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On the evening of August 16, Hengli Petrochemical released its semi-annual report for 2021. In the first half of the year, the company achieved operating revenue of 104.574 billion yuan, a year-on-year increase of 55.25% ； The net profit attributable to the shareholders of the listed company amounted to 8.642 billion yuan, representing a year-on-year increase of 56.65%. It is worth noting that Hengli Petrochemical’s semi-annual profit exceeded 8.5 billion yuan for the first time, reaching a new historical high. Enhancing the advantages of the \"large-scale chemical industry\" platform: As one of the leading enterprises in China that was among the first to pursue a strategic development of the entire polyester materials supply chain, Hengli Petrochemical has made significant efforts in recent years to expand its high-end production capabilities throughout the upstream and downstream stages. This effort aims to create a world-class, integrated supply chain model that encompasses processes ranging from crude oil to aromatics, olefins to PTA, and from ethylene glycol to polyester, as well as various applications such as consumer textiles, industrial fibers, films, and plastics. Regarding the reasons for the growth in performance, Hengli Petrochemical stated that thanks to rising crude oil prices and an improvement in end-demand, coupled with the return of overseas orders, the prices and price differences of various key chemical products produced by upstream refining, coal-based chemical, and ethylene manufacturing facilities remained within a strong range, thereby supporting the stable growth of the company’s performance. At the same time, chemical new material products in the downstream sector of this industry have also seen a rapid improvement in their profitability, driven by falling raw material costs and a recovery in demand from end-users. During the reporting period, Hengli Petrochemical continued to strengthen the role of its upstream \"large-scale chemical\" platform, which is based on the industrial models of \"refining and chemical processing + ethylene + coal chemical processing.\" It made full use of the comprehensive raw material resources resulting from the integration of oil and coal chemical processes, as well as the advantages associated with system integration, in order to accelerate the development of projects related to new chemical materials. It also worked to speed up the planning and improvement of the deep-processing capabilities and the ability to produce new materials within the C2-C4 olefin industry chain. Hengli Petrochemical stated that in the next phase, the company will leverage its existing raw material processing capabilities, options for purchasing external resources, and potential for optimizing its production facilities. It will aim to match the standards of those in the new materials sector that possess scale advantages and leadership positions, focusing on the development of \"new consumption\" and \"advanced technology\" areas. The company plans to advance key areas related to breakthroughs in new materials, by developing markets for high-growth, high-potential new materials such as those in the degradable materials industry, lithium battery industry, photovoltaic industry, and new types of engineering plastics industry. Through continuous system technology upgrades, process optimization, and the construction of further processing facilities, the company will expedite the planning and enhancement of its deep-processing capabilities within the C2-C4 olefins industrial chain. This will further strengthen the “large-scale chemical industry” platform’s role in driving and supporting the development of downstream new materials industries. Focusing on the new materials sector, Fan Hongwei, Chairman of Hengli Petrochemical, said in an interview with China Securities Journal that after the company’s industrial chain has been extended, its priority is to fully leverage the advantages of its upstream industrial chain, broaden and deepen the downstream industrial chain, and thereby establish new competitive edges. This requires sustained efforts in the field of chemical new materials, while also promoting the horizontal development and expansion of new technologies, new processes, and new products within similar areas; this will help to increase the research and development focus, technological content, and proportion of technology in the company’s downstream business segments. At present, Hengli Petrochemical’s downstream new materials business segment is primarily focused on areas that require significant research and development efforts, such as differentiated polyester fiber products, functional film products, engineering plastic products, and PBS/PBAT biodegradable new materials. In the field of differentiated polyester fibers, Hengke New Materials, a subsidiary of the company, successfully put into operation a 600,000-ton polyester production facility as part of the Hengke Phase II project aimed at producing civilian silk fibers, last year in the second half of the year. The subsequent spinning facilities were completed in the first half of this year, enabling the company to increase its production capacity by 250,000 tons of DTY and 350,000 tons of POY. At the same time, Hengli Petrochemical has launched the construction of a new plant for producing 1.5 million tons of green, multi-functional textile materials at Jiangsu Xuanda (Hengke Phase III), thereby further enhancing the technical capabilities, R&D strength, and product value added of the company’s civilian polyester fiber business segment. In addition, the new production capacity of 1.2 million tons of civilian silk at Deli Phase II and 1.4 million tons of industrial silk at the Suzhou headquarters is also in the project planning stage, with construction set to begin promptly once the approval processes or project implementation conditions are met. In the field of polyester civilian and industrial fibers, during the reporting period, its subsidiary Deli Fiber began mass production of ultra-fine fibers with a filament thickness of 0.2 deniers (D), in a specification of 15D/72f; these are among the finest ultra-fine fibers to be produced in mass volume in China ； Its subsidiary, Hengke New Materials, has independently developed ultra-fine 5D/6f fibers for high-density fabrics, and the total density of these fibers is the lowest in the country. In addition, the company’s Hengli Chemical Fibers project, with an annual production capacity of 200,000 tons of industrial fibers, has been fully operational. The products produced there are used for the first time in high-end industries such as oil and gas extraction and offshore engineering, thereby breaking the technical monopolies in this sector. In the fields of functional films and engineering plastics, its subsidiary, Kanghui New Materials, has seen a continuous improvement in its competitive strength in the area of mid-to-high-end functional films and new plastic materials, and has now reached the top tier in China. At present, Kanghui New Materials has a production capacity of 240,000 tons per year for PBT engineering plastics at its Yingkou facility, making it the largest PBT producer in China. It also has a capacity of 266,000 tons per year for BOPET functional films. By the end of this year, three additional film production lines are set to come online, raising the total production capacity to 385,000 tons ； It possesses the largest domestic production capacity for PBAT, with an annual output of 33,000 tons; this facility was put into operation at the end of last year and reached full capacity at the beginning of this year, thanks to autonomous technology. Thanks to its advantages such as recyclability, ease of recovery, non-toxicity, and high safety levels, this new material is perfectly suitable for use in the demanding applications within the biodegradable food-grade sector. Continuing to advance project construction: To make better use of the advantages of integrated refining and chemical production, Hengli Petrochemical continues to push forward with project construction, constantly optimizing and upgrading its industrial model in order to strengthen and expand its production capacity across all stages. It is worth noting that in order to further consolidate and expand its advantages in the field of new materials, Hengli Petrochemical has launched several large-scale project constructions. For example, building on its Yingkou facility, Kanghui New Materials is accelerating the planning of the overall design and construction of its facilities in Fenhu, Suzhou, and Kunshan in Jiangsu Province. Once these two major production facilities are fully operational, it will be equivalent to creating two \"upgraded versions of Kanghui New Materials,\" and the company will become the world’s largest manufacturing base for functional films, functional plastics, and biodegradable new materials. During the reporting period, in line with the progress of the preliminary preparations for its overall production capacity plan, Hengli Petrochemical launched the Kanghui Dalian New Materials project for the production of 450,000 tons of PBS-based biodegradable plastics. The total investment in this project is 1.798 billion yuan, and it is aimed at establishing a production capacity of 450,000 tons of PBS/PBAT biodegradable materials. Upon completion of this project, it will effectively expand the production capacity and scale of Hengli Petrochemical’s biodegradable new materials business, thereby increasing its market share in the biodegradable plastics sector. Hengli Petrochemical has thoroughly analyzed the demand trends for new energy materials in the chemical industry. Leveraging the strategic support of its chemical platform as well as its years of experience in the high-end membrane market, it has quickly expanded its operations into the field of lithium battery separators. Currently, the company has substantially commenced all preparatory work for expanding the production capacity of its new lithium battery separator products. In addition, the company has also launched a project in Jiangsu Kanghui New Materials to produce 800,000 tons of functional polyester films and functional plastics per year, with a total investment of 11.12 billion yuan. The construction scope includes 470,000 tons of high-end functional polyester films, 100,000 tons of special functional films, 150,000 tons of modified PBT, and 80,000 tons of modified PBAT.