as slowing growth in household income and slow recovery of consumption scenarios, the
domestic consumer market faced pressure, and domestic demand for textile and apparel
products was insufficient. Although export volumes reached new highs, export growth rates
declined month by month in the second half of the year. According to data from the National
Bureau of Statistics, the retail sales of apparel, shoes, hats, and textiles above the quota
nationwide decreased by 6.5% compared to the previous year, and the growth rate has
remained negative since March. Insufficient downstream demand for textile and apparel
products led to a general decline in the operating rates of major industries in the chemical
fiber downstream, compared to the same period in 2021. In the olefin chemical industry
chain, real estate and infrastructure, as important terminal consumer markets, bear
enormous consumption volumes. Due to multiple factors, the deep adjustment trend in the
real estate market continued in 2022. Data from the National Bureau of Statistics shows that
nationwide real estate development investment decreased by 10.0% compared to the
previous year.
Against the backdrop of high and volatile crude oil and natural gas prices, prices of
products closer to crude oil have also risen significantly, influenced by crude oil prices. On
the other hand, the prices of chemical products closer to the consumer end depend more
on their own supply and demand dynamics. According to data from the National Bureau of
Statistics, the profits of the upstream oil and gas sector increased by 1.15 times year-on-
year, while the profits of the downstream refining and chemical sectors experienced negative
growth. In the face of a turbulent external environment, the integrated operation of high
value-added and multi-variety industrial chains and the supply composition of products
highlight the industry"s prominent risk resistance and profit capturing capabilities in the face
of high oil price volatility and market fluctuations.
Year 2023 is the starting year for comprehensively implementing the spirit of the 20th
National Congress of the Communist Party of China and a crucial year for carrying forward
the goals set in the 14th Five-Year Plan. "High-quality development is the primary task for
building a socialist modern country." The new generation of information technology and new
materials serve as the two fundamental technologies of the manufacturing industry, with
new materials being the cornerstone of upgrading traditional industries and developing
strategic emerging industries. The chemical new materials industry is an important basic
material for strategic fields such as new energy, high-end equipment, green environmental
protection, and biotechnology. In recent years, driven by the implementation of the domestic
"dual carbon" strategy, the green transformation and upgrading of the national industry, and
changes in consumption patterns, the demand for upstream chemical new materials has
continued to grow. This has prompted industry enterprises to actively transition from "energy
+ chemicals" to "platformization + new materials" and from "scale economy dominance" to
"green and circular-driven" business models. Leading industry players, such as Hengli
Group, have implemented fully integrated development of the entire industry chain, relying
on a rich portfolio of basic chemical raw materials from integrated refining and petrochemical
projects. They have extended their presence into downstream new materials fields such as
high-end polyolefins, lithium battery materials, engineering plastics, and petroleum-based
degradable plastics. By increasing value-added and internally consuming intermediate
products, these companies effectively buffer the intense homogenized competition and
structural imbalances in high-end scarcity in the upstream sector, aiming to achieve
secondary growth.
In recent years, the company has actively adapted to new situations, new developments,
and new changes, closely focusing on the innovation chain based on national industrial
strategic transformation deployments, and deploying the industrial chain based on the
innovation chain. The company has focused on "supply chain enhancement and research
and development innovation." Building upon the advantageous integration of "oil, coal, and
chemicals" in the deep integration of the "large-scale chemical platform, " and relying on fine
chemical park projects, the company has accelerated the development of a high-end fine
chemical industry cluster. This aims to further expand the industry"s support and
development foundation for high-end chemical raw materials, solidify the role and
operational efficiency of the upstream "large-scale chemical" platform. Targeting new
directions and markets in downstream polyester and polyesters, as well as fine chemicals
and specialty new materials in the olefin downstream sector, the company aims to
consolidate its traditional market advantages, benchmark breakthroughs in key new
materials areas, and focus on the development of PBS/PBAT degradable materials,
functional polyester materials, high-performance resin materials, high-end fiber materials,
and new energy materials. The company strategically positions itself in high-growth tracks
with high technological barriers and high added value, actively constructing an ecological
circle for the fine chemical and new materials industry chain in the "Dalian Changxing Island,
" and striving to become a leading enterprise in the entire value chain of research,
development, and manufacturing of platform-based chemical new materials.
During the reporting period, the listed company faced the dual operational pressure of
historically high operating costs and low industry demand in a challenging economic
environment and a complex and volatile market situation. As a result, the company
experienced a significant decline in profitability. The company achieved operating income of
shareholders of the listed company of 2.318 billion yuan, a decrease of 85.07% compared
to the same period last year. The decline in profit was mainly due to the rapid and volatile
increase in prices of major raw materials such as crude oil, coupled with weak recovery in
industry market demand. The company faced the dual operational squeeze of historically
high operating costs and low industry demand. The company"s main products, such as
chemical products, functional films, civilian silk, industrial silk, and others related to
traditional demand in end-consumption and infrastructure construction, were at a low level
in the market, putting pressure on the company"s profitability. In the second half of 2022, the
company implemented a major overhaul of its refinery, which affected the overall load rate
and processing cost level of its integrated refining and petrochemical units. The company
also made provisions in accordance with accounting standards for inventory losses caused
by the temporary downward trend in international crude oil prices, further impacting the
company"s annual profitability.
Despite the extremely challenging external environment in 2022, under the correct
leadership of the Board of Directors, the company"s management actively sought certainty
amid uncertainty, maintained composure, and sought steady progress. Through overall
coordination and actively eliminating environmental factors, the company efficiently and
rapidly advanced key project construction, continuously expanded the industrial chain,
improved scarce production capacity, and strengthened the development of new supports.
The company solidified the foundation of safety and environmental protection, actively
promoted green and low-carbon transformation, and achieved efficient operations with high
standards, green practices, and environmental protection. The company also strengthened
its risk control, refined management, and flexible operational capabilities, controlled costs
while increasing efficiency, and maximized the stability and efficiency of production and
operations.
During the reporting period, the company"s key operational highlights are as follows:
I. Steady operations, flexible management, and strengthened fine management
level and cost advantage, striving to achieve overall maximization of benefits.
During the reporting period, faced with a complex market environment, the company
fully leveraged the unique advantages of Hengli"s quality and speed in maximizing profits
through "quality, cost, and rapid response, " as well as the characteristics of flexibility,
efficiency, and agility in its mechanisms. The company made every effort to ensure the
efficient and coordinated operation of production facilities and industrial parks in the refining,
petrochemical, chemical, and polyester new materials major production bases. On the
"mega-chemical" platform, the company fully utilized the technological and process
advantages of refining, ethylene, and integrated coal chemical units, continuously optimized
unit operations, timely adjusted product structures based on fluctuations in raw material
prices and market demand trends, and organized production according to the principle of
maximizing benefits, achieving a balance between production and sales, smooth operations,
and maximized efficiency.
During the reporting period, the company continued to strengthen fine management
and explore potential for quality improvement and efficiency enhancement. By carefully
calculating production needs, analyzing raw material trends and market conditions,
optimizing procurement plans, and properly controlling raw material inventory, the company
achieved the best matching of raw material inventory, processing units, and product
structures, while simultaneously focusing on risk prevention and efficiency improvement. In
equipment management, the company diligently implemented daily equipment maintenance
and repair, addressing any issues promptly and ensuring the long-term stable operation of
production units. Spare parts management was strengthened, and spare parts were
procured in the most economical and reasonable quantities and batches while meeting the
requirements for equipment maintenance and repair. Common supplies were shared to
reduce inventory costs. Through measures such as equipment technology transformation,
technological innovation, refurbishment, production increase, and consumption reduction,
and optimization of performance indicators, the company achieved cost control and
efficiency improvement.
II. Efficient and rapid progress in key project construction, solid acceleration of
the layout in the new materials and new energy industries, accumulating momentum
for promoting high-quality development.
chemical" platform and leveraging years of experience in new material development, the
company accelerated the layout of downstream high-end chemical new material production
capacity, optimized the raw material supply structure of the "mega-chemical" platform,
continuously expanded the industrial chain, and improved scarce capacity. The progress of
major projects is as follows:
(1) The 1.6 million tons/year high-performance resin and new materials project is
expected to gradually commence production in mid-2023. The project mainly includes
(PC) downstream. This project achieves efficient penetration and deep integration from raw
material supply to process technology to the consumer market, further consolidating the
synergy and industrial depth of the listed company"s chemical new materials business
segment and optimizing market coverage.
(2) The Hengli Chemical New Material supporting project (300,000 tons/year adipic acid
project) is expected to gradually commence production in mid-2023. After its completion, the
project will further integrate and improve the company"s fully degradable new material
industry chain from "crude oil-PTA, adipic acid-PBAT." Adipic acid is also an important raw
material for the production of nylon 66 and the purification of carbon dioxide emissions from
low-temperature methanol washing equipment to food-grade level (purity of 99.99%),
enabling the recovery of industrial waste gas carbon dioxide while increasing the company"s
benefits.
(3) The 600,000 tons/year BDO (1, 4-butanediol) and supporting project is progressing
in an orderly manner and is expected to gradually commence production in mid-2023. The
project mainly includes 411,600 tons/year BDO, 60,000 tons/year PTMEG, 100,000
tons/year adipic acid, and other high-end chemical products. After the project is completed,
the company will have a complete degradable new material industry chain from "crude oil-
PTA, adipic acid-BDO-PBAT, " enhancing its profit-generating capabilities.
new material production capacity and industrial competitiveness, the company relies on
Hengli"s research and development efficiency and the upstream "mega-chemical" platform
support to further develop and expand emerging market demands and business areas such
as PBS/PBAT degradable new materials, high-performance industrial fibers, high-end
polyester films, lithium battery separators, electrolytes, PET copper foils, and solar
photovoltaic backsheet films. The progress of key projects is as follows:
(1) Jiangsu Kanghui New Materials" annual production of 800,000 tons functional films
and functional plastics project mainly includes 470,000 tons of high-end functional polyester
films, 100,000 tons of specialty functional films, 150,000 tons of modified PBT, and 80,000
tons of modified PBAT. This project is expected to commence production gradually in the
first quarter of 2023.
(2) The 450,000 tons PBS/PBAT/PBT degradable new materials project has gradually
reached production in the first quarter of 2023, effectively expanding the company"s capacity
and scale in the degradable new materials sector, and increasing its market share in
degradable plastics.
(3) Jiangsu Xuanda (Hengke Phase III) 1.5 million tons/year green multifunctional textile
new materials project mainly includes 150,000 tons/year new elastic fibers, 150,000
tons/year environmentally friendly fibers, 300,000 tons/year cationic POY, 300,000 tons/year
fully dull POY, and 600,000 tons/year differentiated fibers (300,000 tons/year POY, 300,000
tons/year FDY). Currently, the production of 150,000 tons/year elastic fibers, 150,000
tons/year environmentally friendly fibers, and 250,000 tons/year fully dull POY has been
successfully completed, achieving breakthroughs in differentiated polyester production.
capacity of 440 million square meters of high-performance wet-process lithium battery
separators (including 220 million square meters of coated separators), with the first
production line expected to commence operation in May 2023. The Nantong plant will have
an annual production capacity of 1.2 billion square meters of wet-process lithium battery
separators and 600 million square meters of dry-process lithium battery separators. The
project is progressing in an orderly manner, and gradual production is expected in the first
quarter of 2024.
III. Innovation-driven efficiency and gains, continuous promotion of digital
transformation, and the creation of a powerful development "engine."
In recent years, the company has implemented the "end-to-end bidirectional quality
management model, " establishing an integrated technology innovation system throughout
the upstream and downstream sectors, overcoming numerous bottleneck technologies, and
acquiring a significant number of core patents both domestically and internationally. These
efforts have facilitated the transformation and application of scientific and technological
achievements in production. During the reporting period, the company"s research and
development investment amounted to 1, 184.71 million yuan, representing a year-on-year
growth of 16.21%. As of December 31, 2022, the company has accumulated a total of 1,
the reporting period.
Leveraging its advantages in raw materials, the company continuously enhances the
research and development attributes, technological content, and technical weight of the
polyester new materials business segment. This further increases the added value of
downstream new material products and upgrades the product structure of the polyester new
materials business segment. As for polyester fibers, the company persistently develops in
the direction of refinement, differentiation, high-end, and high-quality. For instance, Deli
Chemical Fiber, adhering to the concept of "achieving the utmost in a single strand, " has
excelled in the field of ultrafine fibers, becoming the first in China to achieve large-scale
production of 5-8D/6f high-uniformity super-soft polyester fibers through melt direct spinning.
This fiber has the finest bus density among domestically produced polyester fibers, breaking
through technological bottlenecks. During the reporting period, Deli Chemical Fiber was
awarded the title of "National Intellectual Property Advantage Enterprise, " becoming the
second subsidiary of the listed company to receive national recognition for its intellectual
property efforts.
In the field of chemical new materials, the company aims at the application demands
for new materials generated by the integration of new consumption, new energy, and new
manufacturing in China. During the reporting period, Kanghui New Materials independently
developed PET composite film for copper foil/aluminum foil has been validated by
downstream battery factories, enabling mass production. The independently developed
solar backsheet film has achieved mass production with an annual capacity of 24,000 tons,
equivalent to 62.4 million square meters, and its production and sales have steadily
increased. The release liner film product for LCD polarizing films has also achieved mass
production, ensuring stable production of conventional and wide-width liner films.
Furthermore, a significant breakthrough has been made in low-tilt angle polarizing film
release liners, successfully replacing imports and becoming the first Chinese enterprise to
pass the full industry chain verification.
Empowered by technology, the continuous drive for digital transformation persists.
Hengke Advanced Materials" intelligent factory for functional polyester fibers is equipped
with fully automated equipment throughout the production process. Through the
establishment of information systems such as the DeltaV-DCS distributed control system,
ERP, and MES, it collects production data and realizes real-time monitoring, fault alarms,
and diagnostic analysis of production equipment operations. Hengke Advanced Materials
has also established a factory-level industrial Internet, achieving 100% equipment
connectivity. The intelligent factory, through the integration and interconnection of intelligent
equipment and software-level basic networks, achieves centralized control and intelligent
production throughout the process, maximizing the efficiency of raw materials, equipment,
and human resources. In 2022, Hengke Advanced Materials was awarded the "Jiangsu
Province Intelligent Factory" title. Hengli Refining & Chemical vigorously promotes intelligent
management, implements advanced process control (APC) projects, and achieves on-edge
operation of key parameters based on stable plant production. By utilizing Petrosim process
simulation software, it assists in problem-solving and provides robust data support for
optimizing company benefits.
IV. Continuously strengthening the foundation of safety and environmental
protection, reducing pollution and carbon emissions, and promoting coordinated
efficiency to achieve high standards, green, and environmentally friendly operations.
Based on high starting points in design planning, construction, operation, and detailed
management, the company practices high standards of inherent safety and green, low-
carbon operations, which serve as the lifeline, efficiency line, and scenic line for promoting
stable, efficient, and sustainable development of the listed company.
The company adheres to the principle of "safety first, prevention-oriented, and
comprehensive management" to enhance the level of inherent safety and establish a solid
defense line for safety production. It comprehensively implements the responsibility of
enterprise safety, signing responsibility agreements at all levels, ensuring that responsibility
is implemented at the workshop, team, and individual levels, forming a safety production
responsibility system that extends horizontally and vertically. The company improves safety
regulations and systems, conducts self-assessment based on updated HSE standards and
specifications, analyzes policy guidance, and timely revises and improves the company"s
HSE system. It strengthens employee safety skill training to enhance compliance with safety
regulations. It strengthens process control in key areas, risk control in operations, conducts
safety hazard investigations and rectification, emergency drills, enhances risk prevention
and control capabilities, eliminates various major safety risks, visualizes inherent and
residual risks, and ensures the safe operation of employees and production facilities.
The company firmly implements the concept of green development, consistently
pursuing high-quality and low-carbon energy-saving development, reducing pollution, and
carbon emissions, and promoting coordinated efficiency to transform environmental
advantages into economic benefits. It integrates green development into project design,
process package selection, equipment procurement, installation, and operation, achieving
substantial energy savings. It strengthens the efficient and economical use of energy and
resources, reduces resource and energy consumption through optimizing process
operations, technological innovations, and other multidimensional approaches, improves
energy efficiency, and establishes an integrated upstream and downstream flow, mutual
supply of materials, and energy coupling in the entire industry chain, achieving energy
savings and sustainable development throughout the production process. For example,
Hengli Petrochemical (Dalian) recovers and treats the oxidized residue produced in the
oxidation process of purified terephthalic acid through R2R equipment, recovering valuable
cobalt and manganese catalyst components and benzoic acid, which are returned to the
oxidation unit for recycling, and the generated benzoic acid is sold as a by-product. Hengli
Refining optimizes the operation of the distillation tower by replacing catalysts, increasing
the production capacity of xylene and reducing the comprehensive energy consumption of
the unit. Hengli Chemical"s ethylene glycol unit adds a decarbonization tower on the basis
of the current washing tower, improving the performance of the catalyst, increasing product
yield, and reducing carbon dioxide emissions by 39,600 tons annually. The ethylene unit
utilizes a back-pressure turbine unit to utilize surplus high-pressure steam for power
generation, meeting the process requirements while increasing electricity generation by
coal.
Incremental progress and unwavering dedication are key. Since the introduction of the
"dual carbon" targets, the company has focused on technological innovation and technical
research, continuously working on wastewater recycling, solid waste disposal, cascading
utilization of energy, waste heat utilization, carbon emissions reduction, VOCs management,
and other aspects through equipment upgrades and process improvements, actively
pursuing energy-saving, cost reduction, and efficiency enhancement, yielding certain results.
Hengli Refining, Hengli Chemical, and Hengli Petrochemical (Dalian) were respectively
awarded the "2022 Key Energy Efficiency Leader" champion in the xylene industry, ethylene
industry, and purified terephthalic acid industry, jointly issued by the Ministry of Industry and
Information Technology, the National Development and Reform Commission, and the State
Administration for Market Regulation. Hengli Refining ranked second in energy efficiency as
a "leader" in the crude oil processing industry. At the same time, Hengli Refining and Hengli
Chemical were awarded the "2022 Key Water Efficiency Leader for Enterprises and
Industrial Parks" by the Ministry of Industry and Information Technology, the Ministry of
Water Resources, the National Development and Reform Commission, and the State
Administration for Market Regulation. Hengli Refining and Hengli Chemical topped the water
efficiency index in the petroleum refining industry, coal-to-methanol industry, and ethylene
industry. For example, in the petroleum refining industry, Hengli Refining"s unit water intake
was 0.27 m³/t, with a water reuse rate of 98.79%. In the ethylene industry, Hengli Chemical"s
unit water intake was 0.43 m³/t, mainly using seawater, with a water reuse rate as high as
Following Hengli Petrochemical (Dalian), Hengli Petrochemical Refining, Hengke
Advanced Materials, and Hengli Chemical Fiber, Hengli Petrochemical Chemical was
awarded the national-level "Green Factory" title at the beginning of 2023. With this, the
company now has five subsidiaries recognized as national-level "Green Factories".
In response to the future trend of "carbon neutrality" in industrial development, the listed
company firmly embraces the direction of green and low-carbon development and actively
promotes the transition to green and low-carbon. It vigorously develops green manufacturing,
leveraging distinctive industries to drive innovation and inject robust vitality into the
company"s development.
V. By fully utilizing the capital platform for financing, operations, and incentives,
the listed company is driving standardized and sustainable development.
reporting period, to safeguard the interests of the company and its shareholders, the
company successfully implemented the third and fourth phase of share repurchase plans,
with a total repurchase fund of 2 billion yuan. Despite the complex and challenging domestic
and international economic conditions in 2022, as well as the irrational downward valuation
of the A-share market, the company consistently fulfilled its market responsibilities towards
all shareholders, especially small and medium shareholders. Through tangible actions, the
company effectively maintained reasonable and stable market value and protected the core
interests of all shareholders. This also fully demonstrates the firm and long-term confidence
of the listed company and its management in the company"s operating performance,
strategic development, and investment value.
effectively motivate the management team, core employees, and all staff of the listed
company, and achieve a close integration and mutual promotion of employee value and
corporate value, the company implemented the sixth phase of the employee stock
ownership plan on a larger scale and with a broader range of participants, allowing
employees to share in the company"s development achievements.
shareholders, the company completed the annual equity distribution for the year 2021, with
a total cash dividend of 7.109 billion yuan (including taxes). The amount of a single cash
dividend reached a historical high, in line with the company"s established "Shareholder
Returns Plan for the Next Five Years (2020-2024) ", which provides shareholders with stable
expectations and mechanisms for returns. This fully reflects the company"s business
philosophy of consistently and sustainably rewarding investors.
diversified financing channels, meet the working capital turnover needs of business
operations, and enhance the flexibility of fund management, the company applied to the
China Interbank Market Dealers Association to register for the issuance of short-term
financing bonds with an amount not exceeding 3 billion yuan (inclusive). As of now, the
company has successfully issued 2 billion yuan of short-term financing bonds.
II. Industry situation of the company during the reporting period
(1) Petroleum Refining Sector:
The company has a designed production capacity of 4.5 million tons per year of
paraxylene (PX), primarily used to meet the raw material demand of downstream purified
terephthalic acid (PTA) production. Additionally, the company is involved in the production
of high-value and domestically scarce chemical products, such as 1.8 million tons of
ethylene glycol, 400,000 tons of acetic acid, 1.2 million tons of benzene, 850, 000 tons of
polypropylene, 720,000 tons of styrene, 400,000 tons of high-density polyethylene, and 140,
aviation kerosene meeting China VI emission standards. As smaller and outdated refineries
with high production costs are gradually phased out, the industry concentration and the
competitiveness of large-scale new refineries will significantly improve. The company stands
out in terms of policy support, process technology, and industrial synergy. Compared to
other oil refining companies, it has a distinct advantage of high quality and low cost, making
it highly competitive in the market.
(2) PTA Sector:
PTA is the direct upstream raw material for polyester production, and China is the
world"s largest producer and consumer of PTA. The company currently has a PTA
production capacity of 16.6 million tons per year, making it the largest PTA producer with
the most advanced technology and the most significant cost advantage in the industry. It is
the only company with a capacity exceeding 10 million tons.
(3) Polyester New Materials Sector:
One of the company"s main business segments involves the research, production, and
sale of polyester-related new materials. The main products include PET, POY, FDY, DTY,
BOPET, PBT, PBS/PBAT, and other polyester and chemical new materials. The company
ranks among the top five in civil filament production capacity nationwide and second in
industrial filament production capacity. It is one of the largest and technologically advanced
manufacturers of polyester filament in China.
The company"s subsidiary, Kanghui New Materials, has an annual production capacity
of 240,000 tons of PBT engineering plastics in its Yingkou base, making it the largest PBT
producer in China. The PBT is mainly used in automotive parts, polymer alloys, optical
cables, and electronics industries. It also has an annual production capacity of 386,000 tons
of BOPET functional films, which are used in high-value-added sectors such as optical
equipment, release protection, electronics, automotive decoration, construction, and
packaging. With independently developed technology, the company has the largest
domestic annual production capacity of 33,000 tons of PBAT, which is used in
environmentally friendly applications such as food-grade shopping bags, tableware, and
straws made from PBS/PBAT. The company partially commenced production of a 450,000-
ton biodegradable plastic project on Dalian Changxing Island during the reporting period. In
Suzhou Fenhu, the construction of a 470,000-ton high-end functional polyester film,
PBAT is underway. Additionally, a 2.6 million-ton high-performance polyester engineering
project and a new lithium battery separator project in Nantong are making efficient and
steady progress. The company possesses strong overall competitiveness in the market.
III. Business situation of the company during the reporting period
The company"s main business encompasses the entire industry chain of refining,
petrochemicals, and polyester new materials, including the production, research, and sales
of PX, acetic acid, PTA, ethylene glycol, polyester chips, civil filament, industrial filament,
functional films, engineering plastics, and PBS/PBAT biodegradable new materials. It is the
first listed company in the industry to achieve integration of the entire industry chain from
crude oil to aromatics, olefins to PTA, and ethylene glycol to polyester new materials.
In the upstream segment, the company has an annual production capacity of 4.5 million
tons of PX and 400,000 tons of acetic acid. In the midstream, it possesses 16.6 million tons
of PTA capacity and 1.8 million tons of fiber-grade ethylene glycol capacity. Some of the
self-produced PTA and ethylene glycol are for internal use, while the remainder is sold
externally. In the downstream segment, the company offers a wide range of chemical new
materials with various product specifications, targeting the medium and high-end market
demand. These products include civil filament, industrial filament, BOPET, PBT, PBS/PBAT,
and other polyester and chemical new materials, which are used in textile, pharmaceutical,
automotive, environmental new energy, electronics, photovoltaic, and optical industries,
meeting the extensive demand for industrial and civil applications.
With the complete production of key capacities in world-class refining and ethylene
projects in the upstream, as well as the consolidation and expansion of its competitive
advantage in the midstream PTA business and various scarce chemical raw material
products, the company has accelerated the establishment of a "large-scale chemical"
platform to support and complement downstream high-end new materials and fine chemical
industries. This has created a continuous and extended value chain for new material
industries.
IV. Analysis of Core Competitiveness in Reporting Period
The company is the industry leader in implementing the strategy of full industry chain
development for polyester new materials in China. It actively promotes the coordinated and
balanced development of various business segments and vigorously expands high-end
capacity in the upstream and downstream. The company is committed to building a world-
class integrated platform for the entire industry chain, from "crude oil-aromatics, olefins-PTA,
ethylene glycol-polyester-civil filament, industrial filament, films, plastics." The Hengli
Integrated Refining and Petrochemical Project with an annual capacity of 20 million tons and
the Ethylene Project with a capacity of 1.5 million tons have been fully put into operation,
achieving strategic breakthroughs in the refining, aromatics, and olefins segments. The
company has become the first enterprise in the industry to achieve integrated operation and
development of the entire industry chain from "crude oil-aromatics, olefins-PTA, ethylene
glycol-polyester new materials." With the sequential construction and operation of newly
built capacities, such as PTA, chemical new materials, PBS/PBAT biodegradable new
materials, the company continuously upgrades and optimizes its industrial model,
consolidates and expands the advantages of each link"s production capacity, promotes the
quantitative change in business scale, and the qualitative change in business structure. It
establishes a strategic leadership advantage in adapting to the high-quality competitive
situation of the industry"s full industry chain collaboration, production capacity structure
quality, equipment scale cost, technological process accumulation, project start-up speed,
and the development of listed platforms.
The company continuously introduces internationally leading production equipment and
mature technology packages, digests, absorbs, and utilizes them, and continuously
innovates and improves technology and processes. It has established a high-quality and
efficient production capacity structure and supporting public engineering in the upstream,
midstream, and downstream of the polyester new materials industry chain, characterized by
"large-scale equipment, large-scale production capacity, integrated structure, advanced
technology, green and environmental protection, and comprehensive supporting facilities."
Whether it is individual equipment, total production capacity, or production processes, the
company is at the industry"s leading processing scale and technological level. This ensures
the company"s advantages in unit investment cost, material and energy consumption saving,
unit processing cost, product delivery cycle, product quality, and diversification. Moreover,
the company has the most comprehensive supporting capabilities in the industry, including
power supply, energy, ports, terminals, tank farms, storage, and transportation. It stands out
in terms of comprehensive cost savings, service quality performance, and operational
efficiency improvement. The complementary relationships among refining, petrochemicals,
and coal chemicals in the industrial park form an efficient synergy of operations and costs.
The refining business has the largest coal-to-hydrogen unit in the country, producing low-
cost coal chemicals such as pure hydrogen, methanol, acetic acid, and synthesis gas. In
addition, the advantages of raw material and product storage and transportation systems
greatly enhance the operational flexibility and comprehensive cost advantages of projects.
The company follows a development path that emphasizes market differentiation, high-
end technology, and large-scale facilities while integrating business operations. It has a
long-term accumulated market-technology innovation mechanism and has established an
international R&D team and a high-level scientific research platform. Its technological
research and development strength and innovation capability in new products are leading
in the industry. The company can quickly respond to the latest market consumption demand
changes and has a stable reserve of mid-to-high-end customer resources. The four main
operating entities of the company, Hengli Fibre, Deli Fibre, Hengke Advanced Materials, and
Kanghui New Materials, are all national high-tech enterprises. Through fine management of
the production process and continuous improvement of technology and processes, the
company has independently developed and accumulated a series of differentiated and
functional products, holds numerous production patents for various products, and has
gained wide market recognition. The company"s products are superior to competitors in
terms of quality and stability. It is the only company in China that can produce specification
domestically. It is also the only domestic and the second global enterprise capable of
producing 12-micrometer silicon-coated stacked lithium battery protection films online. The
company has absolute technological advantages and process accumulation in functional
films and civil polyester filament, forming a competitive moat that is difficult to replicate in
the industry in the short term.
The company strives to promote the deep integration of "Internet, big data, artificial
intelligence, and the real economy" and develop advanced manufacturing capacity to
regenerate internal growth momentum. It regards "intelligent interconnection" as an
important entry point for industrial upgrading and transformation. By gradually implementing
methods such as "machine replacing human, " "automatic equipment change, " "complete
set replacement of single machine, " and "intelligence replacing digitization, " the company
transforms its development model from relying on "population dividends" to "technology
dividends." Through the integration and application of intelligent manufacturing, the Internet,
and the Internet of Things, the company continuously improves the level of intelligent
manufacturing throughout the entire process. It seamlessly integrates key links such as
control, research and development, manufacturing, business management, and finance
through self-developed product testing systems, automatic barcode systems, intelligent
warehousing systems, and sales systems, and interfaces with ERP systems to achieve
product traceability and full-process control. This promotes the company"s transformation
from "manufacturing" to "intelligent manufacturing" and from single business management
to highly synergistic operation of the industrial chain.
The company has formed a multidisciplinary and multi-professional scientific research
team, including disciplines such as refining, petrochemicals, polymer materials, chemical
fiber engineering, textile engineering, electrical engineering, etc. Its scientific research and
development capabilities are ahead of domestic peers. While introducing external talents,
the company attaches great importance to the cultivation of internal talents and provides a
good career development path for employees. The company has also established a sound
internal training system, covering research and development, production, sales,
management, and other aspects, and has cultivated a large number of backbone personnel.
V. Main operating information in the reporting period
As of the end of 2022, the company"s total assets were 241.430 billion yuan, a year-on-
year increase of 14.80%, and the net assets attributable to shareholders of listed companies
were 52.863 billion yuan, a year-on-year decrease of 7.63%.
In 2022, the Company recognised a revenue from operations of 222.324 billion yuan, a
year-on-year increase of 12.30%; a net profit attributable to shareholders of listed company
of 2.318 billion yuan, a year-on-year decrease of 85.07%.
(I) Analysis of Primary operations
statement
Unit: ten thousand yuan Currency: RMB
Item Amount in the
Amount in the
same period of last Variance (%)
reporting period
year
Revenue from operations 22, 232, 358.4 19, 797, 034.49 12.30
Cost of sales 20, 407, 759.71 16, 751, 808.61 21.82
Selling expenses 39, 276.92 29, 136.58 34.80
Administrative expenses 188, 929.87 198, 539.57 -4.84
Financial expense 428, 737.15 491, 620.56 -12.79
Research and development 118, 471.10 101, 945.24 16.21
expenses
Net cash flows from operating 2, 595, 397.08 1, 867, 017.37 39.01
activities
Net cash flows from investing -2, 629, 706.99 -1, 309, 772.25 Not applicable
activities
Net cash flows from financing 1, 040, 541.64 -738, 758.74 Not applicable
activities
Reasons for changes in selling expenses: mainly due to the increase in employee salaries
and storage-related expenses in the current period.
Reason for changes in Net Cash Flow from Operating Activities: The main reason for the
change is a decrease in accounts receivable, an increase in advance payments received,
and improved collection of sales proceeds. The increase in inventory is smaller than the
previous year, and there is a decrease in purchase expenses.
(1). Segmentation of Main Business by Sector, Product, Region, and Sales Model
Unit: ten thousand yuan Currency: RMB
Segmentation of main operations by sector
Year-on- Year-on-
Year-on-
Revenue Gross year year
year
By sector from Cost of sales margin change of change of
change of
operations (%) cost of gross
revenue(%)
sales(%) margin(%)
Petrochemical 20, 944, 19, 154, 8.55 16.12 27.64 -8.25 pts
industry 731.95 348.71
Other 1, 223, 1, 232, -0.75 -27.36 -28.13 1.08 pts
industries 649.95 828.05
Segmentation of main operations by product
Year-on- Year-on-
Year-on-
Revenue Gross year year
year
By product from Cost of sales margin change of change of
change of
operations (%) cost of gross
revenue(%)
sales(%) margin(%)
Refining 12, 367, 10, 473, 15.31 17.86 29.44 -7.58 pts
products 533.63 930.91
PTA 5, 663, 6, 031, -6.49 17.59 28.22 -8.83 pts
Polyester 2, 913, 2, 649, 9.07 6.82 19.8 -9.85 pts
products 612.50 308.21
Others 1, 223, 1, 232, -0.75 -27.36 -28.13 1.08 pts
Segmentation of main operations by region
Year-on- Year-on-
Year-on-
Revenue Gross year year
year
By region from Cost of sales margin change of change of
change of
operations (%) cost of gross
revenue(%)
sales(%) margin(%)
Domestic 20, 449, 18, 704, 8.53 16.66 27.18 - 7.57 pts
Overseas 1, 718, 1, 683, 2.09 -21.6 -16.52 -5.96 pts
Description of main business by industry, by product, by region, and by sales model
Revenues, costs and gross margins for refined products, PTA and polyester products
include sale revenues, purchase costs and gross margins.
(2). Production and sales volume analysis
Year-
Year-on-
Year-on-year on-year
Main Production Sales Inventory year
Unit change of change
products volume volume quantity change of
production(%) of
inventory(%)
sale(%)
Refining 10, 2, 338.95 2, 93.27 -0.54 -7.85 101.19
products 000 135.85
tons
PTA 10, 1, 153.46 1, 26.99 -5.35 -6.88 25.13
tons
New 10, 357.68 326.20 42.20 7.36 4.10 33.29
material 000
products tons
Explanation of production and sales volume:
Petrochemical;
films, and biodegradable materials;
excludes internal consumption within the company.
(3). Cost Analysis
Unit: ten thousand yuan
By Sector
Proportio
Proport n in
ion in total
Amount in Year-
total Amount in the costs
Cost the on-year Explan
By sector costs same period of of the
composition reporting change ation
of the last year same
period (%)
reporting period
period (%) of last
year (%)
Direct 17, 435, 85.52 13, 661, 81.7 27.63
materials 956.16 754.88
Petroche
Direct labor 168, 283.79 0.83 161, 635.81 0.97 4.11
mical
Power fuel 703, 924.33 3.45 543, 939.11 3.25 29.41
industry
Manufacturin 673, 959.64 3.31 639, 526.39 3.82 5.38
g expenses
Direct 1, 154, 573.45 5.66 1, 540, 512.50 9.21 -25.05
materials
Other Direct labor 176, 343.65 0.86 169, 328.56 1.01 4.14
industries Power fuel 64, 379.42 0.32 2, 495.71 0.01 2, 479.6
Manufacturin 9, 756.32 0.05 3, 114.69 0.02 213.24
g expenses
By Product
By Cost Amount in Proport Amount in the Proportio Year- Explan
product composition the ion in same period of n in on-year ation
reporting total last year total change
period costs costs (%)
of the of the
reporting same
period (%) period
of last
year (%)
Direct 9, 574, 213.92 46.96 7, 340, 860.24 43.9 30.42
materials
Refining Direct labor 56, 910.15 0.28 58, 156.39 0.35 -2.14
products Power fuel 327, 732.97 1.61 274, 442.43 1.64 19.42
Manufacturin 440, 075.17 2.16 418, 070.47 2.5 5.26
g expenses
Direct 5, 681, 885.50 27.87 4, 454, 279.79 26.64 27.56
materials
Direct labor 24, 616.91 0.12 21, 314.61 0.13 15.49
PTA
Power fuel 143, 261.15 0.70 107, 722.00 0.64 32.99
Manufacturin 113, 145.96 0.55 120, 496.65 0.72 -6.1
g expenses
Direct 2, 179, 856.74 10.69 1, 866, 614.85 11.16 16.78
materials
Polyester Direct labor 86, 756.73 0.43 82, 164.81 0.49 5.59
products Power fuel 232, 930.21 1.14 161, 774.69 0.97 43.98
Manufacturin 120, 738.51 0.59 100, 959.27 0.6 19.59
g expenses
Direct 1, 154, 573.45 5.66 1, 540, 512.50 9.21 -25.05
materials
Direct labor 176, 343.65 0.86 169, 328.56 1.01 4.14
Others
Power fuel 64, 379.42 0.32 2, 495.71 0.01 2, 479.6
Manufacturin 9, 756.32 0.05 3, 114.69 0.02 213.24
g expenses
(4). Key Sales Customers and Key Suppliers Situation
A. Overview of Key Sales Customers
The sales revenue from the top five customers amounted to 28.20 billion yuan, accounting
for 12.68% of the total annual sales. Among the sales revenue from the top five
customers, there were no sales made to related parties, representing 0% of the total
annual sales.
B. Overview of Key Suppliers
The purchasing amount from the top five suppliers amounted to 72.55 billion yuan,
accounting for 34.96% of the total annual procurement. Among the purchasing amount
from the top five suppliers, there were no purchases made from related parties,
representing 0% of the total annual procurement.
(1). Table of Research and Development Investment Status
Unit: ten thousand yuan
Expensed research and development 118, 471.10
investment in the current period
Capitalized research and development -
investment in the current period
Total R&D investment 118, 471.10
Percentage of research and 0.53
development investment to operating
revenue (%)
Percentage of capitalized research and -
development investment to total
research and development investment
(%)
(2). Table of Research and Development Personnel Status
The number of R&D personnel in the company 3, 128
The ratio of the number of R&D personnel to 8.11
the total number of the company (%)
Educational structure of R&D personnel
Educational Structure Category Educational Structure Headcount
PhD student 12
Postgraduate 93
Undergraduate and below 3, 023
Age structure of R&D personnel
Age Structure Category Age Structure Headcount
Under 30 years old (excluding 30 years old) 1, 035
excluding 40 years old)
excluding 50 years old)
excluding 60 years old)
(II) Analysis of Asset and Liability Situation
Unit: ten thousand yuan
Percentage
Ratio of
Ratio of change in
closing
closing closing
balance
Closing balance of Closing balance
of
balance of current balance of compared
Item previous Explanation
current period to previous between
period to
period total period current
total
assets period to
assets
(%) previous
(%)
period(%)
Cash and 2, 807, 11.63 1, 598, 7.60 75.63 Mainly due to
bank 640.59 605.29 an increase in
balances operating
cash flow
during the
current
period.
Accounts 37, 244.59 0.15 264, 384.34 1.26 -85.91 Mainly due to
receivable the company
intensifying its
collection
efforts on
accounts
receivable
during the
current
period.
Receivable 228, 727.12 0.95 341, 995.77 1.63 -33.12 Mainly due to
financing a decrease in
the amount of
cash received
from bank
acceptance
bills and
letters of
credit during
the current
period.
Construction 2, 728, 11.30 778, 285.36 3.70 250.61 Mainly due to
in progress 749.15 a further
increase in
investment in
Construction
in progress,
including the
Annual output
of 5 million
tons of PTA
project and
Annual output
of 1.5 million
tons of green
multi-
functional
textile new
materials
project.
Deferred tax 89, 222.72 0.37 18, 882.71 0.09 372.51 Mainly due to
assets an increase in
deferred tax
assets
recognized as
a result of the
provision for
decline in
value of
inventories
made during
the current
period.
Other non- 632, 724.84 2.62 390, 259.25 1.86 62.13 Mainly due to
current an increase in
assets long-term
asset
purchase
payments
related to
construction
in progress
made during
the current
period.
Contract 1, 209, 6.41 612, 654.68 4.00 97.35 Mainly due to
liabilities 098.33 an increase in
advance
payments
received for
sales
contracts
during the
current
period.
Non-current 934, 902.82 4.96 542, 322.70 3.54 72.39 Mainly due to
liabilities an increase in
due within the amount of
one year long-term
loans and
bonds
payable that
will mature
within one
year.
Other 338, 212.76 1.79 139, 926.92 0.91 141.71 Mainly due to
current an increase in
liabilities output tax
corresponding
to advance
payments
received for
sales
contracts
during the
current
period.
Long-term 85, 883.33 0.46 2, 189.93 0.01 3, 821.74 Mainly due to
payables the addition of
new financing
leases
payable
during the
current
period.
(1) Assets Scale
Including: Overseas assets 73.42(Unit: hundred million yuan Currency: RMB), accounting
for 3.04% of the total assets.
Unit: ten thousand yuan Currency: RMB
Item Carrying value at year Reason of restriction
end
Cash and bank 761, 763.21 Pledge cash and bank balances to obtain financing
balances credit from financial institutions
Cash and bank 1, 258.62 Security deposits for trading in futures and financial
balances derivatives
Cash and bank 11, 960.00 Freezing funds involved in litigation
balances
Financial assets 1, 000.00 Pledge financial assets held for trading to obtain
held for trading financing credit from financial institutions
Receivable 146, 957.20 Pledge notes receivable to obtain financing credit
financing from financial institutions
Fixed assets 8, 543, 637.15 Mortgage fixed assets to obtain financing credit from
financial institutions
Fixed assets 154, 626.67 Mortgage is used to provide security for the sale and
leaseback contract
Intangible 378, 138.19 Mortgage intangible assets to obtain financing credit
assets from financial institutions
Construction in 67, 573.80 Mortgage construction in progress to obtain financing
progress credit from financial institutions
Total 10, 066, 914.84
(III) Analysis of Industry Operating Information
Analysis of Operating Information in the Chemical Industry
(1). Industry Policies and Their Changes
① 《 Guiding Opinions on Promoting the High-Quality Development of the
Petrochemical and Chemical Industry During the "14th Five-Year Plan"》
In March 2022, the Ministry of Industry and Information Technology and five other
departments jointly issued the Guiding Opinions on Promoting High-Quality Development of
the Petrochemical and Chemical Industry during the 14th Five-Year Plan. It proposed that
by 2025, the petrochemical and chemical industry should establish a high-quality
development pattern characterized by strong independent innovation capability, rational
structural layout, green and low-carbon practices. The industry"s ability to ensure the supply
of high-end products should be significantly improved, core competitiveness should be
noticeably enhanced, and substantial progress should be made in achieving self-reliance at
a high level.
② 《Notification on Further Improving the Work Related to Excluding Raw Material
Energy Consumption from the Total Energy Consumption Control》
In October 2022, the National Development and Reform Commission and the National
Bureau of Statistics issued a notification on further improving the work related to excluding
raw material energy consumption from the total energy consumption control. The notification
explicitly states that "coal, petroleum, natural gas, and their derivatives used for the
the diversity and high-end level of chemical new material products, thus bridging the gaps
and filling the blanks in the industry.
○
Province》
In January 2022, the General Office of the People"s Government of Liaoning Province
issued the "14th Five-Year Plan" for the ecological economic development of Liaoning
Province. The plan highlights the following key points:
Extending the Petrochemical Industry Chain: The plan aims to maintain the scale
advantage of bulk basic chemical raw materials such as ethylene, propylene, PX
(paraxylene), and PTA (purified terephthalic acid). It also seeks to promote the development
of the petrochemical industry towards higher value-added products, focusing on the olefin,
aromatic hydrocarbon, new materials, and fine chemical industrial chains.
Promoting the "Reduction of Oil and Increase of Chemicals" in the Petrochemical
Industry: The plan aims to transform the refining and chemical production towards safe,
clean, green, and efficient practices. The goal is to achieve intensive, high-end, green, and
integrated development of the refining and chemical industry. Key areas of focus include the
development of high-end polyolefins, specialty resins, specialty engineering plastics, high-
end membrane materials, and other chemical new materials.
(2). Basic information on the main industrial segment and industrial status of the
Company
① In the petroleum refining and chemical sector
The company has a designed production capacity of 4.5 million tons of PX per year,
which is primarily used to meet the raw material demand of downstream PTA production.
Additionally, the company is designed to produce 1.8 million tons of ethylene glycol, 400,000
tons of acetic acid, 1.2 million tons of pure benzene, 850,000 tons of polypropylene, 720,000
tons of styrene, 400,000 tons of high-density polyethylene, 140,000 tons of butadiene, and
other domestically scarce and high-value-added chemical products, as well as Refined oil
products such as gasoline, diesel, and aviation kerosene that meet the national standards
above China VI. As smaller refineries with higher production costs and outdated facilities
are gradually phased out, the concentration of the refining and chemical industry and the
competitiveness of large-scale newly built refineries will greatly improve. The company has
prominent advantages in policy support, process technology, and industrial synergy.
Compared to other refineries, it has characteristics of high quality and low cost, making it
highly competitive in the market.
② In the PTA sector
PTA serves as the direct upstream raw material for polyester production, and China is
the world"s largest producer and consumer of PTA. The company currently has a PTA
production capacity of 16.6 million tons per year (including the capacity under construction
in Huizhou). It is the largest PTA production supplier in the world in terms of capacity, with
the most advanced technology and the most significant cost advantages. It is also the only
company in the industry with a capacity of over 10 million tons per year.
③ In the polyester new materials sector
One of the company"s primary operations is the research, production, and sales of
related products. The main products include PET (Polyethylene Terephthalate), POY
(Partially Oriented Yarn), FDY (Fully Drawn Yarn), DTY (Drawn Textured Yarn), BOPET
(Biaxially Oriented PET), PBT (Polybutylene Terephthalate), PBS/PBAT (Polybutylene
Succinate/Polybutylene Adipate Terephthalate), and other polyester and chemical new
materials products. The company ranks among the top five in the national civil filament
capacity and second in the national industrial filament capacity. It is one of the largest and
technologically advanced manufacturers of polyester filament for both civilian and industrial
applications in China.
The subsidiary company Kanghui New Material, located in Yingkou Base, has an
annual production capacity of 240,000 tons of PBT engineering plastics, making it the largest
PBT producer in China. The PBT products are primarily used in industries such as
automotive components, polymer alloys, optical cable protective sleeves, electronics, and
electrical appliances. Kanghui New Material also has an annual production capacity of
in various applications, including optical equipment, release liners, electronics, automotive
decorations, construction, and packaging. Furthermore, the company has the largest single-
set annual production capacity of 33,000 tons of PBAT (Polybutylene Adipate Terephthalate)
in China, based on its proprietary technology. PBAT is applied in eco-friendly applications
such as food-grade shopping bags, utensils, and straws within the PBS/PBAT field. In Dalian
Changxing Island, the company is gradually launching its project for 450,000 tons of
degradable plastics, with qualified products already being produced. Additionally, in Suzhou
Fenhu, the construction of a project for 470,000 tons of high-end functional polyester film,
modified PBAT is underway. Overall, the company demonstrates strong comprehensive
competitiveness in the industry.
(1). Main business model
The company"s main business model involves the procurement of crude oil and related
additives, primarily producing PX products and finished oil, as well as other chemicals. The
PX products are mainly used as raw materials for the company"s PTA plant, with a portion
of the PTA products being used internally by the company"s polyester factory, and the rest
being sold to downstream customers in the fiber industry for the production of polyester
fibers and other products. Various polyester products are sold to downstream weaving
factories for the production of textiles, industrial yarn is sold to construction and automotive
component manufacturers, polyester chips are sold to spinning companies, BOPET films
are sold to downstream printing, packaging, and electronics companies, and PBT resins are
sold to downstream automotive, electronics, and machinery companies. The specific
operating modes are as follows:
(1) Petroleum Refining Sector
Petroleum products, also known as oil products, are processed from crude oil through
various refining processes such as atmospheric distillation, hydrogenation cracking, and
reforming. These processes produce various fuel oils (gasoline, kerosene, diesel, etc.),
lubricants, coke, paraffin wax, asphalt, basic organic materials (ethylene, propylene, butene,
benzene, toluene, xylene, acetylene, naphthalene), as well as various synthetic organic
materials derived from the basic organic materials.
(2) PTA Sector
PTA (Purified Terephthalic Acid) is an important bulk organic material widely used in
various sectors of the national economy, including chemical fibers, light industry, electronics,
and construction. In the domestic market, the main downstream products of PTA are
polyester fibers, which are primarily used in clothing, home textiles, and industrial textiles.
The main business process involves purchasing para-xylene (PX) and producing PTA
through oxidation reactions, crystallization, drying, hydrogenation, and further crystallization
processes, followed by selling the product to downstream customers.
The profit model in the PTA industry is based on producing and selling PTA products to
generate profits. Since the fixed investment for the products is significant, improving
profitability relies mainly on reducing the fixed cost per unit. Companies achieve this by
capitalizing on economies of scale, adopting advanced processing technologies and
equipment, establishing efficient public infrastructure, enhancing production safety and
product quality stability, and ultimately lowering production costs to increase profitability.
(3) Polyester Sector
The primary business process involves the procurement of petrochemical products
such as PTA, MEG, and other additives, followed by polymerization reactions using
appropriate production equipment. Subsequently, the polyester filaments are produced
through spinning and drawing processes, and the products are sold to downstream weaving
companies for the production of civil and industrial textiles.
The profit model in the polyester filament industry is based on producing and selling
polyester filaments to generate profits. Due to the significant fixed costs associated with the
products, improving profitability depends on three main factors: reducing the fixed cost per
unit, increasing the rate of new product development, and adding differentiated products.
Companies achieve this by focusing on increasing the rate of new product development,
pursuing differentiation in product lines, enhancing product value, and ultimately improving
overall profitability.
(4) Polyester Film Sector
The main business process involves the procurement of petrochemical products such
as PTA, MEG, and other additives. Unlike the polyester industry, the equipment and process
routes differ. In the polyester industry, equipment is used to extrude the film into polyester
filaments, while in the polyester film industry, equipment is used to extrude the film directly.
Consequently, the downstream customer base is different.
The profit model in the polyester film industry is based on producing and selling
polyester films to generate profits. Due to the significant fixed investment required, improving
profitability depends mainly on two factors: reducing the fixed cost per unit and developing
new products. For companies, the future primarily involves capitalizing on economies of
scale to seize market share, increasing product added value, and improving overall
profitability.
(5) Engineering Plastics Sector
The primary business process involves the procurement of petrochemical products
such as PTA, BDO, and other additives. The production process includes polymerization,
extrusion, pulverization, and granulation, ultimately producing engineering plastics. The
products are then sold to downstream customers.
The profit model in the engineering plastics industry is based on producing and selling
plastic pellets to generate profits. Due to the significant fixed investment associated with the
products, improving profitability relies mainly on two factors: reducing the fixed cost per unit
and developing new products. For companies, the future primarily involves capitalizing on
economies of scale to seize market share, increasing product added value, and improving
overall profitability.
(2). Main products
Primary
Applications of major Main factors affecting
Product Business sector upstream raw
downstream materials prices
materials
Refined oil Petroleum Crude Oil Aviation kerosene, Upstream raw
refining gasoline, and diesel materials like crude oil
and other power fuels and downstream
demand
PX Chemical raw Crude Oil PTA Upstream raw
materials and materials like crude oil
chemicals and downstream
manufacturing demand
Ethylene Chemical raw Crude Oil Polyethylene, ethylene Upstream raw
materials and glycol materials like crude oil
chemicals and downstream
manufacturing demand
PTA Chemical raw PX Polyester fiber, bottle Crude oil and PX
materials and grade chips, film grade supply and
chemicals chips, etc. downstream demand
manufacturing
Polyester Polyester PTA, MEG Advertising light box Upstream raw
Filament manufacturing cloth, geotextile, materials like crude oil
Yarn conveyor belt, and downstream
(PFY) automobile fiber and textile prosperity
tire meridian, clothing
and home textiles, etc.
Polyester Polyester PTA, MEG Filature Upstream raw
Filament manufacturing materials like crude oil
and downstream
demand
BOPET Plastics product PTA, MEG Packaging film, Upstream raw
manufacturing insulating film, materials like crude oil
capacitor film, etc. and downstream
demand
PBT Plastics product PTA, BDO Auto parts, electronic Upstream raw
manufacturing appliances, aerospace materials like crude oil
materials, etc. and downstream
demand
PBS/PBAT Plastics product PTA, BDO, Packaging materials, Upstream raw
manufacturing Adipic acid shrink film, agricultural materials like crude oil
film, etc. and downstream
demand
(3). R&D and innovation
As of the end of 2022, the company has accumulatively held 1, 116 patents, of which 261
were newly approved during the reporting period.
(4). Production Technology and Process
During the reporting period, there were no significant changes in the company"s main
products and their production processes.
For specific details regarding the production processes of the company"s main
products in the polyester fiber sector, please refer to Section 4, "Discussion and Analysis
of Operating Conditions, " subsection "II. (IV) Analysis of Operational Information in the
Chemical Industry, " and the section "Production Processes and Flow" (page 33) in the
company"s "2016 Annual Report."
For information on the production process of the company"s PTA industry, please
refer to Section 4, "Discussion and Analysis of Operating Conditions, " subsection "II. (IV)
Analysis of Operational Information in the Chemical Industry, " and the section "Production
Processes and Flow" (page 39) in the company"s "2018 Annual Report."
Regarding the production processes of the company"s refining and ethylene
engineering, as well as the PBAT project, please refer to Section 4, "Discussion and
Analysis of Operating Conditions, " subsection "II. (IV) Analysis of Operational Information
in the Chemical Industry, " and the section "Production Processes and Flow" (page 34) in
the company"s "2020 Annual Report."
(5). Production capacity and construction work
Unit: hundred million yuan Currency: RMB
Investment
Capacity Planned
Major Designed Capacity in capacity
under completion
plants/projects capacity utilization(%) under
construction time
construction
High-
performance
industrial
Polyester Filament yarn project
Yarn (PFY) of 100 with an 12.20
tons/Year
Suzhou plant annual
output of
tons
Annual
output of 1.5
million tons
of green
multi-
functional
textile new
PFY for civil 1.75 materials
use of Nantong million 100 project(Part 54.24
plant tons/Year of the
production
capacity has
been put into
production
during the
reporting
period)
PFY for civil
use of Suqian 100
tons/Year
plant
Polyester film
of Kanghui
New Material 100
tons/Year
(Yingkou)
Industrial Park
Engineering
plastics of
Kanghui New 240,000
Material tons/Year
(Yingkou)
Industrial Park
PBS bio-
degradable
advanced
materials project 100
tons/Year
of Kanghui New
Material (Yingkou)
Industrial Park
PTA of Dalian
million 99.44
plant
tons/Year
Refining and
chemical project 102.44
tons/Year
of Dalian plant
Ethylene project of 1.5 million
Dalian plant tons/Year
Gradually
PBS
put into
biodegradable
plastics in / / 22.41
tons/Year in the first
Kanghui Dalian
quarter of
plant
Gradually
Lithium battery put into
separator in production
/ / square 1.15
Kanghui Yingkou in the
meters/Year
Plant middle of
Gradually
PTA of Huizhou million production
/ / 86.25
Plant tons/year in the first
PTA plant quarter of
Hengli Gradually
Petrochemical 300,000 put into
Chemical New tons/Year production
/ / 3.01
Material Adipic acid, in the
Supporting etc. middle of
Chemical Project 2023
Bisphenol A, Gradually
isopropanol, put into
ethylene production
Annual output of
oxide, in the
electronic middle of
high-performance / / 13.68
grade DMC 2023
resin and new
(including
material projects
EC, EMC
and DEC),
ABS, etc.
Functional
polyester film
Gradually
Annual output of tons/year
put into
production
functional films / / end 17.70
in the first
and functional functional
quarter of
plastics polyester film
tons/year
device,
Market-
Monthly 4, 078.97 million 4, 752.87 million
Electricity oriented
settlement kwh kwh
procurement
Market-
Thermal Monthly
oriented 7.94 million tons 7.94 million tons
coal settlement
procurement
Market-
Monthly 192.82 million 199.79 million
Natural gas oriented
settlement cubic meters cubic meters
procurement
The price of major energy sources is directly proportional to the Company"s operating costs.
The prices of major energies are affected by national policies, the supply and demand
structure of the regional markets, and the stability of supply.
(3). Risk response measures for raw material price fluctuations
The main situation of holding derivatives and other financial products
To reasonably mitigate the significant price fluctuations of major raw materials, the company
and its subsidiaries engaged in hedging activities during the reporting period. The hedging
primarily involved commodities related to production and operations, such as Crude Oil,
petroleum products, PTA, and chemicals (including but not limited to Styrene, Ethylene
Glycol, Polypropylene).
(1). Basic situation of the company"s main operations by segment
Unit: ten thousand yuan Currency: RMB
YOY YOY
YOY
chang chang Gross
changes
Gross es in es margins
Business Revenue from in
Cost of sales margin operati in among
segment operations operatin
(%) ng gross the
g
revenu margin peers
cost(%)
e(%) (%)
Petroche
mical 20, 944, 731.95 19, 154, 348.71 8.55 16.12 27.64 -8.25
segment
Other
segments
(IV) Investment Status Analysis
General Analysis on External Equity Investment
During the reporting period, the company did not have any significant equity investments.
However, it initiated two major construction projects.
During the reporting period, the following are the basic details of the major investment
projects undertaken by the company:
tons/year High-performance Resin and New Materials Project
The total investment is 19, 988.26 million yuan. The project is located in Hengli (Dalian
Changxing Island) Industrial Park and has a construction period of 18 months. According to
the feasibility study report, it is estimated that after the project reaches full capacity, the
annual average operating income will be 25, 375.37 million yuan, with an annual average
total profit of 9, 151.57 million yuan.
tons/year High-performance Polyester Engineering Project
The total investment is 4,001.36 million yuan. The project is located in Hengli (Dalian
Changxing Island) Industrial Park and has a construction period of 18 months. According to
the feasibility study report, it is estimated that after the project reaches full capacity, the
annual average operating income will be 16, 613.96 million yuan, with an annual average
total profit of 990.54 million yuan.
(V) Analysis of Major Holding and Participating Companies
Unit: hundred million yuan
Shareholding Business Registered Total Net Net
Company name
(%) nature capital assets assets profit
Hengli
Petrochemical 100.00 Manufacturing 175.96 297.26 13.66
Refining
Hengli
Petrochemical 100.00 Manufacturing 58.90 355.93 114.04 -2.33
(Dalian)
Hengli Chemical
Fiber
Hengli
Petrochemical 100.00 Manufacturing 45.75 350.48 63.74 4.73
Chemical
Kanghui New
Material
Note: Jiangsu Hengli Chemical Fiber Co., Ltd. includes its subsidiaries Jiangsu Hengke
Advanced Materials Co., Ltd., Nantong Teng"an Logistics Co., Ltd., Jiangsu Xuanda
Polymer Material Co., Ltd., Jiangsu Deli Chemical Fiber Co., Ltd., Suqian Deya New
Materials Co., Ltd., Hengli Futures Co., Ltd., Hengli Hengxin Industry and Trade (Shanghai)
Co., Ltd., Suzhou Susheng Thermal Power Co., Ltd., Suzhou Binglin Trading Co., Ltd.,
Sichuan Hengli New Material Co., Ltd., Hengli New Materials (Suqian) Co., Ltd., Suzhou
Hengli Chemical New Material Co., Ltd., Hengli Petrochemical (Dalian) Co., Ltd. including
its subsidiaries Hengli Shipping (Dalian) Co., Ltd., HENGLI PETROCHEMICAL Co.,
LIMITED, and Shenzhen Ganghui Trading Co., Ltd.
Hengli Petrochemical (Dalian) Refining Co., Ltd. includes its subsidiaries HENGLI
PETROCHEMICAL INTERNATIONAL PTE. LTD., HENGLI OILCHEM PTE. LTD., HENGLI
SHIPPING INTERNATIONAL PTE. LTD., Hengli Energy (Hainan) Co., Ltd., Hengli
Petrochemical (Hainan) Co., Ltd., Suzhou Hengli Petrochemical Chemical Import and
Export Co., Ltd., Shenzhen Shengang Trading Co., Ltd., Hengli Petrochemical Refining
Product Sales (Dalian) Co., Ltd., Hengli Aviation Oil Co., Ltd., Hengli Oilchem (Suzhou) Co.,
Ltd., Hengli Energy (Suzhou) Co., Ltd., Hengli Energy (Jiangsu) Co., Ltd., Hengli Logistics
(Dalian) Co., Ltd., Suzhou Hengli Chemical Polymer Co., Ltd., Suzhou Hengli Energy
Chemical Import & Export Co., Ltd.
Hengli Petrochemical (Dalian) Chemical Co., Ltd. includes its subsidiaries Hengli
Petrochemical (Dalian) New Material Technology Co., Ltd., Hengli Petrochemical Utilities
(Dalian) Co., Ltd., Dalian Hengzhong Special Materials Co., Ltd.
(VI) Structured entities controlled by the company
On December 31, 2022, structured entities related to the company but not included in
the scope of the financial statements are mainly engaged in asset management business,
operating client assets, and providing clients with investment management services for
securities, futures and other financial products. The total assets of this type of structured
entity on December 31, 2022 are 227.29 million yuan.
VI. Discussions and analysis of the Company’s future development
(I) Industrial landscape and trend
(1) Leaning towards intensive, efficient, and low-carbon development
Under the goal of “carbon neutrality and carbon emission peaking”, our peers will work
harder to reduce energy consumption and emissions, and improve crude oil conversion.
Through process intensification, optimization of device design and process flow, and the
development and application of energy management systems, the companies will minimize
energy and raw material consumption, maximize device operation efficiency and production
flexibility, reduce the restrictions of other factors, and efficiently respond to the changing
development environment, to achieve low carbon and high-quality development.
(2) Accelerating industrial upgrading and expanding demand for new chemical
materials lead to a broader market space
New chemical materials are important basic materials for strategic emerging materials
such as new energy, high-end equipment, green environmental protection, and
biotechnology. Entering the “14th Five-Year Plan” period, with the rapid growth of strategic
emerging industries as high-end equipment, automobile manufacturing, electronic
information, new energy, energy conservation and environmental protection, new
construction, bio-medicine application, smart grid, and 3D printing, the demand for new
materials such as high-quality synthetic resin, high-performance synthetic rubber,
engineering plastics, degradable materials, electronic chemicals and high-performance
membrane materials continue to grow, driving the rapid growth of new chemical materials
production capacity. With the development of downstream industries, the future market
space for new chemical materials tends to be broad.
China is the largest producer and consumer of PTA. Under the competitive landscape
of the integrated industrial chain, leading companies in the PTA industry have strong market
competitiveness in terms of the scale of a single set of facility, stable production and
operation, material consumption, energy consumption, and product quality. As the PTA
industry is going through more fierce competition, its concentration will be further increased.
(1) Differentiated and high-end new fiber materials
The Company will develop differentiated and functional fiber products such as intelligent,
super-simulation, and dope dyeing, and expand the application of functional fibers in clothing,
home textiles, industry, and environmental protection, continue to optimize the production
and application of high-performance fibers, improve the technological maturity of high-
performance fibers that have been engineered and industrialized, improve the stability and
uniformity of the existing product quality, and meet the needs of downstream applications,
enhance the differentiation and functioning of basic fibers through copolymerization,
blending, and composite spinning to achieve high-quality, efficient production and low cost
fibers, strive to make breakthroughs in key technologies for large-scale production of bio-
based chemical fibers, develop high-quality differentiated products, and strengthen
application technology development.
(2) Accelerating intelligent and digitized transformation
The Company will build an intelligent manufacturing standard system for the chemical
fiber industry, improve the R&D and application of intelligent manufacturing industrialization
technologies such as chemical fiber, seek breakthroughs in key software and hardware
systems, form integrated solutions and full-process intelligent manufacturing technology
integration, and build smart factories based on big data, artificial intelligence, and the
industrial internet.
The Company will push forward its digital transformation and the application of artificial
intelligence, big data, cloud computing, and other emerging digital technologies in chemical
fiber enterprises, improve the digitalization of the whole industrial chain such as R&D, design,
manufacturing, operation and maintenance. By applying digital technology to dovetail
business processes, management systems, and ANNUAL REPORT 2021 55 supply chain
data, it will innovate the management model as organizational structure optimization,
dynamic and accurate services, and auxiliary management decision-making to raise
enterprise management capabilities.
(3) Seeking green and low carbon transformation
The Company will carry forward energy-saving and low-carbon development, guide
enterprises to purchase green electricity, expand the proportion of new energy applications
such as solar energy. It will increase the R&D of green process technology and equipment,
strengthen the technological transformation of clean production and the application of key
energy-saving and emission-reduction technologies, accelerate the development and
construction of green factories, green products, green supply chains, and green parks in the
chemical fiber industry, carry out the construction of a leading water and energy efficiency
demonstration company, and proceed with carbon footprint accounting and social
responsibility building. Through the recycling improvement, the Company is to speed up the
optimization of the industrial structure of recycled chemical fibers and the upgrading of itself.
(II) Development strategy
General development strategy: we are committed to providing quality fiber and creating
a better life for the society. Under the principle of “doing the right things at the right time”,
we adhere to the development philosophy of “innovation, coordination, green, and sharing”,
the operation concept of “winning global markets with surpassing quality, persistence, and
will”, and the management ideal of “people-centered, scientific, institutionalized, and
professional”, foster a company spirit of “solidarity, integrity, steadiness, and innovation”,
increase the industrial innovation capacity, improve industrial structures, and drive the
Company into high-end, intelligent, green, integrated, and international development.
(1) The Company will take solid steps in “improving the upstream and enhancing the
downstream”. In the first place, the Company will continue to strengthen the upstream
industrial platform to support the development of “refining+ethylene+coalification”
underpinning the “big chemicals”, and implement “making up and enhancing the industrial
chains” and “R&D and innovations”, reserving space and paving ways for the new
downstream material businesses in the future. On top of that, the Company will redouble its
efforts in the downstream businesses, consolidate traditional market strengths, benchmark
the breakthroughs in major new materials as the development and upgrading of “new
consumption” and “key&core technologies”, nurture new leading material business growth
points in scale, and make strides toward a world leading petrochemical new material
company that covers the whole industrial chain.
(2) The Company will take unswerving steps in adopting integrated development
strategy across the board. The Company will focus on diversifying the specs of the products,
expanding capacity, differentiating the products through R&D, technology and innovation
upgrading, and strive to realize the industrial development goal of “industrial growth in bases,
scale production, meticulous products, professional technology, and sound management”.
(III) Operational plan
year for the company"s transition to a "platform + new materials" development model. The
company"s management will adhere to a systematic approach in planning its development,
with effective innovation and reform as important drivers. The focus will be on the core
business, with a deep and meticulous approach, combining tradition with innovation, striving
for growth and strength, and achieving high-quality development for the enterprise. The
ultimate goal is to continue progressing towards the grand vision of "Centennial Hengli." The
key areas of focus for the year include:
and efficient operations.
Emphasis will be placed on quality and brand awareness, with a focus on research and
development and innovation to continually improve quality standards and enhance product
quality. Cost management will be strengthened through the rational integration of resources
and control of expenses to achieve cost reduction and increased efficiency. The company
will adhere to the business principles of "production based on sales, and sales driven by
production, " as well as the operational concepts of "customer-centered, market-oriented,
and full-team marketing." By proactively adapting to the market and swiftly responding to
changes, the company will continuously optimize its product structure, increase the
production of high-efficiency products, strengthen the linkage between production and sales,
and strive to achieve the annual production and operational goals, ensuring the company"s
high-quality growth and benefits.
consolidating the competitive advantages of the entire industry chain, and striving to improve
business performance.
Based on maintaining the existing industrial advantages, Hengli Dalian Industrial Park
will highlight the advantages of park scale and centralized management. It will coordinate
and plan operations in a comprehensive and rational manner, leveraging the cost
advantages brought by scale, and emphasizing the core competitiveness of products in the
market. The construction of ongoing projects will be accelerated, with strict control over
construction progress and quality to ensure timely completion and further enhance the
company"s performance center.
management empowerment, and laying a solid foundation for high-quality development.
Further improving the safety and environmental management system, enhancing the
ability to prevent and resolve risks and hazards, strengthening safety supervision, and
conducting special drills to ensure strict, meticulous, and practical work in safety production.
Adhering to green development and low-carbon production, focusing on the research and
development of green and low-carbon technologies.
Continuously optimizing and improving the internal management system, enhancing
financial internal control mechanisms, timely identifying and preventing risks, strengthening
internal supervision to ensure zero financial risk. Adhering to the principles of "managing
people with systems, managing tasks with processes, and managing efficiency with forms"
to enhance risk prevention capabilities. Continuously promoting intelligent transformation
and digitalization, actively utilizing new technologies such as the Internet of Things and big
data to accelerate industrial upgrading and enhance development quality and efficiency.
Continuing to promote the construction of talent and corporate culture systems, actively
engaging in industry-academia-research cooperation, deepening school-enterprise
cooperation, and cultivating high-quality, application-oriented, and innovative talents.
Attracting high-quality talents to provide momentum for the company"s development.
Improving internal promotion mechanisms to provide a broader platform for outstanding
talents. Fostering and promoting corporate culture to create a sense of belonging within the
Hengli family. Strengthening brand building, enhancing brand competitiveness, and
expanding brand influence.
(IV) Potential Risks
The development of the polyester fiber and petrochemical industry is influenced by
industry demands and its own development status, thus featuring a certain level of cyclicity.
Changes of the macro environment, such as China’s national economy and export policy,
would bring risks of cyclical fluctuations to the industry. During adjustment cycles, falling
product prices, insufficient utilization of capacity and decreasing profitability would be seen.
The Company’s production and operation are greatly affected by the price changes of
upstream raw materials, especially crude oil and coal. If the Company’s inventory,
procurement management, and price adjustment of downstream product market cannot
effectively reduce or absorb the impact of price fluctuations of raw materials, its operation,
production and business performance could be adversely impacted.
If the RMB continues to fluctuate substantially, great uncertainties would be posed to
the Company’s exchange gains or losses, export product prices denominated in foreign
currencies, raw material prices and other operational factors. The Company will leverage
forward foreign exchange contracts and other methods to establish and improve the
exchange rate hedging mechanism and reduce the amount of foreign currency receipts and
payments in order to reduce the impact of exchange rate changes on the Company’s
profitability.
With the enhancement of environmental awareness and stricter environmental
protection requirements from the government, the Company proactively takes
environmental protection measures, increase corresponding investments, strictly complies
with relevant laws, regulations and production specifications in its daily management and
establishes strict standard operation procedures. However, environmental or safety
production accidents caused by human errors or accidents still could not be eliminated,
which could affect the Company’s normal businesses. Therefore, there are certain
environmental protection and production safety risks.
Chapter 4 Corporate Governance
I. Notes on Corporate Governance
In strict accordance with the requirements of the Company Law, the Securities Law, the
Code of Corporate Governance for Listed Companies, the Rules Governing the Listing of
Stocks on Shanghai Stock Exchange and other laws, regulations and regulatory documents,
the Company continuously improved the corporate governance structure, established and
improved a sound system of internal management including General Shareholders Meetings,
the Board of Directors and the Supervisory Committee to regulate its operations. The
Company has formed a corporate governance structure with clear rights and responsibilities,
effective checks and balances, scientific decision-making and coordinated operations
among organs of authority, decision-making organs, supervisory organs and the senior
management teams. The structure ensures the effective implementation of the decision-
making power of the general shareholders’ meeting and the Board of Directors and the
supervisory power of the supervisory committee as well as efficient and compliant
operations and management of the senior management team. The Board of Directors of the
Company established four special committees, i.e., the strategy committee, the audit
committee, the nomination committee and the remuneration and appraisal committee, to
provide consultation and advice for the Board of Directors and make sure that its deliberation
and decision-making is professional and efficient. The Company continued to follow closely
new changes in regulatory laws and rules, implement new regulatory policies and
requirements, strengthen risk prevention and control, push forward internal control
management, carry out high-quality information disclosure, narrow the scope of insiders
under the principle of validity, accuracy, timeliness, completeness and fairness to ensure
equitable access to information of all shareholders. The Company managed investor
relations proactively and treated all investors fairly with integrity and openness. The
Company carried forward the ESG system and delivered its social responsibilities to
safeguard the legitimate rights and interests of the Company and all shareholders and
ensured a sustainable and stable development.
II. Notes on General Shareholders Meetings
Inquiry index of the Disclosure
Meeting Date of designated website date of
Meeting resolution
session meeting where the resolution is resolution
published publication
Extraordinary 2022 2022 refer to the
Shareholders" "Announcement on
Meeting Resolutions of
Hengli
Petrochemical"s
Extraordinary
General Meeting of
Shareholders"
(Announcement
No.: 2022-008)
Extraordinary 2022 2022 refer to the
Shareholders" "Announcement on
Meeting Resolutions of
Hengli
Petrochemical"s
Extraordinary
General Meeting of
Shareholders"
(Announcement
No.: 2022-015)
Extraordinary 2022 2022 refer to the
Shareholders" "Announcement on
Meeting Resolutions of
Hengli
Petrochemical"s
Extraordinary
General Meeting of
Shareholders"
(Announcement
No.: 2022-033)
General 2022 2022 refer to the
Meeting "Announcement on
the Resolutions of
Hengli
Petrochemical"s
Shareholders"
Meeting"
(Announcement
No.: 2022-054)
Note to the general meeting of shareholders
During the reporting period, the company held a total of four shareholder meetings,
including one annual shareholder meeting and three extraordinary shareholder meetings.
The convening and procedures of the shareholder meetings complied with the provisions of
laws, administrative regulations, the "Rules of Shareholders" General Meetings of Listed
Companies, " and the company"s articles of association. The attendees and the convener of
the meetings were qualified and valid. The voting procedures and results of the shareholder
meetings were legal and effective.
III. Information about directors, supervisors and senior executives
(I) Changes in shareholding and remuneration of current and resigned directors, supervisors and senior executives within the
reporting period
Unit: Share
The total pre- Whether
tax to get paid
Number of Increase or Reason remuneration at the
Number of
shares held decrease of for received from company’s
Position Position Position shares held
Name Sex Age at the shares increase the company related
(Note) start date end date at the end
beginning during the or within the party
of the year
of the year year decrease Reporting
Period (10,
Fan Chairman of Female 2022-04- 2025-04- 886, 105, 791, 494, -94, 611, No
Hongwei the board 27 27 969 169 800
Wang General Male 2022-12- 2025-04- No
Zhiqing Manager 29 27
Li Feng Director, Male No
Deputy
General 2022-04- 2025-04-
Manager, 27 27
Board
Secretary
Gong Tao director Male 2022-04- 2025-04- No
Liu Dunlei Director, Male No
Deputy 2022-04- 2025-04-
General 27 27
Manager
Liu Jun Independent Male 2022-04- 2025-04- No
Director 27 27
Wu Independent Male 2022-04- 2025-04- No
Yongdong Director 27 27
Supervisory
Committee
(resigned)
Mo Employee Male No
Youjian Supervisor 39 - - - 10.39
(resigned
Xu Yinfei Supervisor Male 2019-05- 2022-04- No
(resigned) 06 27
/ / / / / 886, 120, 791, 498, -94, 621, / 804.95 /
Total
Name Main work experience
Born in 1967, Chinese nationality, no overseas permanent residence, college degree. From May 1994 to December 2001, he served as the
general manager of Wujiang Chemical Fiber Weaving Factory Co., Ltd.; from January 2002, he served as the director of Hengli Group Co.,
Fan Ltd.; from November 2002 to August 2011, he served as the director of Jiangsu Hengli Chemical Fiber Limited; From August 2011 to March
Hongwei 2016, served as the vice chairman and general manager of Jiangsu Hengli Chemical Fiber Co., Ltd.; since March 2016, he has served as the
chairman of Jiangsu Hengli Chemical Fiber Co., Ltd. From March 2016 to December 2022, he served as the chairman and general manager
of the Company; since December 2022, he has served as the chairman of the Company.
Born in 1962, Chinese nationality, no overseas permanent residence, Doctor of Engineering, professor-level senior engineer. Started to work
in 1983, successively served as chief engineer of Luoyang Petrochemical General Plant, deputy manager and manager of Sinopec Luoyang
Wang
Branch, leader of Sinopec Guangxi Oil Refining Preparatory Team, general manager of Sinopec Jiujiang Branch, Director of Jiujiang
Zhiqing
Petrochemical Complex, chairman, general manager, and deputy secretary of the party committee of Shanghai Petrochemical Co., Ltd. Since
December 2022, he has served as the general manager of the Company.
Li Feng Born in 1979, Chinese nationality, no overseas permanent residence, master"s degree, senior economist, member of the third M&A financing
committee of China Association of Listed Companies. Served as project manager, office director, and deputy general manager of Jiangsu
Hengli Chemical Fiber Co., Ltd.; served as deputy general manager and secretary of the board of directors of Jiangsu Hengli Chemical Fiber
Co., Ltd. from August 2011 to March 2016; Since March 2016, he has served as director and deputy general manager of Jiangsu Hengli
Chemical Fiber Co., Ltd.; since March 2016, he has served as director, deputy general manager and secretary of the board of directors of the
Company.
Gong Tao Born in 1980, Chinese nationality, no overseas permanent residence, master degree. He used to be a technician of Xianglu Petrochemical
(Xiamen) Co., Ltd., a monitor of Zhejiang Yisheng Petrochemical Co., Ltd., and an engineer of Hanbang (Jiangyin) Petrochemical Co., Ltd.;
from February 2011 to May 2015 years, he was the director and manager of Hengli Petrochemical (Dalian) Co., Ltd. ; From May 2015 to now,
he has been the deputy general manager of Hengli Petrochemical (Dalian) Co., Ltd. Since March 2018, he has served as a director of the
Company.
Liu Dunlei Born in 1972, Chinese nationality, no overseas permanent residence, bachelor degree. Served as assistant to the general manager and
manager of Qingdao Gaohe Co., Ltd.; successively served as FDY engineer, workshop director, and manager of Area E of the filament
department of Jiangsu Hengli Chemical Fiber Co., Ltd.; Since August 2012, he has served as the general manager of Jiangsu Hengke
Advanced Materials Co. Ltd.; since March 2016, he has served as the Company"s deputy general manager; since March 2018, he has served
as the Company"s director and deputy general manager.
Liu Jun Born in 1964, Chinese nationality, no overseas permanent residence, Ph.D. He used to be an associate professor, professor, and vice
president of Nanjing Normal University, and served as a member of the party group, vice president, member of the judicial committee, and
judge of Yangzhou Intermediate People"s Court. He is currently a professor at the Law School of Nanjing Normal University. Since April 2022,
he has served as an independent director of the Company.
Wu Born in 1980, Chinese nationality, no overseas permanent residence, bachelor degree, Chinese certified public accountant. Served as senior
Yongdong project manager of Tianjian Certified Public Accountants (Special General Partnership), credit partner of Ruihua Certified Public Accountants
(Special General Partnership) Zhejiang Branch, Internal audit director and director of Hangzhou Shunwang Technology Co., Ltd., and financial
director of Zhejiang Chuangke Network Co., Ltd. He is currently the financial director of Hangzhou Jierui Air Treatment Equipment Co., Ltd.
Since April 2022, he has served as an independent director of the Company.
Xue Born in 1979, Chinese nationality, no overseas permanent residence, Ph.D., once served as an associate researcher and master tutor at the
Wenliang Textile College of Donghua University, and is now a professor and doctoral tutor at the Textile College of Donghua University. Since April
Kang Born in 1980, Chinese nationality, no permanent residence abroad, bachelor degree, senior economist. Served as general ledger accountant
Yunqiu of Jiangsu Hengli Chemical Fiber Co., Ltd., financial manager of Jiangsu Boyada Textile Co., Ltd., financial director of Suzhou Wujiang Tongli
Lake Tourist Resort Co., Ltd. He is currently the assistant to the chief financial officer of Hengli Group Co., Ltd., and the director of Suzhou
Wujiang Tongli Lake Tourist Resort Co., Ltd. Since April 2022, he has served as the chairman of the Company"s board of supervisors.
Shen Born in 1978, Chinese nationality, no overseas permanent residence, college degree. Previously served as deputy manager of the general
Guohua ledger accountant and finance department of Jiangsu Hengli Chemical Fiber Co., Ltd.; from December 2017 to August 2021, he served as
the manager of the Company"s audit department. Since August 2021, he has served as the Company"s audit director. Since April 2022, he
has served as a supervisor of the Company.
Tang Born in 1980, Chinese nationality, no overseas permanent residence, bachelor degree, senior engineer, successively worked as a technician,
Fangming engineer, and director of the enterprise management department of Jiangsu Hengli Chemical Fiber Co., Ltd.; he is currently the assistant to
the general manager of Jiangsu Hengli Chemical Fiber Co., Ltd. Since April 2022, he has served as the employee supervisor of the Company.
Liu Born in 1977, Chinese nationality, no overseas permanent residence, master degree. Served as business representative, deputy sales
Qianhan manager and sales manager of Jiangsu Hengli Chemical Fiber Co., Ltd.; Deputy General Manager of Jiangsu Hengli Chemical Fiber Co., Ltd.
from September 2010 to now; current Deputy General Manager of the Company.
Liu Xuefen Born in 1972, Chinese nationality, no overseas permanent residence, college degree. Worked as cashier and accountant of Wujiang Silk
Sample Factory; teller, loan officer and accounting supervisor of Shengze Branch of China Construction Bank; from April 2004 to April 2012,
manager of the audit department of Jiangsu Hengli Chemical Fiber Co., Ltd; Since April 2012, he has served as the financial director of Hengli
of Directors, " "Election of Independent Directors of the 9th Board of Directors, " and "Election of Supervisor Candidates of the 9th Supervisory
Board" were approved. Fan Hongwei, Li Feng, Liu Dunlei, Gong Tao, Liu Jun, Xue Wenliang, and Wu Yongdong were elected as directors, while
Kang Yunqiu and Shen Guohua were elected as supervisors. Tang Fangming was elected as the staff representative supervisor by the
Company"s Staff Representative Assembly.
During the first meeting of the 9th Board of Directors, the relevant resolutions were approved, appointing Fan Hongwei as the General
Manager, Li Feng as the Deputy General Manager and Board Secretary, Liu Xuefen as the Deputy General Manager and Chief Financial Officer,
and Liu Dunlei and Liu Qianhan as Deputy General Managers.
After Fan Hongwei applied to resign as the General Manager, the company held the 6th meeting of the 9th Board of Directors on
December 29, 2022, and approved the resolution on "Appointment of General Manager, " agreeing to appoint Wang Zhiqing as the General
Manager.
For detailed information, please refer to the announcements published by the company on April 7, 2022, April 28, 2022, and December
Staff Representative Supervisor" (Announcement No.: 2022-047), "Announcement of Resolutions of Hengli Petrochemical"s 2021 Annual
Shareholders" Meeting" (Announcement No.: 2022-054), "Announcement of Resolutions of the 1st Meeting of the 9th Board of Directors of Hengli
Petrochemical" (Announcement No.: 2022-055), and "Announcement of Hengli Petrochemical on the Change of General Manager"
(Announcement No.: 2022-092).
(II) Positions of current and resigned directors, supervisors and senior executives
during the reporting period
(III) Remuneration of Directors, Supervisors and Senior Management
Decision-making procedures The compensation plan for the company"s directors and the
for the remuneration of salary distribution plan for senior executives proposed by the
directors, supervisors and Remuneration and Appraisal Committee, and reported to the
senior executives Board of Directors for approval
Basis for Determination of According to the company"s overall operating conditions and
Remuneration of Directors, the annual salary level of previous years, it is determined by
Supervisors and Senior comparing the director and executive salary levels of similar
Management listed companies and Others companies in the same
industry
Actual Payment of The payment has been completed according to the results of
Remuneration to Directors, the performance appraisal. For details, please refer to the
Supervisors and Senior "Statement of Shareholding Changes and Remuneration of
Management Directors, Supervisors and Senior Management"
Total remuneration actually 8.0495 million yuan
received by all directors,
supervisors and senior
management at the end of
the reporting period
(IV) Changes in Directors, Supervisors and Senior Management of the Company
Name Position held Changes Reason for change
Fan Hongwei General manager resign Company work
arrangement
Wang Zhiqing General manager hire Company work
arrangement
Liu Jun Independent election General Election of
Director the Board of
Directors
Xue Wenliang Independent election General Election of
Director the Board of
Directors
Wu Yongdong Independent election General Election of
Director the Board of
Directors
Kang Yunqiu Chairman of the election General Election of
Supervisory Board the Board of
Supervisors
Shen Guohua Supervisor election General Election of
the Board of
Supervisors
Tang Fangming Employee election General Election of
Supervisor the Board of
Supervisors
Li Li Independent resign Served as
Director independent director
of the company for 6
years
Fu Yuanlue Independent resign Served as
Director independent director
of the company for 6
years
Cheng Longdi Independent resign Served as
Director independent director
of the company for 6
years
Wang Weiming Chairman of the resign General Election of
Supervisory Board the Board of
Supervisors
Xu Yinfei Supervisor resign General Election of
the Board of
Supervisors
Mo Youjian Employee resign General Election of
Supervisor the Board of
Supervisors
Liu Jian Deputy General resign Company work
Manager arrangement
IV. Relevant information on board meetings held during the reporting period
Date of
Meeting session Meeting resolutions
Meeting
Announcement of 2022-12-29 "Proposal on the Appointment of the General Manager of
Resolutions of the the Company"
Sixth Meeting of
the Ninth Board of
Directors
Announcement on 2022-10-28 "2022 Third Quarter Report"
Resolutions of the
Fifth Meeting of
the Ninth Board of
Directors
Announcement on 2022-08-15 "2022 Semi-Annual Report" Full Text and Abstract
Resolutions of the
Fourth Meeting of
the Ninth Board of
Directors
Announcement on 2022-06-02 "Proposal on Purchasing Assets and Related
Resolutions of the Transactions"
Third Meeting of
the Ninth Board of
Directors
Announcement on 2022-04-29 1. "First Quarter Report 2022"
Resolutions of the 2. "Proposal on Revising the Corporate Governance
Second Meeting of System"
the Ninth Board of
Directors
Announcement on 2022-04-27 1. "Proposal on the Election of the Chairman of the
Resolutions of the Company"
First Meeting of 2. "Proposal on Election of Members of Special
the Ninth Board of Committees of the Ninth Board of Directors"
Directors 3. "Proposal on the Appointment of the General Manager
of the Company"
Secretary to the Board of Directors"
Deputy General Manager and Chief Financial Officer"
Securities Affairs Representative"
Announcement on 2022-04-06 1. "2021 General Manager Work Report"
Resolutions of the 2. "2021 Annual Work Report of the Board of Directors"
Twenty-eighth 3. "2021 Annual Report" and its summary
Meeting of the 4. "2021 Annual Financial Final Account Report"
Eighth Board of 5. "Profit Distribution Plan for 2021"
Directors 6. "Company"s 2021 Internal Control Evaluation Report"
Management of the Company in 2021"
Transactions in 2022"
Trading Business in 2022"
Investment Plan for 2022"
from Banks and Other Financial Institutions in 2022"
Firms"
Candidates for the Ninth Board of Directors"
Candidates for the Ninth Board of Directors"
Ninth Board of Directors of the Company"
Charter Annex"
Independent Directors of the Company>"
Transactions"
General Meeting of Shareholders"
Announcement on 2022-03-09 1. "Proposal on the Fourth Phase Repurchase Report of
Resolutions of the Shares Repurchased by Centralized Bidding Transactions"
Twenty-Seventh 2. "Proposal on authorizing the company"s management to
Meeting of the handle matters related to this Share repurchase"
Eighth Board of
Directors
Announcement on 2022-03-03 1. "Hengli Petrochemical Co., Ltd. Phase Six Employee
Resolutions of the Stock Ownership Plan (Draft) " and its summary
Twenty-sixth 2. "Hengli Petrochemical Co., Ltd. Sixth Phase Employee
Meeting of the Stock Ownership Plan Management Measures"
Eighth Board of 3. "Proposal on Proposing to the General Meeting of
Directors Shareholders to Authorize the Board of Directors to Handle
Matters Related to the Employee Stock Ownership Plan"
Repurchase in 2020"
Meeting of Shareholders in 2022"
Announcement on 2022-01-26 1. "Proposal on Investment and Construction of 16010, 000
Resolutions of the tons/year High Performance Resin and New Material
Twenty-fifth Project"
Meeting of the 2. "Proposal on Investing in the Construction of a High-
Eighth Board of performance polyester project with an annual output of 2.6
Directors million tons"
General Meeting of Shareholders in 2022"
V. Performance of duties by directors
(I) Participation of Directors in the Board of Directors and General Meetings of
Shareholders
Participati
on in the
general
Participation in the board of directors meeting
of
sharehold
Whether ers
Directo
independ Did
r"s
ent not Attendan
name Numb
director Participatio attend ce at
er of In- Entruste Numbe
n by two general
board person d r of
means of meetin meetings
meetin attenda attenda absenc
communica gs in of
gs this nce nce es
tion person sharehold
year
in a ers
row
Fan
Hongw No 10 10 0 0 0 No 4
ei
Li Feng No 10 10 0 0 0 No 4
Gong
No 10 10 9 0 0 No 2
Tao
Liu
No 10 10 8 0 0 No 1
Dunlei
Liu Jun Yes 6 6 5 0 0 No 0
Xue
Wenlia Yes 6 6 5 0 0 No 0
ng
Wu
Yongdo Yes 6 6 5 0 0 No 0
ng
Li Li
(resigned Yes 4 4 3 0 0 No 0
）
Fu
Yuanlu
e Yes 4 4 3 0 0 No 0
(resigned
)
Cheng
Yes 4 4 3 0 0 No 1
Longdi
(resigned
)
Number of board meetings held during the year 10
Including: Number of on-site meetings 0
Number of meetings held by means of 2
communication
Number of meetings held on site combined 8
with communication
VI. Special committees under the board of directors
(1). Membership of special committees under the board of directors
Special committee Members
Audit Committee Wu Yongdong, Liu Jun, Li Feng
Nominating Committee Liu Jun, Xue Wenliang, Liu Dunlei
Remuneration and Appraisal Committee Xue Wenliang, Wu Yongdong, Gong Tao
Strategy Committee Fan Hongwei, Xue Wenliang, Li Feng
(2). During the reporting period, the Audit Committee held 6 meetings
Material
Other
Date of comments
Meeting content performance
meeting and
of duties
suggestions
March 20, The second annual audit communication meeting Nil Nil
the preliminary audit opinion to be issued by the
accountant for the annual audit on the company"s
financial accounting statements.
April 6, 2022 Reviewed the "Company"s 2021 Financial Nil Nil
Accounting Statement", "Summary Report of the
Audit Committee of the Board of Directors on the
an Accounting Firm", "2021 Annual Report and Its
Summary", "Proposal on the Estimated Situation
of Routine Related Party Transactions in 2022"
April 29, Review the "2022 First Quarterly Report" and Nil Nil
August 15, Review the "2022 Semi-Annual Report" and issue Nil Nil
October 28, Review the "2022 Third Quarterly Report" and Nil Nil
December Held the first annual review communication Nil Nil
(3). During the reporting period, the Nomination Committee held 3 meetings
Material
Other
Date of comments
Meeting content performance
meeting and
of duties
suggestions
April 6, Review the qualifications of director candidates for Nil Nil
April 27, Review the qualifications of candidates for senior Nil Nil
company
December Review the qualifications of the company"s general Nil Nil
(4). During the reporting period, the Remuneration and Appraisal Committee held 1
meeting
Material
Other
Date of comments
Meeting content performance
meeting and
of duties
suggestions
April 5, 2022 Reviewed the "Proposal on the Company"s 2021 Nil Nil
Directors and Senior Managers" Remuneration"
and the "Proposal on the Company"s Ninth Board
of Directors" Remuneration Plan"
(5). During the reporting period, the Strategy and Investment Committee held 1
meeting
Material
Other
Date of comments
Meeting content performance
meeting and
of duties
suggestions
January 25, Reviewed the "Proposal on Investment and Nil Nil
performance Resin and New Materials Project",
"Proposal on Investment and Construction of High-
performance polyester project with an annual
output of 2.6 million tons"
VII. Explanation of the Board of Supervisors’ discovery of risks in the company
The Supervisory Committee had no objection to the supervisory matters during the
reporting period.
VIII. Employees of the parent company and major subsidiaries at the end of the
reporting period
(I) Employees
The number of employees employed by the parent 31
company
The number of employees in the main subsidiary 28, 075
Total Number of Employees 38, 550
Number of retired employees whose parent company 359
and main subsidiaries need to bear the expenses
Professional composition
Professional composition category Headcount
Production staff 27, 883
Sales staff 776
Technical staff 6, 158
Financial officer 358
Administrative staff 1, 465
Service staff 485
Others 1, 425
Total 38, 550
Education level
Education level category Headcount
Postgraduate and above 289
Undergraduate 5, 857
College 10, 136
Secondary school and below 22, 268
Total 38, 550
(II) Remuneration policy
The company has established a legal, standardized, and effective salary and job
grading system, taking into account the internal and external labor market conditions,
regional and industry differences, and the value of employee positions. The principles
guiding the system are "competitiveness externally, fairness internally, and protection of
employee development space." The grading and salary determination are based on factors
such as responsibilities, capabilities, and performance contributions. Each subsidiary
company refines and implements specific compensation plans, promotion channels, and
assessment indicators that are suitable for its own development, based on its business
scope, industry, and regional factors.
The company"s compensation and benefits primarily include basic salary, position-
based salary, seniority-based salary, piecework wages, bonuses, overtime pay, night shift
allowances, management allowances, skill allowances, etc. The company also provides
social insurance and housing fund contributions for employees, offers free entry medical
examinations, free work meals, holiday allowances, birthday cakes, etc. Annual salary
increases are determined based on market benchmarks and the company"s salary range,
while annual bonuses are distributed based on company performance and individual
achievements. The fair, reasonable, and competitive compensation system aims to attract
and retain outstanding talents, provide employees with a sense of belonging and identity,
motivate their sense of responsibility and enthusiasm, and promote the mutual enhancement
of company and employee value.
IX. Profit distribution or capital reserve conversion plan
(I) Formulation, implementation or adjustment of cash dividend policy
During the reporting period, there was no adjustment to the company"s cash dividend
policy. The company strictly follows the relevant provisions of the "Articles of Association"
and "Shareholder Return Plan for the Next Five Years (2020-2024) ".
(II) Special Notes on Cash Dividend Policy
Does it comply with the provisions of the company"s bylaws or requirements YES
set by the shareholders" meeting resolutions?
Are the dividend standards and ratios clear and explicit? YES
Are the relevant decision-making procedures and mechanisms complete? YES
Have the independent directors fulfilled their duties and played their expected YES
roles?
Do minority shareholders have sufficient opportunities to express their YES
opinions and demands, and have their legal rights and interests been
adequately protected?
(III) If the company has made profits during the reporting period and the parent
company has distributable profits, but no proposed cash dividend distribution
plan has been put forward, the company should provide detailed disclosure of
the reasons as well as the purpose and utilization plan of the undistributed profits
Profit during the reporting period and the parent Purpose and utilization plan of
company’s profit available for shareholders to undistributed profits
distribute is positive, but the reason for not
proposing a cash profit distribution plan
During the current year, the company repurchased The main purpose of the funds is to
shares through a centralized bidding process with a support the company"s ongoing projects,
total amount of 2 billion yuan. According to the including a 1.6 million tons/year high-
relevant provisions of the "Shanghai Stock performance resin and new materials
Exchange Listed Company Self-discipline project, a 300, 000 tons/year adipic acid
Supervision Guidelines No. 7 - Repurchase of project for Hengli Chemical"s new
Shares, " the above-mentioned amount is treated materials, an 800, 000 tons/year functional
as equivalent to cash dividends and accounts for film and functional plastics project for
over 80% of the net profit. This is in line with the Jiangsu Kanghui New Materials, a 600,
requirements stated in the company"s Articles of 000 tons/year BDO and related project,
Association and the company"s "Shareholder and a lithium battery separator project.
Return Plan for the Next Five Years (2020-2024)."
Considering the significant investment plans and
substantial cash expenditures currently undertaken
by the company, the board of directors has made a
prudent decision. It is proposed not to distribute
cash dividends, bonus shares, or carry out capital
reserve capitalization, and the undistributed profits
will be carried forward to the following year.
(IV) Profit distribution and conversion of capital reserve into share capital during the
reporting period
Unit: hundred million yuan Currency: RMB
Bonus shares for every 10 shares (shares) 0
Dividend per 10 shares (yuan) (tax included) 0
Number of conversions per 10 shares (shares) 0
Cash dividend amount (tax included) 0
Net profit attributable to ordinary shareholders of listed companies in the annual
consolidated statement of dividends
Ratio of net profit attributable to ordinary shareholders of listed companies in the
consolidated statements (%)
Repurchase of shares in cash is included in the amount of cash dividends 20.00
Total dividend amount (tax included) 20.00
The ratio of the total dividend amount to the net profit attributable to ordinary
shareholders of the listed company in the consolidated statement (%)
X. The status and impact of the company"s equity incentive plan, employee stock
ownership plan or other employee incentives
(I) Relevant incentives have been disclosed in temporary announcements and
there is no progress or change in subsequent implementation
Event Index
The company"s fourth employee For details, please refer to the "Hengli Petrochemical
stock ownership plan was sold Announcement on the Completion and Termination of the
and terminated Stock Sale and Termination of the Fourth Phase Employee
Stock Ownership Plan" disclosed by the company on the
website of the Shanghai Stock Exchange on January 18, 2022
(Announcement No.: 2022-006)
The company"s sixth employee For details, please refer to the "Hengli Petrochemical Phase
stock ownership plan was Six Employee Stock Ownership Plan (Draft) " and other
launched relevant announcements disclosed by the company on the
website of the Shanghai Stock Exchange on March 4, 2022
Part of the lock-up period of the For details, please refer to the "Hengli Petrochemical
company"s fifth employee stock Indicative Announcement Regarding the Expiration of the
ownership plan expires Partial Share Lock-up Period of the Fifth Employee Stock
Ownership Plan" disclosed by the company on the website of
the Shanghai Stock Exchange on March 10, 2022
(announcement number: 2022-026)
The company"s sixth employee For details, please refer to the "Hengli Petrochemical
stock ownership plan completed Announcement on the Completion of Stock Purchase under
the stock purchase the Sixth Employee Stock Ownership Plan" disclosed by the
company on the website of the Shanghai Stock Exchange on
May 12, 2022 (Announcement No.: 2022-065)
Proposed to change the asset For details, please refer to the "Announcement of Hengli
management organization of the Petrochemical on Changing the Asset Management
third and fifth employee stock Organization of the Third and Fifth Employee Stock Ownership
ownership plans Plans" disclosed by the company on the website of the
Shanghai Stock Exchange on February 18, 2023
(Announcement No.: 2023-003)
(II) The establishment and implementation of the evaluation mechanism for senior
management personnel and the incentive mechanism during the reporting
period
The company has established a senior management performance evaluation and
incentive mechanism, with a compensation and assessment committee under the board of
directors. This committee is responsible for studying and formulating the standards and
procedures for evaluating senior management personnel and reviewing their compensation
policies and plans. The company continuously improves its long-term incentive policies
based on actual circumstances, aiming to motivate senior management to fulfill their
responsibilities diligently and responsibly.
XI. Construction and implementation of internal control system during the reporting
period
During the reporting period, the company strictly adhered to various laws and
regulations, such as the "Company Law, " "Basic Norms for Enterprise Internal Control, "
"Listing Rules of the Shanghai Stock Exchange, " and "Self-regulatory Guidelines for Listed
Companies of the Shanghai Stock Exchange - Standard Operations." The company also
followed internal control system standards to operate and manage risks effectively. The
company established a robust internal control management system, taking into account
industry characteristics and actual business operations. The internal control system was
continuously optimized and improved to ensure the lawful and compliant operation and
management of the company, asset security, and the accuracy and integrity of financial
reporting and related information. These measures aimed to enhance operational efficiency,
actual results, and protect the interests of the company and all shareholders.
XII. Management and control over subsidiaries during the reporting period
In compliance with the requirements of the "Company Law, " the company has
established and continuously improved a modern corporate system. Through the
shareholders" meeting, the board of directors, and the supervisory board, effective
management of subsidiary companies has been implemented. The company has developed
a comprehensive management system that covers its major business areas, achieving
institutionalization of management practices. The management system has also been
disseminated to the subsidiary companies, which have formulated their own management
systems based on it.
XIII. Explanation on the relevant situation of the internal control audit report
According to the "Basic Norms for Enterprise Internal Control" and its supporting
guidelines, as well as other internal control regulatory requirements, the company, in
conjunction with its internal control system and evaluation methods, conducted an
assessment of the effectiveness of internal controls as of the benchmark date for the internal
control evaluation report. The company prepared the "2022 Annual Internal Control
Evaluation Report" in accordance with the format, content, and requirements specified by
the China Securities Regulatory Commission (CSRC) and the Shanghai Stock Exchange
(SSE).
The company engaged an external auditing firm, Zhong Hui Certified Public
Accountants LLP (Special General Partnership), to perform an internal control audit. The
audit firm issued a standard unqualified opinion in the internal control audit report.
Whether to disclose the internal control audit report: Yes
Type of internal control audit report opinion: standard unqualified opinion
XIV. The rectification of problems in the self-examination of the special action of listed
company governance
During the reporting period, there were no significant differences between the
company"s corporate governance status and the relevant regulations of the China Securities
Regulatory Commission (CSRC) regarding the governance of listed companies. The
company will continue to enhance its corporate governance level and improve its
governance framework in accordance with legal regulations and regulatory requirements.
This ongoing effort aims to continuously enhance the quality of the listed company.
Chapter 5 Environmental and Social Responsibility
I. Environmental information
Whether to establish relevant mechanisms for Yes
environmental protection
Investment in environmental protection funds 24, 776.30
during the reporting period (unit: ten thousand
yuan)
(I) Explanation on the environmental protection status of companies and their major
subsidiaries that belong to the key pollutant discharge units announced by the
environmental protection department
The Company pays great heed to environmental protection, and strictly acts upon the
Environmental Protection Law of the People’s Republic of China, the Law of the People’s
Republic of China on Promoting Clean Production, and the Law of the People’s Republic of
China on the Prevention and Control of Environmental Pollution by Solid Wastes and other
relevant laws and regulations. The key pollutant discharging companies and their subsidiaries
mainly include Hengli Chemical Fiber, Susheng Thermal Power, Deli Chemical Fiber, Hengke
Advanced Materials, Kanghui New Material, Hengli Petrochemical (Dalian), Hengli
Petrochemical Refining and Hengli Petrochemical Chemical.
During the reporting period, each pollutant discharging subsidiary carried out self-monitoring
of their environmental impact and engaged professional third parties to test various pollutant
factors. The test results showed that the emission concentrations of various pollutants were in
compliance with national and local pollutant discharge standards and other relevant standards.
The total discharge of pollutants is under the required limit as outlined by operation permits. (Due
to the switch between old and new pollutant discharge licenses, there were some changes in the
approved total annual pollutant discharge amount and discharge calculation methods of some
key pollutant discharge subsidiaries.)
The specific pollutant discharge is as follows:
Th
e Ex
Nu
dis ce
m
E tri ssi
Ty be
mi bu Approved ve
pe Main r Total
ssi tio total e
of Pollutants of emissio
on n Emission emission Pollutant Emission mi
po and dis ns
m of Concentration s Standards Executed ssi
llu Characteristi ch (tons/ye
et dis (tons/yea on
ta c Pollutants ar ar)
ho ch r) sit
nt ge
d ar ua
po
ge tio
rts
po n
rts
Wastewater
/ 51038 /
volume In GB31572-2015
Chemical dir Synthetic Resin
W
oxygen ec 16.67mg/L 0.8492 8.623 Industrial Pollutant
as
demand t Discharge Standard,
te
Ammonia e 1 Wujiang Shengze
w 0.70mg/L 0.0417 0.675
nitrogen mi Water Treatment
at In
Total ssi Development Co.,
er th 0.06mg/L 0.003 0.0684
Phosphorus on Ltd. Takeover
e
Total s Standard
fa 7.95mg/L 0.5861 5.748
nitrogen ct Nil
Sulfur or 9.137mg/m³ 16.04 152.25
dioxide y GB13271-2014 Boiler
Dir
Ex Nitrogen ec 3 ar Air Pollutant Emission
ha oxides t ea Standard
us Particles e 2.340mg/m³ 4.2 30.16
t mi
DB32/4041-2021
ga ssi
Comprehensive
s on
VOCs 2 0.608mg/m³ 0.7417 1.9008 Discharge Standard
s
of Air Pollutants in
Jiangsu Province
Th Ex
e ce
Nu
dis ss
m
tri iv
Ty E be
bu Approv e
pe Main mi r Total
tio ed total e
of Pollutants ssi of Emission emissio
n emissio Pollutant Emission mi
po and on dis Concentratio ns
of ns Standards Executed ss
llu Characteristi me ch n (tons/ye
dis (tons/ye io
ta c Pollutants tho ar ar)
ch ar) n
nt d ge
ar sit
po
ge ua
rts
po tio
rts n
Ind
W
ire
as 31962-2015,
ct
te Wastewater comprehensive sewage
em 1 10733 11000
w volume discharge standard
iss
at In GB8978-1996
ion
er th
s
e
Sulfur fa 5.71 mg/m³ 26.056 434.337 Air Pollutant Emission
dioxide ct Nil
Nitrogen Standards for Coal-fired
Ex Dir 3 or 30.91 mg/m³ 134.136 868.674
oxides Power Plants
ha ect y
DB32/4148—2021
us Particles em ar 1.64 mg/m³ 7.185 172.424
t iss ea
DB32/4041-2021
ga ion
Comprehensive
s VOCs s 2 / / Discharge Standard of Air
Pollutants in Jiangsu
Province
Th
E
e
E xc
Nu di
m es
m str
is si
Ty be ib
si Approv ve
pe Main r uti
o Emission ed total e
of Pollutants of on Total
n Concentratio emissio Pollutant Emission mi
po and dis of emissions
m n ns Standards Executed ss
llu Characteristi ch di (tons/year)
e (tons/ye io
ta c Pollutants ar sc
t ar) n
nt ge ha
h sit
po rg
o ua
rts e
d tio
po
n
rts
W Wastewater I In
/ 82592.114 105160
as volume n th GB31572-2015 Synthetic
Ni
te Chemical d 1 e Resin Industrial Pollutant
l
w oxygen ir fa 24.528 mg/L 2.025862 42.06 Discharge Standard
at demand e ct
er c or
t y
e ar
m ea
Ammonia
is 0.352mg/L 0.029141 0.601
nitrogen
si
o
n
s
Sulfur D GB13271-2014 Boiler Air
dioxide ir Pollutant Emission
Nitrogen e 104.78mg/m Standard
E oxides c 3 ³ GB16297-1996
xh t comprehensive
au Particles e 2.316 mg/m³ 0.42264 6.75 discharge standard of air
st m pollutants
ga is
GB37822-2019 Volatile
s si
Organic Compound
VOCs o 2 / / /
Fugitive Emission
n
Control Standard
s
Th E
e xc
Nu
dis es
m
E tri si
Ty be
Main mi bu Approv ve
pe r Total
Pollutants ssi tio ed total e
of of Emission emissio
and on n emissio Pollutant Emission mi
po dis Concentratio ns
Characteris m of ns Standards Executed ss
llut ch n (tons/ye
tic et dis (tons/ye io
an ar ar)
Pollutants ho ch ar) n
t ge
d ar sit
po
ge ua
rts
po tio
rts n
Wastewate Fe
/ 425950 659400 /
r volume nc
e Standards in Table 2 of
on DB21-1627-2008
Chemical th Liaoning Provincial
oxygen e 12.8223mg/L 8.471 28.808
demand
Comprehensive
so
ut
Wastewater Discharge
W Standard
h
as Standards in Table 2 of
sid
te 1
e DB21-1627-2008
wa
of Liaoning Provincial
ter Co th Comprehensive
nti e
Ammonia nu Wastewater Discharge
fa 0.337 mg/L 0.309 2.9109
nitrogen ou Standard
ct Ni
s or l
e y
mi ar
ssi ea
on
GB31572-2015
Fa
Sulfur
ct
Synthetic Resin
dioxide Industrial Pollutant
or
Ex Discharge Standard
y
ha GB31572-2015
ce
us
t
Nitrogen 1 ntr Synthetic Resin
oxides al Industrial Pollutant
ga
chi Discharge Standard
s
m GB13271-2014 Boiler
ne 50.5916
Particles 2.55 mg/m³ 27.448
Air Pollutant Emission
y
Standard
Main The Approv Excess
Numb Total
Type Pollutants Emissi distribut ed total Pollutant ive
er of Emission emissio
of and on ion of emissio Emission emissi
discha Concentr ns
pollut Character metho dischar ns Standards on
rge ation (tons/y
ant istic d ge (tons/y Executed situatio
ports ear)
Pollutants ports ear) n
Wastewat Sewage
/ 940744 /
er volume discharged
Chemical into urban
oxygen 15.2 281.95 sewer
mg/L
demand water
Ammonia quality
nitrogen
Total GB/T
Phosphor 0.15 mg/L 0.074 0.92 31962-
us 2015,
textile
dyeing and
finishing
industry
water
pollutant
discharge
standard
GB 4287-
Indirec
Wast 4287-2012,
t
e 1 comprehen
emissi
water sive
ons
In the sewage
factory discharge Nil
area standard
Total GB8978-
nitrogen 1996,
petrochemi
cal industry
pollutant
discharge
standard
GB 31571-
Synthetic
Resin
Industrial
Pollutant
Discharge
Standard
GB 31572-
Sulfur 2.04 "Emission
dioxide mg/m3 Standards
Exha Direct
Nitrogen 18.4 of Air
ust emissi 1 8.82 349.39
oxides mg/m3 Pollutants
gas ons
Particles 4.44 52.41
mg/m3 (DB32/438
Emission
Standards
for
Industrial
Pollutants
of
Synthetic
Resin GB
"Emission
Standards
for Air
Pollutants
for Boilers"
(DB32/438
Comprehe
nsive
Emission
Standards
for Air
Pollutants
DB32/4041
—2021
Petrochemi
cal Industry
Pollutant
Discharge
Standard
GB 31571
Pollutant
Discharge
Standard
GB14554-
DB32/4041
-2021
Comprehe
nsive
VOCs 1 0.66 28.86
mg/m3 Standard
of Air
Pollutants
in Jiangsu
Province
T
h
e
d
i
s
tr
i
b Ex
Nu
u ce
m
E ti ssi
Ty be
Main mi o Approve ve
pe r
Pollutants ssi n d total e
of of Emission Total
and on o emissio Pollutant Emission mi
pol dis Concentratio emissions
Characteris m f ns Standards Executed ssi
lut ch n (tons/year)
tic et d (tons/ye on
an ar
Pollutants ho i ar) sit
t ge
d s ua
po
c tio
rts
h n
a
r
g
e
p
o
rt
s
Wastewate
r volume
DB21/1627-2008
Chemical
Comprehensive
oxygen 1 18.65mg/L 39.306 249.23
demand
Wastewater
Discharge Standard
Co GB31570-2015
DW001 discharge port
nti Pollutant Discharge
W Ammonia nu 1 0.187mg/L 0.394 19.86 Standard for
ast nitrogen ou Petroleum Refining
e s
Industry
wa e
ter mi GB31570-2015
Total ssi Pollutant Discharge
Phosphoru on 1 0.223mg/L 0.47 / Standard for
s Petroleum Refining
Nil
Industry
DB21/1627-2008
Total Comprehensive
nitrogen Wastewater
Discharge Standard
GB31570-2015
Or Pollutant Discharge
Sulfur ga 11.214mg/m³
dioxide
Ex niz Petroleum Refining
ha ed
Industry
ust e
/
ga mi GB31570-2015
s ssi Pollutant Discharge
Nitrogen
on 15 30.255mg/m³ 2004.638 5064.92 Standard for
oxides
s Petroleum Refining
Industry
GB31570-2015
Pollutant Discharge
Smoke 0.669mg/m³
dust
Petroleum Refining
Industry
Non-
methane
total / / 3224.911 3274.58 /
hydrocarbo
ns
Th
e
Nu
dis Ex
m
E tri ce
Ty be
Main mi bu Approve ssi
pe r Total
Pollutants ssi tio d total ve
of of Emission emissio
and on n emissio Pollutant Emission em
pol dis Concentratio ns
Characteris m of ns Standards Executed iss
lut ch n (tons/ye
tic et dis (tons/ye ion
an ar ar)
Pollutants ho ch ar) sit
t ge
d ar uat
po
ge ion
rts
po
rts
Wastewater 170188
volume 2
DB21/1627-2008
Chemical
"Comprehensive
oxygen 1 15.766mg/L 26.016 204.3
demand Wastewater Discharge
Co Standard"
DW001 discharge port
nti GB31571-2015
W Ammonia nu "Petrochemical
ast ou 1 0.037mg/L 0.061 32.7
nitrogen Industry Pollutant
e s
Discharge Standard"
wa e
ter mi DB21/1627-2008
Total
ssi "Comprehensive
Phosphoru 1 0.116mg/L 0.197 /
s on Wastewater Discharge
Standard"
DB21/1627-2008
Total "Comprehensive
nitrogen Wastewater Discharge
Standard"
GB31571-2015
Sulfur
"Petrochemical
dioxide Industry Pollutant
Or Discharge Standard"
ga GB31571-2015
Ex niz
Nitrogen 43.916mg/m³
"Petrochemical
ha ed 4 423.495 974.4
oxides Industry Pollutant
ust e /
ga mi Discharge Standard"
s ssi GB31571-2015
on 1.999mg/m³
"Petrochemical
Smoke dust 4 7.292 149
s Industry Pollutant
Discharge Standard"
Non-
methane
total
hydrocarbo
ns
Th
e Ex
Nu
dis ce
m
E tri ssi
Ty be
Main mi bu Approve ve
pe r
Pollutants ssi tio d total e
of of Emission Total
and on n emissio Pollutant Emission mi
pol dis Concentratio emissions
Characteris m of ns Standards Executed ssi
lut ch n (tons/year)
tic et dis (tons/ye on
an ar
Pollutants ho ch ar) sit
t ge
d ar ua
po
ge tio
rts
po n
rts
Wastewater
volume
DB21/1627-2008
Chemical "Comprehensive
oxygen 1 27.021mg/L 303.542 559 Wastewater
demand Discharge
Standard"
Co DB21/1627-2008
DW001 discharge port
nti "Comprehensive
W Ammonia nu
nitrogen
ast ou Discharge
e s
Standard"
wa e
ter mi DB21/1627-2008
Total ssi "Comprehensive
Phosphoru on 1 0.18mg/L 2.3273 / Wastewater
s Discharge
Standard"
DB21/1627-2008
"Comprehensive
Total
nitrogen
Discharge Nil
Standard"
GB31571-2015
"Petrochemical
Sulfur 15.193mg/m³
dioxide
Discharge
Standard"
Or GB31571-2015
ga "Petrochemical
Nitrogen
Ex niz 2 26.470mg/m³ 345.05 682.06 Industry Pollutant
oxides
ha ed Discharge
ust e / Standard"
ga mi GB31571-2015
s ssi
"Petrochemical
on
Smoke dust 2 0.891mg/m³ 11.611 319.52 Industry Pollutant
s
Discharge
Standard"
Non-
methane
/ 6.593mg/m³ 76.843 914.05 /
total
hydrocarbo
ns
During the reporting period, the above companies who discharged pollutants all built
their pollutant control facilities following the requirements for environmental impact
assessment of the construction project. Currently, the facilities are under normal operation.
The companies carry out daily maintenance of the facilities to ensure their efficient and
stable operations of keeping emissions within the standards.
Environmental Protection Administrative Licensing
During the reporting period, the company"s construction and renovation projects have
been accompanied by the preparation of environmental impact assessment reports by
relevant construction units. These reports have received approval from the corresponding
ecological and environmental departments, granting permission for construction. Various
pollution prevention and control facilities (including those for air, water, noise, and solid
waste classification and disposal) and environmental management during the construction
period have been implemented in accordance with the approved content of the
environmental impact assessment report. The company strictly adheres to the "design,
construction, and production simultaneously" system for environmental protection.
Company Emergency plan Filing party Filing number
《Jiangsu Hengli Chemical Suzhou Wujiang
Hengli Ecological Environment
Fiber Co., Ltd. Emergency 320509-2022-042-
Chemical Bureau
plan for environmental M
Fiber
emergencies 》
《Jiangsu Deli Chemical Suqian Sucheng
Deli Chemical Fiber Co., Ltd. Emergency Ecological Environment 321302-2021-006-
Fiber plan for environmental Bureau L
emergencies 》
《Suzhou Susheng Thermal Suzhou Wujiang
Susheng Ecological Environment
Power Co., Ltd. Emergency 320509-2020-043-
Thermal Bureau
plan for environmental M
Power
emergencies 》
《Kanghui New Material Environmental Protection
Technology Co., Ltd. Bureau of Administrative
Kanghui New Committee of 210881-2021-037-
Emergency plan for
Material Xianrendao Economic M
environmental
emergencies 》 Development Zone
《Jiangsu Hengke Advanced Nantong Tongzhou
Hengke Ecological Environment
Materials Co., Ltd. 320682-2020-057-
Advanced Bureau
Contingency plans for M
Materials
environmental emergencies》
Hengli 《Hengli Petrochemical Dalian Wafangdian
Petrochemical (Dalian) Refining Co., Ltd. (Changxing Island
H
Refining Emergency plan for Economic Zone)
environmental Ecological Environment
emergencies 》 Branch
《Hengli Petrochemical Dalian Wafangdian
Hengli (Changxing Island
(Dalian) Co., Ltd. Emergency 210281-2022-068-
Petrochemical Economic Zone)
plan for environmental H
(Dalian) Ecological Environment
emergencies 》
Branch
《Hengli Petrochemical Dalian Wafangdian
Hengli (Dalian) Chemical Co., Ltd. (Changxing Island
Economic Zone) 210281-2022-069-
Petrochemical Emergency plan for
Ecological Environment H
Chemical environmental
emergencies 》 Branch
Note: 《 Jiangsu Hengke Advanced Materials Co. Ltd. Risk Contingency Plan for
Environmental Emergencies》is in the process of updating.
The company"s key pollutant-emitting subsidiaries under its jurisdiction have developed
environmental monitoring plans in accordance with relevant national self-monitoring
standards and environmental management system requirements. These plans are
submitted to the local environmental regulatory authorities for record-keeping while applying
for pollutant discharge permits. The company regularly organizes its environmental
monitoring station to conduct tests on various pollutants emitted from each workshop"s
discharge outlets. For projects where the company lacks testing capabilities, it entrusts third-
party institutions with environmental monitoring qualifications to conduct emission testing for
specific pollutants, such as wastewater and exhaust gases. The company assigns dedicated
personnel to inspect and aggregate data on various pollutant indicators. Additionally, data
analysis is performed to provide timely feedback to relevant departments as a basis for
adjusting process parameters and ensuring compliance with emission standards. This
systematic approach ensures that the company achieves standardized emissions.
(II) Measures and effects taken to reduce its carbon emissions during the reporting
period
Whether to take carbon reduction measures Yes
Reduction of carbon dioxide equivalent emissions Not applicable
(unit: tons)
Types of carbon reduction measures (such as using Use carbon reduction technology in the
clean energy to generate electricity, using carbon production process, clean energy power
reduction technologies in the production process, generation, research and development of
developing and producing new products that help new products that help reduce carbon
reduce carbon emissions, etc.)
Specific note
Please refer to the relevant cases in the "5.3 Resource Conservation" section of the
company"s "2022 Annual Corporate Social Responsibility Report, " which was disclosed on
the SSE website (www.sse.com.cn) on April 28, 2023.
II. Social Responsibility Work Situation
(I) Whether to disclose social responsibility report, sustainable development report
or ESG report separately
The company has prepared and disclosed its separate Annual Corporate Social
Responsibility Report for the year 2022. For specific details, please refer to the "2022 Annual
Corporate Social Responsibility Report" disclosed by the company on April 28, 2023, on the
SSE website (www.sse.com.cn).
(II) Specific situation of social responsibility work
External donation, public Quantity/Content Detail
welfare projects
Total investment (ten 40 Kanghui New Material donated 200, 000
thousand yuan) yuan each to the Bayuquan District Charity
Federation of Yingkou City and the
Gaizhou New Crown Epidemic
Headquarters.
Including: capital (ten 40
thousand yuan)
Material discount (ten 0
thousand yuan)
Number of people benefited
(person)
III. Consolidate and expand the achievements of poverty alleviation and rural
revitalization
Poverty Alleviation and Rural Quantity/Content Details
Revitalization Projects
Total investment (ten 53.90
thousand yuan)
Including: capital (ten 52.40 Hengli Petrochemical Refining donated
thousand yuan) 100, 000 yuan to Liaoning Petrochemical
Vocational and Technical College; Hengli
Futures donated 424, 000 yuan to rural
revitalization and poverty alleviation.
Material discount (ten 1.50 Hengli Futures is a financial institution in
thousand yuan) response to the call of the Dalian Futures
Industry Association to carry out the "New
Semester, New School Bags, and Warm
Food Plan" for elementary schools in
Dalian for 15, 000 yuan.
Number of people benefited
(person)
Forms of assistance (such as Rural revitalization,
industrial poverty alleviation, education and
employment poverty poverty alleviation
alleviation, education poverty
alleviation, etc.)
Chapter 6 Important events
I. Appointment and Dismissal of Accounting Firms
Unit: ten thousand yuan Currency: RMB
Currently employed
Domestic accounting firm name Zhonghui Certified Public Accountants
(Special General Partnership)
Domestic accounting firm remuneration 379
Audit period for domestic accounting firms 4
The name of the certified public accountant of the Han Jian, Fang Sai
domestic accounting firm
Consecutive years of audit services of CPAs of Han Jian (4 years), Fang Sai (1 year)
domestic accounting firms
Name Remuneration
Internal control audit accounting Zhonghui Certified Public Accountants 60
firm (Special General Partnership)
II. Major litigation and arbitration matters
No major litigation and arbitration matters during the reporting period.
III. Significant related party transactions
(I) Related party transactions related to daily operations
Matter Index
Estimated daily related Please refer to the announcement titled "Hengli Petrochemical
party transactions in 2022 Announcement on the Expected Situation of Routine Related Party
Transactions for the Year 2022" (Announcement No.: 2022-038)
disclosed on the SSE website on April 7, 2022 for more details.
(II) Related party transactions in asset or equity acquisition and sale
Matter Index
Subsidiary companies Jiangsu Xuanda Polymer Materials Co., Ltd. has Please refer to the announcement titled "Hengli Petrochemical
acquired assets from Nantong Guangzhen Textile Intelligent Technology Announcement on Subsidiary"s Purchase of Assets and Related Party
Co., Ltd., including a building, ongoing construction projects, engineering Transactions" (Announcement No.: 2022-002), disclosed on the SSE
materials, and the rights to use three industrial land plots located in Wujie website on January 1, 2022.
Town, Tongzhou District, Nantong City.
The company has purchased assets related to an apartment and parking Please refer to the announcement titled "Hengli Petrochemical
spaces located in Building B of Victoria Plaza in the Donggang Business Announcement on Purchase of Assets and Related Party Transactions"
District of Dalian City, held by Hengli Real Estate (Dalian) Co., Ltd (Announcement No.: 2022-071), disclosed on the SSE website on June 3,
(III) Guarantee
Unit: hundred million yuan Currency: RMB
The company"s external guarantees (excluding guarantees for subsidiaries)
Guarantor"s Guarantee Whether Whether Whether
relationship The party date Guarantee the the Guarantee to Relationship
Guarantee Guarantee Guarantee Collateral Counter
Guarantor with the being (signing expiry guarantee guarantee overdue guarantee with related
amount start date type (if any) guarantee
listed guaranteed date of the date has been is amount for related party
company agreement) fulfilled overdue parties
Nil
Total amount of guarantees incurred during the reporting period (excluding
guarantees to subsidiaries)
Total balance of guarantees at the end of the reporting period (A)
(excluding guarantees to subsidiaries)
Guarantees provided by the company and subsidiaries to its subsidiaries
Total amount of guarantees for subsidiaries during the reporting period 2, 778.29
Total balance of guarantees to subsidiaries at the end of the reporting
period (B)
Total company guarantees (including guarantees to subsidiaries)
Total Guarantee (A+B) 1, 748.38
The ratio of the total guarantee amount to the company"s net assets (%) 330.38
Including:
Amount of guarantee provided for shareholders, actual controllers and
their related parties (C)
Amount of debt guarantee provided directly or indirectly for guaranteed
objects whose asset-liability ratio exceeds 70% (D)
The amount of the part where the total guarantee exceeds 50% of the net
assets (E)
The total amount of the above three guarantees (C+D+E) 1, 386.81
Explanation on possible joint and several liability for unexpired guarantees
Guarantee information During the reporting period, the company"s guarantees were mutual guarantees between the
company and its subsidiaries (sub-subsidiaries).
(IV) Entrusting others to manage cash assets
(1) Overall situation of entrusted financial management
Unit: ten thousand yuan Currency: RMB
Outstanding Overdue uncollected
Type Source of fund Amount
balance amount
Bank financial Self-owned
management funds
Brokerage Self-owned
products funds
Others Self-owned
funds
(2) Individual entrusted financial management
Unit: ten thousand yuan Currency: RMB
Is Amount
there of
Entruste Entruste Whethe
Entruste Entruste any provisio
d d Remuner Annuali Expec Actu r it has
d d Sour entrus n for
financial financial Capital ation zed ted al Actual gone
financial financial ces ted impair
Trustee manage manage invest determina rate of incom gain recover through
manage manage of financi ment (if
ment ment ment tion return e (if or y legal
ment ment funds al plan any)
start maturity method any) loss proced
type amount in the
date date ures
future
Rural Bank 1, 2022/1/2 2022/2/7 Self- 2.65% 0.65 Collecte Yes
Comme wealth 000.00 9 owne d
rcial manage d
Bank ment funds
products
Rural Bank 2, 2022/3/3 2022/4/1 Self- 2.66% 0.19 Collecte Yes
Comme wealth 600.00 1 owne d
rcial manage d
Bank ment funds
products
Bank of Bank 3, 2022/6/9 2022/6/1 Self- 2.64% 2.14 Collecte Yes
China wealth 700.00 7 owne d
manage d
ment funds
products
Postal Bank 1, 2022/6/1 2022/6/1 Self- 1.32% 0.20 Collecte Yes
Savings wealth 120.00 2 7 owne d
Bank manage d
ment funds
products
Industri Bank 1, 2022/7/2 2022/9/9 Self- 3.15% 5.43 Collecte Yes
al Bank wealth 400.00 6 owne d
manage d
ment funds
products
Zhesha Bank 5, 2022/12/ 2023/1/4 Self- 2.30% 0.00 Uncolle Yes
ng Bank wealth 500.00 13 owne cted
manage d
ment funds
products
Bank of Structure 2, 2021/12/ 2022/12/ Self- 3.19% 63.2 Collecte Yes
Ningbo d 000.00 17 14 owne 7 d
deposits d
funds
Bank of Structure 10, 2022/2/1 2022/8/1 Self- 3.45% 171. Collecte Yes
Jiangsu d 000.00 6 6 owne 23 d
deposits d
funds
Bank of Structure 1, 2022/3/1 2023/3/1 Self- 3.00% 0.00 Uncolle Yes
Nanjing d 000.00 6 5 owne cted
deposits d
funds
Guolian Treasury 15, 2022/12/ 2022/12/ Self- 1.79% 0.74 Collecte Yes
Securiti bond 115.60 21 22 owne d
es reverse d
repurcha funds
se
Guolian Treasury 6, 2022/12/ 2022/12/ Self- 2.20% 1.45 Collecte Yes
Securiti bond 000.00 22 26 owne d
es reverse d
repurcha funds
se
Guolian Treasury 7, 2022/12/ 2022/12/ Self- 4.19% 0.80 Collecte Yes
Securiti bond 000.00 26 27 owne d
es reverse d
repurcha funds
se
Guolian Treasury 8, 2022/12/ 2022/12/ Self- 5.17% 8.45 Collecte Yes
Securiti bond 521.00 23 30 owne d
es reverse d
repurcha funds
se
Lianchu Income 6, 2022/2/8 2022/12/ Self- 3.80% 200. Collecte Yes
Securiti certificat 000.00 26 owne 35 d
es e d
funds
Guolian Quote 4, 2022/10/ 2022/10/ Self- 1.50% 0.16 Collecte Yes
Securiti repurcha 004.30 10 11 owne d
es se d
funds
Guolian Quote 4, 2022/10/ 2022/10/ Self- 1.50% 0.16 Collecte Yes
Securiti repurcha 004.40 11 12 owne d
es se d
funds
Chapter 7 Share Changes and Shareholders
I. Changes in Shares
During the reporting period, the total number of shares and share capital structure of the
company remained unchanged.
II. Securities Issuance and Listing
(I) Securities issuance as of the reporting period
Unit: share Currency: RMB
Types of Issue The number
stocks and price of
Issuance Issue Transaction
their (or Listing date transactions
date quantity end date
derivative interest approved
securities rate) for listing
Bonds (including corporate bonds, corporate bonds, and non-financial corporate bond financing
instruments)
Short-term
bond
yuan
Short-term
bond
yuan
Explanation on securities issuance as of the reporting period (for bonds with different interest
rates during the duration, please explain separately) :
On November 10, 2021, and November 26, 2021, the company convened the 23rd
meeting of the eighth Board of Directors and the second extraordinary general meeting of
shareholders in 2021. The meetings reviewed and approved the Proposal on Registering
and Issuing Short-Term Financing Bonds, agreeing that the company would apply to the
China Interbank Market Dealers Association to register and issue short-term financing bonds
with an amount not exceeding RMB 3 billion (including 3 billion yuan).
On March 11, 2022, the company received the Acceptance of Registration Notice
(Zhong Shi Xie Zhu [2022] CP14) from the Dealers Association, stating that the Dealers
Association accepted the registration of the company"s short-term financing bonds with a
registered amount of 3 billion yuan. The registered quota is valid for a period of 2 years from
the date of the notice.
On May 31, 2022, the company issued the first tranche of short-term financing bonds
for the year 2022 in the national interbank market. The bonds have a maturity of 1 year, with
a total issuance amount of 1 billion yuan and an issuance interest rate of 3.03%.
On July 22, 2022, the company issued the second tranche of short-term financing bonds
for the year 2022 in the national interbank market. The bonds have a maturity of 1 year, with
a total issuance amount of 1 billion yuan and an issuance interest rate of 3.18%.
III. Shareholders and actual controllers
(I) Total number of shareholders
Total number of ordinary shareholders as of the end of the reporting period 114, 006
(accounts)
The total number of ordinary shareholders at the end of the previous month 113, 210
before the annual report disclosure date (accounts)
Total number of preferred shareholders with voting rights restored as of 0
the end of the reporting period (accounts)
The total number of preference shareholders whose voting rights have 0
been restored at the end of the previous month before the annual report
disclosure date (accounts)
(II) Table of shareholdings of the top ten shareholders and top ten tradable shareholders (or shareholders not subject to sales
restrictions) as of the end of the reporting period
Unit: share
Shareholdings of the top ten shareholders
Shareholder"s name Changes Number of Pledge, Mark or Freeze
Number of
during the shares held at Ratio Situation Shareholder
restricted
(Full name) reporting the end of the (%) Share nature
shares held Quantity
period period status
Domestic non-
Hengneng Investment (Dalian) Co., Ltd. 0 1, 498, 478, 926 21.29 0 None 0 state-owned
legal person
Domestic non-
Hengli Group Co., Ltd. -155, 000, 000 1, 243, 172, 342 17.66 0 Pledged state-owned
legal person
Hengli Group - Southwest Securities－21
Hengli E1 Guarantee and Trust Property 155, 000, 000 857, 440, 000 12.18 0 None 0 Other
Account
Domestic
Fan Hongwei -94, 611, 800 791, 494, 169 11.24 0 None 0
natural person
Foreign legal
Tak Shing Li International Holdings Ltd. 0 732, 711, 668 10.41 0 None 0
person
Hong Kong Securities Clearing Company
-1, 413, 344 117, 237, 227 1.67 0 Unknown 0 Other
Limited
Xuanyuan Private Equity Fund Investment
Management (Guangdong) Co., Ltd. -
Xuanyuan Yuanbao No. 16 Private
Securities Investment Fund
Xuanyuan Private Equity Fund Investment
Management (Guangdong) Co., Ltd. -
Xuanyuan Yuanbao No. 15 Private
Securities Investment Fund
Dalian State-owned Assets Investment and State-owned
Operation Group Co., Ltd. legal entity
Xuanyuan Private Equity Fund Investment
Management (Guangdong) Co., Ltd. -
Xuanyuan Yuanbao No. 17 Private Equity
Securities Investment Fund
Shareholdings of the top ten shareholders not subject to sales restrictions
Shareholder"s name Number of unrestricted tradable shares Share type and quantity
held Type Quantity
Hengneng Investment (Dalian) Co., Ltd. 1, 498, 478, 926 Renminbi ordinary shares 1, 498, 478, 926
Hengli Group Co., Ltd. 1, 243, 172, 342 Renminbi ordinary shares 1, 243, 172, 342
Hengli Group－Southwest Securities－21 Hengli E1
Guarantee and Trust Property Account
Fan Hongwei 791, 494, 169 Renminbi ordinary shares 791, 494, 169
Tak Shing Li International Holdings Ltd. 732, 711, 668 Renminbi ordinary shares 732, 711, 668
Hong Kong Securities Clearing Company Limited 117, 237, 227 Renminbi ordinary shares 117, 237, 227
Xuanyuan Private Equity Fund Investment Management
(Guangdong) Co., Ltd. - Xuanyuan Yuanbao No. 16 Private 83, 666, 983 Renminbi ordinary shares 83, 666, 983
Securities Investment Fund
Xuanyuan Private Equity Fund Investment Management
(Guangdong) Co., Ltd. - Xuanyuan Yuanbao No. 15 Private 75, 124, 294 Renminbi ordinary shares 75, 124, 294
Securities Investment Fund
Dalian State-owned Assets Investment and Operation Group
Co., Ltd.
Xuanyuan Private Equity Fund Investment Management
(Guangdong) Co., Ltd. - Xuanyuan Yuanbao No. 17 Private 67, 163, 623 Renminbi ordinary shares 67, 163, 623
Equity Securities Investment Fund
Explanation of the repurchase accounts among the top ten As of the end of the reporting period, none of the top ten shareholders had a corporate
shareholders repurchase account.
When Hengli Group, the controlling shareholder of the company, conducted a non-public
issuance of exchangeable corporate bonds, it established a guarantee and trust account
through the trustee, using a portion of Hengli Petrochemical"s legally owned A-share
stocks as collateral and trust property. The account is held in the name of Southwest
Explanation on proxy voting rights, proxy voting rights and
Securities Co., Ltd. and is registered as the securities holder in the company"s shareholder
waiver of voting rights of the above-mentioned shareholders
register under the name "Hengli Group-Southwest Securities-21 Hengli E1 Guarantee and
Trust Property Account." When exercising voting rights, Southwest Securities Co., Ltd. will
act in accordance with the opinions of Hengli Group, while ensuring the interests of the
holders of the exchangeable bonds are not compromised.
Explanation on the related relationship or concerted action of Hengli Group, Hengneng Investment, Fan Hongwei and Dechengli are parties acting in
the above-mentioned shareholders concert with each other; the relationship between other shareholders is unknown.
Explanation on preferred stockholders with restored voting
During the reporting period, the company had no preferred shareholders.
rights and the number of shares held
IV. Controlling Shareholders and Actual Controllers
(I) Controlling Shareholders
Name Hengli Group Co., Ltd.
The person in charge or Chen Jianhua
legal representative of the
entity
Date of establishment January 16, 2002
Main operating business Production and sales of needle textiles and paper packaging
materials (excluding printing) ; sales of chemical fiber raw materials,
plastics, mechanical and electrical equipment, instruments, ash
residue, purified terephthalic acid (PTA), and monoethylene glycol
(MEG) ; industrial investment; research and development of new
textile raw materials products; self-operated and agency import and
export of various commodities and technologies; limited branch
operations include thermal power generation and steam production
and supply. (Business activities in projects that require approval by
law can only be conducted after obtaining approvals from relevant
departments).
Shareholdings of other Hengli Group is the controlling shareholder of the listed company
domestic and foreign listed Guangdong Songfa Ceramics Co., Ltd. (stock code: 603268) and the
companies controlled and listed company Suzhou Wujiang Tongli Lake Tourist Resort Co., Ltd.
participated in during the (stock code: 834199).
reporting period
Other information Nil
company and the controlling shareholder
Note :
When calculating the shareholding ratio of the controlling shareholder Hengli Group, the
number of shares held indirectly through the "Hengli Group-Southwest Securities-21 Hengli
E1 Guarantee and Trust Property Account" is included.
(II) Actual controller
Name Chen Jianhua and Fan Hongwei (Spouse)
Nationality China
Whether to obtain the right of Nil
residence in other countries or
regions
Main occupation and position Chen Jianhua is the chairman and general manager of
Hengli Group Co., Ltd., the controlling shareholder of the
listed company; Fan Hongwei is the current chairman of the
listed company
Domestic and foreign listed Chen Jianhua and Fan Hongwei are the actual controllers of
companies that have been the listed company Guangdong Songfa Ceramics Co., Ltd.
controlled in the past 10 years (stock code: 603268) and the listed company Suzhou
Wujiang Tongli Lake Tourist Resort Co., Ltd. (stock code:
company and the actual controller
V. Other legal person shareholders holding more than 10% of the shares
Unit: ten thousand yuan Currency: RMB
Main
The person in
operating
Legal entity charge or Date of
Registere business or
shareholder legal establishmen Organization Code
d capital managemen
name representativ t
t activities,
e of the entity
etc.
Hengneng Fan Hongwei 2014-03-06 91210244089086145 Project
Investment 2 investment
(Dalian) 50, 000 (excluding
Co., Ltd. special
approval)
Tak Shing Fan Hongwei 2003-08-27 Registration number: Mainly
Li 859250 engaged in
Internationa 500 trade and
l Holdings investment
Ltd. business
Other Hengneng Investment and Tak Shing Li are persons acting in concert with Hengli
information Group, the controlling shareholder of the company
VI. Specific implementation of share repurchase during the reporting period
Unit: hundred million yuan Currency: RMB
Name of share repurchase plan Share repurchase in the third phase
Disclosure time of share repurchase November 6, 2021
plan
The number of shares to be 0.41%
repurchased and the proportion of
the total share capital (%)
Proposed repurchase amount 5-10
Proposed repurchase period Within 12 months from the date when the board of
directors considers and approves the share
repurchase plan (November 5, 2021)
Repurchase purpose For Employee Stock Ownership Plans
Repurchased quantity (share) 38, 692, 489
Ratio (%) of the repurchased quantity Not applicable
to the underlying stocks involved in
the equity incentive plan (if any)
The progress of the company"s None
reduction of repurchased shares by
means of centralized bidding
transactions
Name of share repurchase plan Share repurchase in the fourth phase
Disclosure time of share repurchase March 10, 2022
plan
The number of shares to be 0.47-0.71
repurchased and the proportion of
the total share capital (%)
Proposed repurchase amount 10-15
Proposed repurchase period Within 12 months from the date when the board of
directors considers and approves the share
repurchase plan (March 9, 2022)
Repurchase purpose For Employee Stock Ownership Plans
Repurchased quantity (share) 44, 991, 970
Ratio (%) of the repurchased quantity Not applicable
to the underlying stocks involved in
the equity incentive plan (if any)
The progress of the company"s None
reduction of repurchased shares by
means of centralized bidding
transactions
Chapter 8 Information of Bonds
I. Corporate bonds, company bonds and non-financial corporate debt financing
instruments
(I) Debt financing instruments for non-financial enterprises in the inter-bank bond
market
Unit: hundred million yuan Currency: RMB
Tr Wheth
a er
Inve
di there
stor
n is a
Suit
Paymen g risk of
Abb C Interes abilit
Valu Bond t of Tradin M termin
Bond revi o Issuan Maturit t y
e balanc principal g e ation
name atio d ce date y date rate(% Arra
date e and places c of
n e ) nge
interest h listing
men
a transa
ts (if
ni ctions
any)
s
m
Hen 4 time
Phase
gli 2 repaym China
I
Petr 2 2022 ent of Interb
Short- 2022- 2023-
och 8 -06- 10 3.03 principal ank No
term 05-31 06-01
emi 0 01 and Marke
Financ
cal 2 interest t
ing
CP 5 at
Bonds
Hen 4 time
Phase
gli 2 repaym China
II
Petr 2 2022 ent of Interb
Short- 2022- 2023-
och 8 -07- 10 3.18 principal ank No
Term 07-22 07-25
emi 0 25 and Marke
Financ
cal 3 interest t
ing
CP 4 at
Bonds
Name of
Intermediary name Office address Signing Contact person Contact number
Accountant
China Merchants China Merchants Sun Ziqi, Guo 0755-88026087
Bank Co., Ltd. Bank Building, No. Wei or 0411-
Avenue, Shenzhen
Beijing Tianyuan Floor 10, Block B, Huang Jingya, 010-57763888
Law Firm Pacific Insurance Sun Chunyan
Building, No. 28
Fengsheng Hutong,
Xicheng District,
Beijing
Zhonghui Certified Room 601, Building A, Han Jian, Han Jian 0571-88879999
Public Accountants Hualian Times Fang Sai
(Special General Building, No. 8 Xinye
Partnership) Road, Jianggan
District, Hangzhou
Oriental Jincheng Floor 12, Block C, Guo Zhebiao 010-62299800
International Credit Zhaotai International
Rating Co., Ltd. Center, No. 3 Chaowai
West Street,
Chaoyang District,
Beijing
Unit: hundred million yuan Currency: RMB
Whether it is
Operation consistent with
Rectification
Total of special the purpose,
of illegal
amount Amount Unused account use plan and
Bond name use of
of funds used amount for raised other
raised funds
raised funds (if agreements
(if any)
any) promised in
the prospectus
Petrochemical 10 10 0 Yes
CP001
Petrochemical 10 10 0 yes
CP002
(II) Accounting Data and Financial Indicators of the Company in the Previous Two
Years by the End of the Reporting Period
Unit: ten thousand yuan Currency: RMB
YOY Reason of
Key indicators 2022 2021
changes(%) changes
Net profit excluding
extraordinary profit and loss
Current ratio 0.61 0.67 -8.96
Quick ratio 0.25 0.24 4.17
Debt-to-assets ratio (%) 78.08 72.75 5.33
Total debt-to-EBITDA ratio 0.09 0.22 -58.92
Interest coverage ratio 1.36 4.93 -72.41
Cash flow interest coverage
ratio
EBITDA-to-interest coverage
ratio
Loan repayment rate (%) 100.00 100.00
Interest coverage rate (%) 100.00 100.00
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