2022 Annual Report of Hengyi Petrochemical Co., Ltd.
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Chairman’s Statements
Looking back on 2022, we may find that the external environment remained severe, the international situation was
changing constantly, the geopolitical conditions in the world were very complex, and the global economy was facing
significant downward pressures. Under the disturbance of multiple unfavorable factors, the business operation of the
Company faced a critical test, and the petrochemical chemical fiber industry that the Company had been engaged in also
experienced a huge challenge. Only after polishing can a piece of jade be finer. Facing this harsh test, all persons of
Hengyi Petrochemical were full of confidence, worked together to overcome the difficulties and demonstrated high
business vitality and development resilience, so that the Company can steadily enter the next stage of development.
Guided by the strategy, we have significant advantages
This year, we continued implementing the strategic deployment of "refinery, polyester and polyamide industries" without
wavering. The Phase I of the refining-petrochemical project in Brunei was operated steadily, and won the China
Construction Engineering Luban Prize. It was hailed by the People's Daily as a model for building an Asia-Pacific
community with a shared future. The investment and construction of the 1.2-mtpa Caprolactam-Polyamide Integration
and Supporting Project have been started in China, and the 500,000-tpa New-type Functional Fiber Project was
successfully put into production; the production capacity of differentiated high-end polyester products was gradually
released, and the integration advantages of the whole industrial chain were prominent, laying a solid foundation for the
high-quality development of Hengyi.
Based on the R&D, we are empowered by innovation
In 2022, the Company continued adhering to the innovation-driven development. With our long-term and unremitting
efforts and down-to-earth attitude, the Company achieved significant technological development results this year: The
green and environmentally-friendly polyester product "Eticont" achieved large-scale production; the production of flame-
retardant and antibacterial products steadily increased; the development of functional composite materials, such as
cationic dyeable fiber, was taking shape and gradually advancing industrialization. Besides, the Company continued
developing and researching cutting-edge processes and technologies in caprolactam, polyamide and other fields, and our
products continued moving towards high-end and differentiation, adding brightness to the innovative development of
Hengyi.
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Digital-intelligence integration improving the quality and efficiency
This year, the Company continued focusing on the transformation of industry digitization, networking and intelligence,
and the construction of the visualized "Hengyi Brain" Phase II project was being orderly promoted; besides, on the basis
of building the first polyester factory with full-process intelligent storage and transportation system in China, the
Company further promoted the application of the equipment management system, and thus the overall level of intelligence
of the Company rose again accordingly. With the introduction and optimization of the automated and intelligent
equipment, the labor costs were reduced and the overall operational efficiency was significantly improved, enhancing the
sustainability of the development of the Company.
The continuous share repurchases give us confidence
This year, based on our current favorable business background and the expected continuous growth with the project
production in the future, we continued firmly implementing our repurchase plan. Up to now, Hengyi Petrochemical has
accumulated a repurchase amount of approximately RMB 2.034 billion through the third-phase repurchase plan. The
continuous share repurchase plan not only injected a shot of energy into the market, but also gave us confidence in the
future development of Hengyi.
The cold winter is passing, and the warm spring is coming. With the gradual release of the effects of national economic
stabilization policies, our confidence in the market has been significantly boosted, the downstream consumer demand is
gradually recovering, and positive signals of a rebound in the petrochemical and chemical fiber industry have emerged.
The climate is extremely cold, but the verdant pine trees have not withered, and the vast blue sea is even clearer. The test
of the cold winter makes all Hengyi people more confident that the future is foreseeable. We will continue maintaining
our composure, take the initiative, and firmly grasp the next important opportunity to face and overcome difficulties,
demonstrate high business vitality and development resilience, steadily entering the next stage of development of the
Company.
In 2023, we will follow the spirit of the 20 th National Congress of the CPC, continue to fully leverage the advantages of
upstream and downstream industry integration, and strive to build the Company into a source and a leading place for new
technologies and products, further enhancing the profitability and risk resistance ability of the Company. The Company
will further increase investment in R&D, adhere to the guidance of "green manufacturing" and "circular economy", and
continue to focus on high-end and differentiated product development and achievement transformation of three major
themes, i.e., green environmental protection, functional, and bio-based, so as to accumulate energy for the technological
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
innovation and development of Hengyi, striving to achieve the transformation from an "Industrial He ngyi" to a
"Technological Hengyi".
Facing the whole country and the world, Hengyi has always been rooted in China. Following the “headquarters + scientific
research + base" trinity model, we have been actively creating one platform, two centers, and six bases, and building a
market pattern that "backing on the Yangtze River Delta, the Pearl River Delta, and the Bohai Bay, and facing the blue
sea", striving to create high-quality development models. The year of 2023 is the tenth anniversary of the "the Belt and
Road" initiative. The Company will continue to actively respond to the "the Belt and Road" initiative, steadily improve
the operating efficiency of the Brunei Phase I Project, and accelerate the construction of the Brunei Phase II Project, being
a firm practitioner of the "double cycle" development strategy.
We will do our best every day and all the way, and we believe there will be more beautiful scenery ahead. Nowadays, the
pain and haze brought about by the external environment are dissipating, and the dawn of hope is now in sight. We will
continue to maintain our strategic composure, seize the industrial opportunities of new technologies and products,
embrace new changes, achieve new leaps, and draw a new high-quality development blueprint for Hengyi Petrochemical
with a forward-looking vision, rock-solid confidence, fearless courage, and seize every moment! Let’s strive to create
new and greater value for our country, our society, our shareholders, and our employees!
President:
April 19, 2023
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Section I Important Notes, Contents and Definitions
The Board of Directors (BOD), Board of Supervisors (BOS), directors,
supervisors and senior managers of the Company guarantee that the contents of
the 2022 Annual Report (hereinafter referred to as "the Re port") are true,
accurate and complete, free of false records, misleading statements or major
omissions, and that they shall bear relevant individual and joint and several legal
liabilities.
The financial statements of the Report have been audited by Zhongxinghua
Certified Public Accountants LLP, and a standard unqualified audit report has
been issued.
Qiu Yibo, the head of the Company, Fang Xianshui, the person in charge of the
accounting work, and Yu Zhicheng, the head of the accounting body (accountant
in charge), declared that they would ensure the truthfulness, accuracy and
completeness of the financial statements in this Annual Report. We would ensure
the truthfulness, accuracy and completeness of the financial statements in this
Annual Report.
The Report has been reviewed and approved at the twenty-eighth meeting of the
eleventh session of the BOD of the Company. All directors have attended the
Board meeting at which this Report was considered.
According to the plan of the Company, no cash dividends or bonus shares will be
distributed, and no public reserve funds will be converted into share capital.
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Forward-looking statements such as future plans, development strategies,
industry discussions and prospects involved in this Report do not constitute the
substantive commitment of the Company to investors, and investors are advised
to pay attention to investment risks. For possible risks in the operation and
development of the Company, please refer to (II) "Possible Risks and
Countermeasures in the Future" of “XI. Prospects for the Future Development of
the Company" under "Section III Management Discussion and Analysis".
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Contents
Section I Important Notes, Contents and Definitions .................................................................. 5
Section II Company Profile and Main Financial Indicators........................................................ 12
Section III Management Discussion and Analysis ....................................................................... 19
Section IV Corporate Governance .............................................................................................. 124
Section V Environmental and Social Responsibilities .............................................................. 166
Section VI Important Matters ..................................................................................................... 189
Section VII Changes in Shares and Shareholders ........................................................................ 220
Section VIII Preference Shares ..................................................................................................... 233
Section IX Bonds ........................................................................................................................ 234
Section X Financial Report ....................................................................................................... 244
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
List of Documents for Reference
1. Accounting statements signed and stamped by the legal representative, the financial principal
and the head of the accounting body;
2. The original audit report stamped by the accounting firm and signed and stamped by the certified
public accountant;
3. All original documents and original announcements of the Company publicly disclosed on the
website designated by CSRC during the current period.
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Definitions
Item Refers to Definition
Hengyi
Petrochemical/Company/the Refers to Hengyi Petrochemical Co., Ltd.
Company
SZSE/the Exchange Refers to Shenzhen Stock Exchange
Hengyi Group Refers to Zhejiang Hengyi Group Co., Ltd.
Hengyi Limited Refers to Zhejiang Hengyi Petrochemical Co., Ltd.
Hengyi Brunei Refers to Hengyi Industries Sdn. Bhd.
Zhejiang Yisheng Refers to Zhejiang Yisheng Petrochemical Co., Ltd.
Yisheng New Materials Refers to Zhejiang Yisheng New Materials Co., Ltd.
Yisheng Dahua Refers to Yisheng Dahua Petrochemical Co., Ltd.
Hainan Yisheng Refers to Hainan Yisheng Petrochemical Co., Ltd.
Hengyi Polymer Refers to Zhejiang Hengyi Polymer Co., Ltd.
Hengyi High-Tech Refers to Zhejiang Hengyi High-Tech Materials Co., Ltd.
Haining New Materials Refers to Haining Hengyi New Materials Co., Ltd.
Haining Thermal Power Refers to Haining Hengyi Thermal Power Co., Ltd.
Taicang Yifeng Refers to Taicang Yifeng Chemical Fiber Co., Ltd.
Jiaxing Yipeng Refers to Jiaxing Yipeng Chemical Fiber Co., Ltd.
Shuangtu New Materials Refers to Zhejiang Shuangtu New Materials Co., Ltd.
Hangzhou Yichen Refers to Hangzhou Yichen Chemical Fiber Co., Ltd.
Suqian Yida Refers to Suqian Yida New Materials Co., Ltd.
Ningbo Hengyi Trading Refers to Ningbo Hengyi Trading Co., Ltd.
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Item Refers to Definition
Hong Kong Yisheng Refers to Hong Kong Yisheng Co., Ltd.
Hengyi Singapore Refers to Hengyi Industries International (Singapore) Co., Ltd.
Hangzhou Yijing Refers to Hangzhou Yijing Chemical Fiber Co., Ltd.
Hengyi Caprolactam Refers to Zhejiang Baling Hengyi Caprolactam Co., Ltd.
China Zheshang Bank Refers to China Zheshang Bank Co., Ltd.
Yisheng Investment Refers to Dalian Yisheng Investment Co., Ltd.
Hong Kong Tianyi Refers to Hong Kong Tianyi International Holding Co., Ltd.
Hengyi Investment Refers to Hangzhou Hengyi Investment Co., Ltd.
Hengqi Environmental Haining Hengqi Environmental Protection Technology
Refers to
Protection Co., Ltd.
Hengyi Polyamide Refers to Zhejiang Hengyi Polyamide Co., Ltd.
Brunei Project, PMB The petrochemical project invested and constructed by
Refers to
Petrochemical Project the Company in Brunei
Paraxylene, a colorless and transparent liquid. It is used
PX Refers to
to produce plastics, polyester fibers and films.
Purified terephthalic acid, mainly used to produce PET,
can also be made into engineering polyester plastics,
PTA Refers to
and be used as the raw material of plasticizer and dye
intermediate.
Isophthalic acid, mainly used in the production of alkyd
resin, unsaturated polyester resin and other polymers
PIA Refers to and plasticizers, as well as in the production of film
finishers, coatings, polyester fiber dyeing modifiers and
medicines.
Ethylene glycol, mainly used to produce polyester fiber,
MEG Refers to antifreeze, unsaturated polyester resin, lubricant,
plasticizers, nonionic surfactant and explosives, etc.
Polyethylene terephthalate. It is a fiber-forming
PET and polyester Refers to polymer made from PTA and MEG through direct
esterification and continuous polycondensation
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Item Refers to Definition
reaction.
POY Refers to Polyester pre-oriented yarn or partially oriented yarn
FDY Refers to Fully drawn yarn or polyester drawn yarn
Drawn textured yarn, also known as polyester textured
DTY Refers to
yarn
Caprolactam, mainly used to produce polyamide fiber,
CPL Refers to engineering plastics, plastic film, etc. It is widely used
in industrial and civil fields.
A variety that is innovative in technology or
Differentiated yarn Refers to performance or has some characteristics that is different
from traditional yarns.
RMB 1 and RMB 10,000 Refers to RMB 1 and RMB 10,000
Reporting period / during the
reporting period / this Refers to From January 1, 2022 to December 31, 2022
reporting period
End of reporting period/end
of the current reporting Refers to As of December 31, 2022
period
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Section II Company Profile and Main Financial Indicators
I. Company Profile
Stock abbreviation Hengyi Petrochemical Stock code 000703
Stock abbreviation before the
None
change (if any)
Stock Exchange Shenzhen Stock Exchange
Chinese name 恒逸石化股份有限公司
Chinese abbreviation 恒逸石化
Foreign name (if any) HENGYI PETROCHEMICAL CO., LTD.
Foreign abbreviation (if any) HYPC
Legal representative Qiu Yibo
4/F, Building 2, International Science and Technology Park, No.
Registered address 5 Zhongma Avenue, China-Malaysia Qinzhou Industrial Park,
Qinzhou Port Area, China (Guangxi) Pilot Free Trade Zone
Postal code of the registered
535000
address
The original registered address of the Company, No. G, F7, Haifu
Change history of the Building, No. 16 West Beihai Avenue, Beihai City, Guangxi
Company’s registered address Zhuang Autonomous Region, was changed to current registered
address of the Company in August 2022.
Building 3, Hengyi Nan’an Mingzhu, 260 North Shixin Road,
Office address
Xiaoshan District, Hangzhou City, Zhejiang Province
Postal code of the office
311215
address
Company website http://www.hengyishihua.com
E-mail hysh@hengyi.com
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
II. Contact Person and Contact Information
Secretary of the BOD Securities Representative
Name Zheng Xingang Chen Shasha
BOD Office, 16/F, Building 3, Nan’an BOD Office, 16/F, Building 3, Nan’an
Contact Mingzhu, No. 260 North Shixin Road, Mingzhu, No. 260 North Shixin Road,
address Xiaoshan District, Hangzhou City, Xiaoshan District, Hangzhou City,
Zhejiang Province Zhejiang Province
Tel (0571) 83871991 (0571) 83871991
Fax (0571) 83871992 (0571) 83871992
E-mail hysh@hengyi.com hysh@hengyi.com
III. Information Disclosure and Place of Preparation
The website of the Stock Exchange
where the Company discloses the Shenzhen Stock Exchange: http://www.szse.cn
Annual Report
Name and website of the media through China Securities Journal, STCN, Shanghai Securities
which the Company discloses the Annual News and Securities Daily; CNINFO:
Report http://www.cninfo.com.cn
Place where the Company’s Annual
Office of the BOD of Hengyi Petrochemical Co., Ltd.
Report is prepared
IV. Registration Changes
Unified Social Credit Code 9145050019822966X4
Changes in the Company’s main business since listing (if any) No changes
Previous changes of controlling shareholders (if any) No changes
V. Other Relevant Information
Accounting firm engaged by the Company
Name of accounting firm Zhongxinghua Certified Public Accountants LLP
Office address of accounting 20/F, Tower B, Lize SOHO, 20 Lize Road, Fengtai District,
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
firm Beijing
Name of signing accountants Liu Hongyue, Wang Guohai
Sponsor institutions engaged by the Company to perform continuous supervision duties
during the reporting period
Continuous
Name of sponsor Office address of sponsor Name of sponsor
supervision
institution institution representative
period
48 Liangmaqiao Road, Chaoyang Mao Zongxuan January 2022 to
CITIC Securities Co., Ltd.
District, Beijing and Zhu Wei December 2022
Financial consultants engaged by the Company to perform continuous supervision duties
during the reporting period
□ Applicable Not applicable
VI. Main Accounting Data and Financial Indicators
Whether the Company needs to retroactively adjust or restate the accounting data of previous
years
Yes □ No
Reason for retrospective adjustment or restatement
Changes in accounting policies
Increase/decr
ease of this
2021 2020
year over the
2022 previous year
After
Before adjustment After adjustment Before adjustment After adjustment
adjustment
Operating
income 152,050,274,944.64 128,979,539,693.27 129,666,931,795.26 17.26% 86,429,630,191.87 86,429,630,191.87
(RMB)
Net profit
attributable to
shareholders
-1,079,547,699.72 3,408,043,143.47 3,378,328,289.28 -131.96% 3,071,998,839.75 3,071,998,839.75
of listed
companies
(RMB)
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Net profit after
deducting
non-recurring
profits and
losses
-1,092,334,520.95 2,758,543,282.50 2,728,828,428.31 -140.03% 2,479,101,027.63 2,479,101,027.63
attributable to
shareholders
of listed
companies
(RMB)
Net cash flow
from operating
2,705,533,483.36 7,754,871,519.56 7,720,521,139.40 -64.96% 5,013,772,777.95 5,013,772,777.95
activities
(RMB)
Basic earnings
per share -0.30 0.94 0.93 -132.26% 0.83 0.83
(RMB/share)
Diluted
earnings per
-0.30 0.91 0.90 -133.33% 0.83 0.83
share
(RMB/share)
Weighted
-4.31% 13.56% 13.45% -17.76% 12.56% 12.56%
average ROE
Increase/decr
ease at the
end of this
End of 2021 End of 2020
year over the
End of 2022 end of the
previous year
After
Before adjustment After adjustment Before adjustment After adjustment
adjustment
Total assets
111,964,797,711.33 105,548,909,472.93 105,514,058,363.19 6.11% 92,260,268,155.54 92,685,505,184.24
(RMB)
Net assets
attributable to
shareholders
25,446,694,059.09 25,896,860,136.22 25,863,447,788.06 -1.61% 24,006,633,612.78 24,006,633,612.78
of listed
companies
(RMB)
Main reasons for changes in accounting policies
On December 30, 2021, the Ministry of Finance issued Interpretation No. 15 of the Accounting
Standards for Business Enterprises. According to the interpretation requirements, the content under
“Accounting treatment for the sale of products or by-products produced by an enterprise before the
fixed assets reach the intended usable state" was implemented from January 1, 2022, and retrospective
adjustments were made to the trial sales that occurred between the beginning of the earliest period
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
presented in the financial statements and the implementation date of this interpretation.
The Company’s net profit before and after deducting non-recurring profits and losses in the
previous three fiscal years is negative, and the audit report of the latest year shows that the
Company’s going concern ability is uncertain.
□Yes No
The lower of net profit before and after deducting non-recurring profits and losses is negative.
Item 2022 2021 Remarks
Operating income (RMB) 152,050,274,944.64 129,666,931,795.26 /
Amount deducted from the
1,034,447,991.65 1,349,634,365.69 /
operating income (RMB)
Amount after the deduction from
151,015,826,952.99 128,317,297,429.57 /
the operating income (RMB)
VII. Differences between accounting data under the domestic and foreign accounting
standards
1. Differences in the net profit and net assets in the financial statements which are presented
concurrently in accordance with international accounting standards and the accounting
standards of China
□ Applicable Not applicable
There are no differences in the net profit and net assets in the financial statements which are presented
concurrently in accordance with international accounting standards and the accounting standards of
China during the reporting period.
2. Differences in the net profit and net assets in the financial statements which are presented
concurrently in accordance with foreign accounting standards and the accounting standards of
China
□ Applicable Not applicable
There are no differences in the net profit and net assets in the financial statements which are presented
concurrently in accordance with foreign accounting standards and the accounting standards of China
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
during the reporting period.
VIII. Quarterly main financial indicators
Currency unit: RMB
First quarter Second quarter Third quarter Fourth quarter
Operating income 33,252,703,014.35 46,551,958,652.09 43,511,638,340.48 28,733,974,937.72
Net profit attributable to
shareholders of listed 732,204,352.08 1,081,182,221.86 -496,074,241.58 -2,396,860,032.08
companies
Net profit after deducting non-
recurring profits and losses
670,677,786.49 1,181,319,420.97 -463,524,733.65 -2,480,806,994.76
attributable to shareholders of
listed companies
Net cash flow from operating
-3,801,157,548.89 -1,985,208,857.06 2,012,007,811.44 6,479,892,077.87
activities
Whether the aforesaid financial indicators or their sum are significantly different from the
financial indicators related to the quarterly and semi-annual reports disclosed by the Company
□Yes No
IX. Non-recurring profit and loss items and amounts
Currency unit: RMB
Amount in Amount in
Item Amount in 2022 Notes
2021 2020
Profit or loss from disposal of non-current assets
(including the write-off portion of provided asset 128,936,835.05 -12,534,455.04 -6,741,262.61
impairment reserves)
Tax refund or exemption approved ultra vires or
24,841,218.44 15,609,249.33 12,921,483.38
without any formal approval
Government grants recorded into current profits and
losses (except for those that are closely related to the
normal business operation of the Company, in line 179,870,984.15 277,839,245.44 318,607,292.74
with national policies, and are continuously enjoyed
on a fixed quota or a quantitative basis)
Current net profit or loss from subsidiaries formed by 0.00 0.00 19,376,584.76
business merger under common control, from the
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
period-beginning to the merger date
The profit or loss arising from the fair value changes
of held-for-trading financial assets and held-for-
trading financial liabilities, as well as investment gains
received from the disposal of held-for-trading
-448,914,776.35 480,727,659.11 487,752,983.95
financial assets, held-for-trading financial liabilities
and financial assets available for sale, except for
effective hedging transactions that are related to the
normal business operations of the Company
Reversal of impairment reserves for receivables that
0.00 309,000.00 0.00
are separately tested for impairment
Profits or losses from entrusted loans 48,520,852.95 49,567,383.65 41,586,615.56
Income from custodian fees obtained from entrusted
1,698,113.19 1,698,113.20 1,698,113.20
operation
Other non-operating income and expense in addition
612,146.73 13,359,433.22 -6,299,334.89
to the above
Other profit or loss items that meet the definition of
17,898,857.26 0.00 2,595,730.83
non-recurring profit and loss
Minus: Income tax influence amount 91,691,403.61 38,805,031.16 215,685,156.22
Influenced amount of the minority shareholders’
-151,013,993.42 138,270,736.78 62,915,238.58
equity (after-tax)
Total 12,786,821.23 649,499,860.97 592,897,812.12 --
Details of other profit or loss items that meet the definition of non-recurring profit and loss:
□ Applicable Not applicable
The Company does not have any other profit or loss items that meet the definition of non-recurring
profit and loss.
Cases of defining the non-recurring profit and loss items as recurring profit and loss items,
which are enumerated in the Explanatory Announcement No. 1 on Information Disclosure of
Companies That Offer Securities to the Public -- Non-recurring Profits and Losses
□ Applicable Not applicable
There was no case of defining any non-recurring profit and loss items as recurring profit and loss
items, which are enumerated in the Explanatory Announcement No. 1 on Information Disclosure of
Companies That Offer Securities to the Public -- Non-recurring Profits and Losses.
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Section III Management Discussion and Analysis
I. Main business of the Company and the industry in which the Company is engaged during
the reporting period
The Company shall comply with the disclosure requirements for petrochemical industry
specified in Guidelines No. 3 for Self-Regulation of Listed Companies of Shenzhen Stock
Exchange - Industry Information Disclosure
(I) Overview
Hengyi Petrochemical (stock code: 000703) is committed to developing into a leading domestic and
world-class refining - chemical engineering - chemical fiber private multinational industrial group.
We have been making continuous efforts to enhance the comprehensive competitiveness through
"upstream and downstream collaboration, domestic and international linkage, and software and
hardware supports". Under the guidance of the development strategy of "refinery, polyester and
polyamide industries", the Company, relying on the Brunei Project as the fulcrum, has accelerated
the pace of internationalization, completed the "last mile" of the whole industrial chain from oil
refining to chemical fiber, achieved a columnar industrial structure integrating the upstream,
midstream and downstream industrial chains, created a unique "polyester + polyamide" double-fiber
driving mode among domestic counterparts, and formed a "petrochemical +" multi-level and three-
dimensional industrial layout with petrochemical industry chain as the core business, supply chain
service business as the growth business, and differentiated fiber products and application of industrial
intelligent technology as the emerging business.
1. Overview of petrochemical chemical fiber business
(1) The world’s leading group in the integration of “refining - petrochemical - chemical fiber”
industrial chain
During the reporting period, the Company closely focused on the strategic development policy of
"consolidating, highlighting, and enhancing the competitiveness of the main business”, the
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Company's unique industrial layout of "refinery, polyester and polyamide industries" was further
improved, and the Hengyi Brunei Phase I Project was operated efficiently, continuously improving
the business level; the Company continued filling the gap in domestic chemical products, breaking
the monopoly of foreign chemical fiber technology, and improving the industrial layout of domestic
substitution and self-sufficiency; the caprolactam-based synthetic ammonia project of the joint-stock
company was completed and put into operation, effectively replenishing the downstream industrial
chain of aromatics, reducing production costs, and enabling the Company to obtain lasting
competitiveness.
During the reporting period, the Company continuously extended the petrochemical industry chain,
enriched product categories and further improved product structure, which effectively consolidated
the core competitiveness of the main business, strengthened the profitability of products and
improved the ability to resist market risks. The Company's main products include gasoline, diesel oil,
jet fuel and other product oils; light chemical oil, liquefied petroleum gas (LPG), paraxylene (PX),
benzene, purified terephthalic acid (PTA), caprolactam (CPL) and other petrochemical products;
polyester bottle flakes and other packaging products, as well as polyester pre-oriented yarn (POY),
polyester drawn yarn (FDY), polyester textured yarn (DTY), polyester staple fiber, polyester (PET)
flakes and other polyester products. The products are widely used to meet the rigid needs related to
national economy and people's livelihood, and meet people's yearning for a better life.
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Figure 1 The petrochemical and chemical fiber industry chain in which the Company is
engaged
Petroleum Refining-petrochemical integration
Oil refining Product
Olefins Aromatics
Oil
Paraxylene
Gasoline Diesel Jet Fuel Propylene Ethylene Benzene
(PX)
Petrochemical
Ethylene Glycol Purified terephthalic
Polypropylene Polyethylene Caprolactam (CPL)
(MEG) acid (PTA)
industry chain
industry chain
Polyamide
Polyamide
Polyethylene terephthalate (PET)
Polyester
(PA)
Polyamide
Bottle flake
flake
Chemical fiber
Polyester fully Polyester partially Polyester staple
drawn yarn (FDY) oriented yarn (POY) fiber
Polyester drawn
textured yarn (DTY)
Weaving fields (such as textiles,
garments and home textiles)
Business in China
Business in Brunei
Business in future
Downstream products
Note: Polyamide flakes are products operated by Hengyi Group, the controlling shareholder.
As of the disclosure date of this report, the Company's designed crude oil processing capacity was 8
mtpa; the PTA production capacity of shareholding and joint-stock companies was 19 mtpa; the PIA
production capacity was 300,000 tpa; the polymer production capacity of shareholding and joint-
stock companies was 10.765 mtpa, among which the production capacity of polyester fiber was 8.065
mtpa, that of polyester bottle flakes (including RPET bottle flakes) was 2.7 mtpa, and that of
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caprolactam (CPL) was 400,000 tpa, ranking among the top of the industry.
Table 1 Production Capacity of Main Products of the Company (10,000 tpa)
Product Production capacity
Chemical products 265
Product oil 565
PTA 1,900
PIA 30
Polyester fiber products 806.5
PET bottle flakes(including RPET) 270
Caprolactam 40
Note:
1) Polyester fiber products include POY, FDY, DTY, staple fiber and flake products.
2) This table is the actual production capacity table of the Company in the reporting period.
During the reporting period, the Company continued to attach importance to investment in R&D of
new products, actively responded to the “carbon peaking and carbon neutrality” strategy, and adhered
to the guidance of "green manufacturing" and "circular economy". In polyester business, it continued
to carry out product development and achievement transformation around the three major themes of
green environmental protection, function and bio-based. Internally, the Company optimized its sales
system, actively grasped market demand, and fully tapped and reasonably guided customer demands
through the organic linkage of R&D, production and sales. Externally, the Company, through
cooperation with colleges and universities, built an "industry-university-research" school-enterprise
ecology and realized effective exploration in basic materials research support and cutting-edge key
technologies.
During the reporting period, the Company adopted a multi-path, multi-echelon and multi-scenario
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
R&D system. Through technical research, the Company quickly opened up the regenerated fine
denier fiber market and was well received by customers. The environment-friendly "Eticont" series
products were also recognized by more and more customers, and the sales volume continued to rise.
The flame-retardant fibers continued to maintain a strong market share among domestic flame-
retardant products. The project of "Green Manufacturing of TiO2 Dulling Agent for Polyamide and
Complete Technology for Industrial Application of Fully Dulling Polyamide" made breakthrough
progress, taking the lead in achieving domestic application. In the field of differentiated products, the
development of functional composite materials, such as antibacterial and cationic dyes, was taking
shape, and the industrialization of these materials was gradually being promoted, with the technical
level reaching international leading levels. In addition, the Company was also focusing on promoting
the R&D process of gas phase rearrangement, synthetic ammonia, hydrogen peroxide and other
technologies.
During the reporting period, the Brunei Project of the Company, as an important product oil
production base in Southeast Asia, seized the historic development opportunities in Southeast Asia
and followed the fluctuation trend of crack spread of product oil in the Singapore market. In the
market where the crack spread of jet fuel was weaker than diesel, the jet fuel production capacity was
duly converted into diesel production capacity, and the output ratio of gasoline and PX was flexibly
adjusted to achieve maximum benefits.
(2) Company products that promote national economic development and improve people's
better lives
The Company's terminal sales products mainly include product oil, such as gasoline, diesel oil and
jet fuel, as well as polyester products such as polyester bottle flakes, polyester fully drawn yarn and
polyester staple fiber, which are widely used to meet the rigid needs related to national economy and
people's livelihood. Among the products, the product oil such as gasoline, diesel oil and jet fuel
provides energy for automobiles, ships, and aircraft and other vehicles and corresponding equipment;
polyester bottle flakes are widely used in fields such as food packaging and medical material
production, e.g., the demand for PET bottle-grade product in livelihood industries such as beverages,
dairy products, edible oils, and seasonings has maintained steady growth, and its share in emerging
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
application fields such as alcohol, daily chemicals, electronic products, and medical products is
rapidly increasing; polyester fully drawn yarn includes POY, FDY, and DTY, mainly used in isolation
materials such as clothing and protective clothing, and it can also be used for industrial purposes such
as webbing, zippers, tents, automotive interiors, and mask cords. FDY products of the Company can
be used as medical and other materials to meet the increasing demand of downstream customers for
medical supplies raw materials; polyester staple fibers can be widely used in fields such as yarns,
nonwovens, and filling materials. Among them, nonwoven fabrics can be used as raw materials for
the production of face masks, and downstream disinfectant wipes and disposable protective products
and other health fields.
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Figure 2 Features and Application Fields of Main Products of the Company
Products Application fields
A type of hydrocarbon, colorless transparent liquid. It can be used in many
PX fields. It is the main raw material for the production of PTA and is also used
to make synthetic plastics, drugs, pesticides etc.
Mainly used as fuel of various fuel-fired power equipment and heating
Product supply. Used as fuel for automobiles, motorcycles, speedboats, helicopters,
Oil agricultural and forestry aircraft, motor vehicles with diesel engine (including
trains), vessels and diesel boilers.
Mainly used for producing polyester products, and is widely used for all
national economy aspects, such as clothing, decoration, electronics and
PTA construction. 75% of PTA is used for polyester fiber, 20% for bottle grade
polyester and 5% for film polyester (mainly for civil use in the downstream).
PIA is a white crystalline powder or acicular crystal used to produce alkyd
resins, unsaturated polyester resins and other high polymers and plasticizers.
PIA It is also used to make film finishers, coatings, polyester fiber dyeing
modifiers and medicines.
Used for DTY and fiber products with special styles
POY reprocessing production. It is widely used in
clothing and industrial fields.
Directly used for weaving and for production of
garment and decorative fabrics. It is widely used in
FDY clothing and industrial fields, and also used as
isolation material for protective suits and other
protective products.
It is directly used for weaving and is widely used in
DTY clothing and industrial fields, garment fabrics and
lining materials.
It is mainly used to produce polyamide fibers,
CPL engineering plastics and plastic films; widely used
in industrial and civil fields.
Mainly used to produce yarns, nonwovens and
filling materials. The non-woven fabric can be used
PET staple as a raw material for the production of face masks
fiber and the downstream disinfectant wipes and
disposable protective products.
Widely used for indirect spinning. They can be
PET flakes used to produce textile materials such as yarns
and staple fibers, and also for strip casting to
produce plastics and other products.
Mainly used as food packaging (including coke
PET bottle bottle, beverage bottles, water bottles and oil
flakes bottle.
2. Overview of “petrochemical +” business
(1) Supply chain service business is conducive to improving product operation capability and
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
enhancing value-added services
In recent years, against the backdrop of significant uncertainty and severe challenges in the external
environment, the Company has steadfastly pursued and built a resilient and stable supply chain
industry system, promoting the stable and healthy development of the industry, as well as the green
and low-carbon transformation of the industry. The Company has been continuously strengthening
the supply chain cooperation and service management capabilities, actively carrying out
comprehensive distribution services for raw materials and products, with Hengyi Micro Mall and
marketing supply chain system as the core online, and logistics business as the support offline, to
realize effective integration of online and offline services. Among them, the Intelligent Logistics
Management Platform (HTTMS) is one of the functionalized applications of Hengyi Micro Mall. It
collaborated with supporting services such as price inquiry, quick order placement, market
information, and financial services, seeing a sustained explosive growth in the trading volume.
Besides, the Company has been innovating in its unique omni-channel logistics control system and
building a third-party logistics transportation platform.
In terms of digital development, the Company has been continuously promoting intelligent
management, strengthening the construction of digital factories, and actively exploring flexible and
personalized customization of production through “big data” means, creating a flexible, controllable,
and efficient supply chain and industry chain system.
With the continuous and stable operation of the Brunei Project, the Company has actively conducted
supporting shipping business, accelerated the implementation of integrated management of supply
chain services, formed a plant-product-warehouse-logistics-customer intelligent supply chain closed-
loop system, and led the upgrading of intelligent supply chain services in the industry.
(2) Long-term equity investment income improves the Company profits
China Zheshang Bank Co., Ltd, established in 2004, is one of the 12 national joint-stock commercial
banks approved by the China Banking and Insurance Regulatory Commission. The Bank was listed
on the Main Board of the Stock Exchange of Hong Kong on March 30, 2016 and on Shanghai Stock
Exchange on November 26, 2019, becoming an "A+H" listed bank. At present, the Bank has
developed into a high-quality commercial bank featuring solid foundation, excellent benefits, rapid
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
growth and well-established risk control. With the completion of the "A+H" layout, China Zheshang
Bank will accelerate its future growth. The Company will further optimize the strategic layout and
continuously create value for shareholders through the growth premium of China Zheshang Bank.
According to the 2022 Annual Report released by China Zheshang Bank, in 2022, the Bank achieved
an operating income of RMB 61.085 billion and net profit attributable to shareholders of RMB 13.618
billion. As of the end of December 2022, the total assets of the Bank were RMB 2,62 trillion, an
increase of 14.66% over the end of the previous year. Guided by the vision "to be a first-class
commercial bank", and focusing on the “two most” general goal and the management principle of
“scaling up, adjusting structure, controlling risks, and creating benefits”, China Zheshang Bank has
created a new situation of five business segments (i.e. big retail, big company, big investment bank,
big asset management and big cross-border business)advancing together to serve the real economy to
a new stage.
(II) Industries involved
Hengyi Petrochemical is engaged in the petrochemical and chemical fiber industry. Its raw materials
come from petroleum or corresponding chemicals cracked by petroleum. The downstream demands
for terminal products are closely related to the basic necessities of ordinary people. Important factors
affecting the industry mainly include crude oil price fluctuation, downstream demand, production
capacity supply and matching of upstream and downstream industry chains.
1. Refining and petrochemical business: Relying on the competitive advantage of China-
Brunei location, the Company explored the refining and petrochemical market potential in
Southeast Asia
(1) Under the unpredictable international situation, the overall price of crude oil fluctuated in
an inverted "V" shape
Since 2022, we have seen the increase in international geopolitical conflicts, the frequent adjustments
in OPEC+ countries’ crude oil production, the reduction in Russian crude oil production, and the
weak performance in US crude oil production. At the same time, the recovery of international crude
oil demand was below the expectations, coupled with expectations of the Federal Reserve's interest
rate hike, which led to a slowdown in overseas economic growth and continuous fluctuations in global
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
oil prices, presenting an overall "V" trend.
In the first half of 2022, under the influence of factors such as geopolitical risk premium and consumer
resilience, the international crude oil price trend was strong; in the second half of the same year, due
to macroeconomic pressures on the demand side, crude oil prices fell again, seeking a rebalancing
between the low supply and the weak demand.
In terms of the supply, OPEC+ countries gradually relaxed the production in the first three quarters
of 2022 to meet the constantly recovering demand for crude oil. However, after experiencing a rapid
decline in oil prices in the second half of 2022, OPEC+ countries have been reducing the production
of crude oil since October 2022. In April 2023, preventive measures were taken to support the stability
of the oil market, and multiple oil producing countries announced further production reduction. From
May 2023 to the end of 2023, countries including Russia will have a cumulative reduction of over
1.6 million barrels per day, accounting for approximately 1.5% of global crude oil production.
Considering OPEC+ countries’ unexpected production reduction, and the US’s limited crude oil
production and the possibility for replenishing strategic reserves, oil supply may continue to be tight,
leading to an upward shift in the range of oil price fluctuations.
In terms of the demand, IEA predicts that global oil demand will increase by 2 million barrels per day
in 2023, reaching a record high of 101.9 million barrels per day. Driven by China's economic recovery,
the Asia-Pacific region will play a major role in driving the demand growth, and reopening borders
will bring a significant increase in the demand for jet fuel.
(2) With the global tight supply of product oil, the Southeast Asian product oil market
continued to maintain a prosperous pattern
From the perspective of the demand side, in 2022, multiple Southeast Asian countries such as
Indonesia, Malaysia, and Singapore actively resumed work and production, leading to a recovery of
demands in the Southeast Asian product oil market. Compared with the oversupply of domestic
product oil, the Southeast Asian product oil market had a larger gap. Although Southeast Asia has
abundant oil and gas resources, it is the world's largest net import market for product oil due to
insufficient infrastructure investment. Besides, Australia also needed to import product oil. In addition,
with the implementation of the new IMO standard in 2020, the demand for low-sulfur fuel oil has
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
risen. Singapore is a major shipping base. As some marine diesel (MGO) has been required to replace
marine fuel oil, the demand for diesel in Southeast Asia is expected to continue to increase.
From the perspective of the supply side, due to the early construction of some refinery facilities in
Southeast Asia and the outdated technology, poor management, heavy government subsidy burden,
as well as the impact of public health events, according to Platts (Platts Energy Consulting Platform)
data, from 2020 to 2023, energy refining facilities with a total production capacity of more than 30
million tons were withdrawn from the market in Southeast Asia and Australia due to public health
events and energy structure transformation; and, in the future, the supply of new production capacity
in Southeast Asia will be insufficient. 2022 has become a cut-off period for production capacity
supply in Southeast Asian refineries. Due to various factors such as public health events and funding,
the production capacity deployment in Southeast Asian refineries will also be delayed or postponed
to varying degrees in 2023.
According to IEA data, the production capacity of refineries which announced to be shut down
globally from 2020 to 2026 reached 3.6 million barrels per day. According to BP statistics, in 2021,
refineries in Europe, the United States, Australia and other regions experienced a wave of shutdowns,
resulting in a decrease in production capacity of 25.68 mtpa, 10.06 mtpa, and 11 mtpa, respectively.
The growth rate of new global refining capacity has been declining for two consecutive years. In 2021,
the global refinery capacity decreased by 20.89 mtpa year-on-year, marking the first net decline in
production capacity in the past 30 years. However, in 2022, refineries’ profits rose to historical highs,
and the operating rates of overseas refineries have basically rebounded to high levels. Some new
refineries in China and the Middle East have been put into operation, and the global refining capacity
has increased by approximately 1.98 million barrels per day; however, this still cannot make up for
the supply and demand gap caused by the reduced production capacity.
Besides, in the context of carbon neutrality and carbon peaking policies, refining and petrochemical
enterprises were not willing to expand their refineries and capital expenditure plans tended to be
cautious, and thus the refinery production capacity growth will be limited in the future. In addition,
under the influence of geopolitics, the global product oil market supply has been significantly
tightened, exacerbating the tight supply situation of Southeast Asian product oil market, which is
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
difficult to be alleviated in the medium to long term.
Against the backdrop of undersupply, the Southeast Asian product oil market will maintain a
prosperous pattern.
Figure 3 Crack Spread of Product Oil in Southeast Asia in Recent Years
January 2019 January 2020 January 2021 January 2022 January 2023
Gasoline
January 2019 January 2020 January 2021 January 2022 January 2023
Diesel
January 2019 January 2020 January 2021 January 2022 January 2023
(10) Jet fuel
Data source: Platts Platform
As the profit vane of refineries in Southeast Asia, from the perspective of the crack spread of product
oil in the Singapore market since 2019, the crack spread of refined product oil was at the lowest level
in history in 2020. With the improvement of the external environment in Southeast Asia in 2021,
market demand was gradually picked up, and the crack spread of product oil continued to recover. In
the first half of 2022, under the influence of multiple factors such as the sharp rise in crude oil prices,
the tight supply of product oil, and the increase in oil demands brought about by the economic
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
recovery in Southeast Asia, the crack spread of product oil in Singapore continued to rise. However,
since the second half of the year, under multiple pressures such as weak demand and price fluctuations,
the price difference of product oil has significantly decreased. Since 2023, the gasoline price
difference has significantly improved month on month, while the diesel price difference remains at a
high level. The profitability of Brunei Refinery is expected to remain stable.
2. PTA business: Exports were steadily increasing, and the profitability of the Company was
being stabilized
In 2022, PTA prices showed a fluctuating upward trend overall due to the interactive effects of cost
and supply and demand. In the first half of 2022, due to multiple sets of PTA devices entering annual
maintenance ahead of schedule, the industrial operating rate decreased year-on-year. Coupled with
contract reductions from mainstream suppliers and staged supply-demand mismatches and other
factors, PTA prices continued to rise. In the second half of the year, PTA spot prices rebounded from
a high level due to bearish factors such as the volatility and decline of crude oil prices and the l inkage
of bulk commodities. Afterwards, the tight supply and demand of PX constrained the downstream
PTA construction; coupled with the recovery of market consumer confidence at the end of 2022, PTA
spot prices rebounded accordingly.
In terms of the supply, according to CCF data, in 2022, due to the lack of new PTA production capacity
in foreign countries, the delay in the production schedule of JBF in India, and much more device
maintenance in other regions of Asia in 2022, the operating rate in South Korea and Taiwan remained
at 50-80%, and in some time periods it was 30-40% (excluding IPA devices). Especially in the second
half of 2022, device maintenance significantly increased, and some devices extended their
maintenance cycles for several months. On the other hand, in terms of the demand, due to the fair
overseas demand, the polyester facilities in India and Turkey operated at a high level in the first half
of the year, and the gap between overseas PTA supply and demand was large, driving China's PTA
exports to increase significantly. According to statistics from Longzhong Information, in 2022,
China's PTA export volume reached 3.4467 mtpa, with an increase of 33.85% year-on-year.
According to the estimated external demand situation, the export volume will still remain high in
2023, and the domestic PTA price advantage will continue. Coupled with the gradual withdrawal of
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
foreign competitive devices from the market, there will be a possibility of forcing foreign PTA devices
to reduce production and increase production in the domestic market, thereby expanding China's
export volume.
3. Polyester business: The inflection point of downstream demand has emerged, and the
market confidence is expected to be enhanced continuously with macroeconomic boosting
measures
Since 2022, the chemical fiber industry has faced complex and severe domestic and international
situations and multiple factors, and its operations have generally been under pressure. Under the
pressure of high inventory and weak demand, the average operating load of the chemical fiber
industry has significantly decreased compared with that in 2021, with the profitability of the industry
still under pressure. However, under the central government’s overall strategy of "seeking progress
while maintaining stability" for economic work, the overall operation of the textile and chemical fiber
industry tended to be stable. With the gradual recovery of China's macro economy, the production
and operation situation of the chemical fiber industry is expected to continue to improve in 2023.
(1) Slow release of new production capacity, sustained recovery in downstream demands, and
further optimization of competition order
In recent years, China's polyester industry has gradually entered a stage of large-scale and integrated
development. The whole industry is currently facing a pattern of continuous improvement in the
concentration ratio of production capacity, constant strength of industry leaders, and continuous
extension of the industrial chain to the upstream raw material end.
From the perspective of the supply side, due to the dual-carbon policy and equipment supply issues
etc., the growth rate of new polyester production capacity has slowed down from 2021 and this
situation continued in the future. According to CCF statistics, the withdrawn capacity of polyester
fully drawn yarn in 2022 was 1.8 mtpa, while the actual increase in net production capacity was only
2.7%. Besides, polyester factories with old and backward devices and without ability of technologica l
innovation also gradually withdrew from the industry competition. In the future, the backward
production capacity will be further cleared, the industry access threshold will be further increased,
the market concentration ratio of polyester industry will be further optimized, and the development
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
environment will become more benign.
For the demand side, as domestic consumption gradually recovers, downstream demand for textiles
and clothing has been rebounding. According to data from the National Bureau of Statistics, the per
capita disposable income of Chinese residents in 2022 was RMB 36,883, with an increase of 5.0%
compared with that in the previous year. With price factors excluded, the actual increase was 2.9%.
The median per capita disposable income of Chinese residents was RMB 31,370, with an increase of
4.7%. According to the permanent residence, the per capita disposable income of urban residents was
RMB 49,283, with an increase of 3.9% compared with that in the previous year. With price factors
excluded, the actual increase was 1.9%. The median per capita disposable income of urban residents
was RMB 45,123, with an increase of 3.7%. The per capita disposable income of rural residents was
RMB 20,133, with an increase of 6.3% compared with that in the previous year. With price factors
excluded, the actual increase was 4.2%. The median per capita disposable income of rural residents
was RMB 17,734, with an increase of 4.9%. The improvement of residents' consumption capacity has
promoted the increase of terminal consumption expenditure in textile clothing and apparel industry.
In the future, with the continuous driving of domestic demands for real estate, automobiles, tourism,
and exports, the demand for the polyester industry will continue to maintain a healthy and stable
growth.
(2) Active building of a high-end, intelligent, and green modern chemical fiber industry
During the 14th Five-Year Plan period, China established itself in a new stage of development,
implemented new development concepts, and constructed a new development pattern, putting
forward higher requirements for the high-quality development of the chemical fiber industry. In 2022,
the Ministry of Industry and Information Technology and the Development and Reform Commission
jointly issued the Guiding Opinions on the High-quality Development of the Chemical Fiber Industry,
proposing a series of high-quality development goals to guide the chemical fiber industry in building
a high-end, intelligent, and green modern industrial system and comprehensively building a strong
chemical fiber country. Faced with the new development situation, the chemical fiber industry
focused on researching and developing new technologies to promote the entire industry towards high-
end, intelligent, and green development. In terms of digital transformation and upgrading, leading
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
polyester enterprises have established an Industrial Internet Platform System based on the whole
polyester fiber industrial chain, involving PTA, polyester, spinning and trade, developed data-driven
intelligent control technology for the whole process of efficient fiber production, realized large-scale
flexible green production, and high-value efficient fine management.
(3) The supply of raw materials is loose and the profits of the upstream and downstre am
industrial chains are expected to shift to the polyester end
From the perspective of the structure of upstream and downstream industrial chains, according to
CCF statistics, it is expected that the new production capacity of domestic PX and PTA will be 5.6
mtpa and 15.2 mtpa respectively in 2023, with a year-on-year growth of 14% and 20% respectively.
The growth rate of production capacity is higher than that of the downstream polyester production
capacity, which is conducive to the transfer of profits of the industrial chain to the downstream
polyester end. In addition, MEG production capacity will still be continuously expanded, and
integration and coal production capacity will continue to be invested. According to CCF statistics, it
is expected that new domestic and international production capacity will be 3.65 mtpa in 2023, with
a growth rate of approximately 11.3%. The continuous loose supply of polyester raw materials will
be conducive to the transfer of profits from the upstream and downstream industrial chains to the
downstream polyester end.
(4) Exports of polyester bottle flakes to overseas and strong consumer demands in new fields
In recent years, the demand for polyester bottle flakes in China has grown faster than the production
growth rate. In terms of overseas export, due to the advantages of distance, sea freight and relatively
few anti-dumping duties of Asian countries, Asian countries currently account for a large proportion
of exporting countries. China's prominent production position, coupled with the fact that overseas
polyester bottle flake factories have successively stopped production or encountered some financial
problems in recent years, even with the existence of anti-dumping policies, China's polyester products
also have strong advantages in both price and quality, and the overseas demand for export will
continue to increase rapidly. According to ICIS research, in the first half of 2022, the volume of bottle
flake products imported from China by the Middle East and Latin America increased significantly.
They then achieved exports to European and American countries through regional exchanges. Some
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
countries that originally imported bottle flake products from the United States, such as Colombia,
also began to import bottle flake products from China due to the tight supply of the United States.
According to customs data statistics, the export volume of polyester bottle flakes in China increased
by 36% year-on-year in 2021; in 2022, the export volume increased by 35.68% year-on-year, reaching
4,314,300 tons.
In terms of the downstream demand side of emerging fields, in addition to the good performance of
the traditional soft drink market, the application of bottle flakes in the fresh e-commerce field,
household disinfection and sterilization and other daily chemical fields, as well as in new fields such
as environmental protection flooring and optical film, is also developing rapidly, driving the
continuous growth of bottle flake demands. Currently, the total production capacity of polyester bottle
flakes (including RPET bottle flakes) of the shareholding and joint-stock companies has ranked first
in the country, and the prosperity of the bottle flake industry has become a new growth point for the
Company's profit contribution.
(III) Position of each business segment of the Company
Being deeply involved in the fields of petrochemical and chemical fiber, the Company has been
developed into a private multinational leading enterprise in China that integrates refining and
petrochemical with chemical fiber. As the only private large refining and petrochemical enterprise
with a refinery located overseas, the Company has the largest single overseas project invested by
private enterprises. In the future, with the completion and operation of the Brunei Phase II Project of
the Company, the Company is expected to usher in new opportunities for development.
1. Refining and petrochemical business
According to Platts data, as of December 31, 2022, the production capacity of Southeast Asian
refineries was approximately 271 mtpa. The new production capacity of Southeast Asian refineries
in 2022 was approximately 3 mtpa, which was basically a bottleneck-free expansion. Due to good
profits in 2022, there were no new or existing production capacity, but it is still lower than the 278
mtpa in 2020. Among them, the production capacity of the Hengyi Brunei Phase I Project accounts
for 3% of the total production capacity of the Company.
The Hengyi Brunei Phase I Project introduced the world's largest single series aromatics complex and
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
the sixth flexicoking process unit in the world, which have lower production cost per unit of product,
are cleaner and more environmentally-friendly, and boast obvious late-mover advantages. After the
completion of the Brunei Phase II Project, under the overall transformation and upgrading trend of
the petrochemical industry, the advantages of refining-petrochemical integration will further reduce
costs and increase efficiency for the Company. In addition, due to the limited investment of new
refining and petrochemical production capacity in Southeast Asian countries in the future, and the
fact that Southeast Asia itself has a gap in product oil, it is expected that the supply and demand will
continue to be tight in the future, and the Brunei project is expected to be greatly benefited.
2. PTA business
According to CCF data, as of December 31, 2022, the existing domestic PTA production capacity
base was adjusted to 71.44 million tons. As one of the leading enterprises in PTA industry, the
Company has strategically arranged four PTA bases in Dalian of Liaoning Province, Ningbo of
Zhejiang Province and Yangpu of Hainan Province along the coastline from north to south. The total
PTA production capacity of shareholding and joint-stock companies was about 19 mtpa, ranking the
first in the world, and the Company becomes the world's largest manufacturer of purified terephthalic
acid (PTA) In addition, according to CCF data, as of December 31, 2022, the national PIA production
capacity was about 550,000 tpa, and the Company's PIA production capacity was 300,000 tpa,
accounting for about 54.55% of the national total.
3. Polyester business
According to CCF data, most of the polyester production capacity is concentrated in the Asia-Pacific
region, and China has been the world's largest textile producer and exporter. As of December 31, 2022,
China's total polymer production capacity reached 70.64 mtpa, with a year-on-year growth of 7.75%,
of which the production capacity of polyester fully drawn yarn was 38.31 mtpa, that of polyester
staple fiber was 9 mtpa and that of polyester bottle flakes was 12.31 mtpa. The polymer production
capacity of shareholding and joint-stock companies of the Company was 10.765 mtpa, among which
the production capacity of polyester bottle flakes (including RPET) was 2.7 mtpa, and that of
polyester fiber consisted of 6.445 mtpa of fully drawn yarn, 880,000 tpa of staple fiber and 740,000
tpa of PET flakes. The polymer production capacity of shareholding and joint-stock companies ranked
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
the first in the world. The Company has continuously increased the proportion of differentiated
chemical fiber varieties and focused on promoting differentiated fully drawn yarn products. In
addition, the Company has been accelerating the promotion of a green and environmentally-friendly
new product - "Eticont", leading the technological progress of the chemical fiber industry.
II. Main business model, process flow and performance drivers of the company during the
reporting period
The Company shall comply with the disclosure requirements for petrochemical industry
specified in Guidelines No. 3 for Self-Regulation of Listed Companies of Shenzhen Stock
Exchange - Industry Information Disclosure
(I) Business model
1. Procurement model
The Company mainly purchases raw materials through direct negotiation with manufacturers or
traders. It selects competitive suppliers to establish long-term and stable cooperative relations, on the
basis of which it decides the transaction price according to market conditions. The Company adopts
a centralized procurement strategy, integrating resources from Brunei and domestic operating
suppliers and increasing resource sharing efforts, so as to enhance the Company's own bargaining
power.
The raw materials required for production of the Company are mainly purchased from major
petrochemical products and crude oil suppliers at home and abroad. When selecting raw material
suppliers, the Company first considers the quality of their products and the stability of supply. While
ensuring the above, the Company will also give priority to suppliers with competitive prices to reduce
production costs. The Company will sign annual supply contracts with major suppliers, regarding the
supply in the relevant year of their products to the Company in accordance with international or
domestic market prices at the time of actual supply as per the quantity agreed in the contracts.
The main procurement process for auxiliary materials is basically the same as that for raw materials.
2. Production model
For polyester products, the Company arranges production mainly according to the production plan
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
formulated in advance. In specific implementation, the annual production plan will be subdivided
into monthly production plan, and then the Production Department will make necessary adjustments
to the monthly production plan according to the market feedback and change information provided
by the Sales Department before finalizing the monthly production plan and arranging production.
The Company's product oil and chemical products (PX, benzene, etc.) are mainly produced by Hengyi
Brunei. Usually, it will adjust the process and parameters to control the output of specific products,
such as product oil and chemical products, according to the market demand.
The Company's PTA products are mainly produced by Zhejiang Yisheng. Usually, it will adjust the
load level of production unit to control PTA output according to the market demand.
3. Sales model
The Company’s product oils are mainly sold to Brunei, other Southeast Asian countries and Australia.
PTA and polyester products are mainly sold in the domestic market, covering more than 20 provinces
and regions in China. Most products are sold directly to customers through the Company's Sales
Department, and only a small number of products are sold through distributors.
(1) Sales model of product oil and chemical products (PX, benzene, etc.)
The Company's product oil and chemical products are mainly produced by Hengyi Brunei. Among
them, the main customers of chemical products are PTA manufacturers downstream of the Company' s
industry chain, and the settlement mode usually adopts wire transfer and letter of credit, etc. Product
oil is mainly sold to Brunei, other Southeast Asian countries and Australia. When selling to local
enterprises in Brunei, the Company usually signs sales contracts directly and the settlement mode is
letter of credit. The Company's sales to other Southeast Asian countries and Australia are mainly
through Singapore Commodity Exchange. Sales contracts are directly entered into with customers
and the settlement mode is letter of credit.
(2) Sales model of PTA products
The Company’s PTA products are generally sold by direct sales, that is, the Company will directly
sign purchase and sale contracts with downstream polyester manufacturers or large traders, agr eeing
on the purchase quantity and price within a certain period. After receiving the payment for goods
from customers, the products are delivered directly from the Company's warehouse. The settlement
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
mode for sales of PTA products is “payment before delivery”, or “collect on delivery”, usually by
wire transfer, acceptance draft or letter of credit.
(3) Sales model of polyester fiber products
The main customers of the Company's polyester fiber products are textile enterprises, including
elastomer enterprises, garment fabric manufacturers, bag fabric manufacturers, home decoration
fabric manufacturers, etc. These customers are mainly concentrated in the areas of Jiangsu and
Zhejiang as well as Shanghai. The Company generally adopts direct sales, and directly concludes
sales contracts with customers. The settlement mode is usually “payment before delivery”, or “collect
on delivery”.
4. Business model of supply chain service business
The Company's supply chain service business mainly includes trade business and supporting logistics
related services.
(1) Trading business
Petrochemical industry is a cyclical industry. On the one hand, the supply side of raw materials is
susceptible to factors such as upstream suppliers' production capacity, operation stability of the plant
and start-up time of the new plant. On the demand side, especially in the downstream polyester
business, sales have typical seasonal characteristics. Meanwhile, chemical raw materials and finished
products are very dependent on the stability of port facilities and international logistics transportation.
On the other hand, the prices of products in the petrochemical industry chain are affected by the price
of terminal crude oil, showing wide fluctuations. Therefore, in order to ensure production and
operation, strengthen supply chain stability and reduce the risk of price fluctuation, petrochemical
enterprises need to smooth supply and demand and hedge risks through trade business in procurement
and sales.
Since 2022, the production capacity release in the industry has been uncertain. The quarantine and
lockdown measures in various regions have led to the instability of logistics supply. In addition, the
sharp shock of oil prices has increased the uncertainty of supply and demand in the industry, which
further drives the urgent need of enterprises to hedge supply risks through trade management. In trade
business, the Company always adheres to the principle of “serving the main business”. The trading
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
varieties focus on the primary business and core products, mainly PTA and MEG. Among them, PTA
belongs to the finished products of the Company’s PTA business segment, and PTA and MEG are
also important raw materials of polyester business, which shows that the Company uses its trading
business to stabilize supply chain and hedge against price volatility.
(2) Supporting logistics related services
The Company’s logistics sector provides transportation services of raw materials and products for
upstream and downstream industries of Hengyi Petrochemical. Its business covers three aspects of
raw materials transportation, product transportation and foreign trade transportation. It is deeply
rooted in China and gradually going abroad, and the business scope involves international shipping
and land transportation. The main business model is as follows:
1) Transportation of raw materials mainly serves the production plants within the Company system,
through the land transport of self-own vehicles and third-party land transport, inland river shipping,
etc.
2) Transportation of products mainly used for the Company to sell the Company's business orders
and organize the third-party logistics company to transport the products. The transportation business
settlement is carried out by Hengyi Logistics.
3) Foreign trade transportation mainly through Hengyi Logistics, under collaboration with the sales
company of the Company and cooperation with third-party shipping companies or freight forwarding
companies, to carry out container transportation business by means of bidding. Transportation modes
include sea-rail combined transport, sea-river combined transport, direct transport, etc.
4) International transportation mainly serves Brunei PMB Petrochemical Project, most of which are
operated by Hengyi Logistics and its overseas subsidiaries. The imported crude oil and coal, exported
product oil and benzene and other products of the PMB Project are transported by spot chartering
with the fleet capacity of a third-party ship-owner in the market. For the transportation of chemical
PX, due to the relatively stable ports and batch volume of upstream and downstream routes, MR
chemical fleet will be rented for transportation during the self-construction period. For some LPG gas
products, a mixture of the above two modes is adopted to achieve the goal of safe transportation.
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
(II) Process flow charts of main products
1. Production flow of product oil/chemical products
The production flow of the Company’s product oil/chemical products includes atmospheric
distillation, vacuum distillation, hydrocracking, flexicoking, catalytic cracking and alkylation, etc.
Vacuum Distillation
Atmospheric Distillation Unit Vacuum
Overhead gas
Unit
residue
Kerosene
Naphtha
Atmospheric 4th line Vacuum gas oil
Diesel
Flexicoking
Coker gasoline and diesel
Light ends recovery Kerosene Diesel
Hydrotreating Hydrotreating
Coker gas oil
Coker liquefied
Sulfur-bearing
Hydrogen
liquefied gas
Hydrocracking
Naphtha
gas
Gas from low
PSA
naphtha
naphtha
Heavy
Light
pressure separator
Sour water
Reforming
Sour gas
Hydrogen
Product Pre- Refined naphtha
purification hydrogenation Reforming
Reforming liquefied gas
Reformate
Cracking liquefied gas
Liquefied refinery gas
Sulfur Recovery
Light naphtha
Complex
Raffinate
Gas Light Naphtha oil Aromatics
fractionation Isomerization complex
LPG
Petroleum Gas
Liquefied
Heavy aromatics
component C7+
Methylbenzene
isomerized oil
non-aromatic
Iso-butane
Propylene
component
component
isopentane
P
Gasoline
Gasoline
Gasoline
Sulfur (solid Flexible gas
Benzene
gasoline
Jet fuel
Diesel
X & liquid) (fuel gas)
2. PTA preparation process
The specific PTA process flow can be divided into oxidation unit and refining unit:
(1) Oxidation unit
The specific flow chart of oxidation unit is as follows:
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Steam turbine Air compressor Expander
Steam
By-product
steam
PX
Oxidation Level-4 High pressure
Feed mixture
reactor condensation absorber
Co，Mn
Supplementing Post oxidation reactor Condenser Tail gas drying
acetic acid
Acetic acid
storage
PTA pressure
filter mother
liquor Solvent recovery
Primary crystallizer
and dehydration
Acetic acid
storage Residue
Second crystallizer Condenser Recovery and
evaporator hydrolysis of
Wastewater
treatment
methyl acetate
Mother Catalyst
Vacuum filter recovery
liquor
CTA dryer
TA bin
(2) Refining unit
The flow chart of refining unit is as follows:
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
CTA bin PTA batch bin PTA bin
Desalted
water
Packaging
Slurry
PTA drying
preparation
Solvent
tank
Booster pump Vacuum filter
Recycling
solvent
Desalted
water
Sundyne pump Re-beating
Flash-off steam Pressure
Preheater
filtering
Hydrogenation Level-5 Mother liquor
reactor crystallization flashing
To mother-liquor
solid recovery
H2
Hydrogen
compression
3. Polyester esterification polycondensation process
In the process of polyester esterification, the raw material PTA, ethylene glycol and catalyst solution
are continuously sent into the slurry preparation tank according to the specified proportion. After they
enter the esterification reactor, the esterification rate can reach about 95%-96% by controlling the
reaction temperature at an appropriate level. By means of gear pump discharging and pressurization,
the polyester melt produced from esterified materials after prepolycondensation and final
polycondensation is filtered by melt filter, and is distributed through a specially designed melt
distribution system. Part of it is sent to the spinning device for melt direct spinning, and the other part
is sent to the flake production system for ribbon casting and pelletizing.
The specific flow chart of polyester esterification, polycondensation and other reactions is as follows:
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
PTA store
Ethylene glycol
exhaust gas
Dust Feed EG tank
Ethylene glycol Ethylene glycol/
Catalyst Slurry allocation tank exhaust gas acetaldehyde exhaust gas Exhaust gas is burned in a
Condens thermal furnace
Stripping Sewage
er
tower treatment station
First esterification reactor Esterification
fractionating
Condensate
Process
column
collecting tank wastewater
Second esterification reactor
Heavy component
Prepolycondensation reactor Condenser
Ethylene glycol
liquid seal trough Oligomer residue
Residue Prepolymer filter EG EG jet pump
Exhaust gas is incinerated in
a heat medium furnace
Liquid ring pump Recycle EG to slurry allocation tank
Final polycondensation reactor Condenser
Residue Melt filtering and conveying
Directly to spinning Ribbon Underwater
workshop casting Flake drying Packaging
pelletizing
PET caput-heels and waste flakes
4. Production flow of POY/FDY
The production process of POY and that of FDY are basically the same. The polyester melt is
connected and transported to the device from the outlet of the melt distribution valve of the polyester
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
device, and then is divided into two systems through the melt three-way valve. On the way, it is
pressurized by the melt booster pump, and then sent to the melt distribution valve after cooling-down
by the melt cooler. The polyester melt from the melt distribution system enters the spinning chamber
insulated by steam phase heat medium at a certain temperature and is delivered to the spinning
assembly after metering by a metering pump. The melt pipe is equipped with a freezing valve to
ensure that the spinning position can be independently started and stopped. After the melt is filtered
and pressed by the filter layer again in the spinning assembly, it is ejected from the spinneret in a thin
stream and solidified into yarns under the condition of constant temperature and humidity. The yarn
is oiled by the tanker, and then through the network nozzles, it is rolled into a yarn tube in the winding
machine. POY and FDY products were prepared under high speed winding ranging from 2,500m/min
to 5,100m/min.
Booster Melt distribution Spinning
Melt cooler Static mixer Metering pump
Polyester melt pump valve assembly
Oil + water Blending Oil
Draw-off Packaging
POY winding Delivery
godet check
Cooling (ring
Oiling Spinning Network
blowing, side
device channel nozzle Heating
blowing) FDY winding Dyeing
roller
Oil dripping fluid
Oil exhaust gas Oil exhaust gas
5. Production flow of DTY
The POY yarn on the yarn tube rack is wound into a DTY yarn tube and becomes a finished product
after it passes through yarn guide, feeding roller, texturing heater, cooling, drafting, false twister,
feeding roller in the middle, network, heater, delivery roller and oil roller.
Original Upper roller Upper heater Drafting and
POY yarns (texturing heater)
Cooling Middle roller
filament rack feeding false twisting
Oil exhaust gas
Lower heater Winding and Grading and
Network Lower roller Oiling Delivery
(setting heater) forming packaging
DTY oil Waste yarn
6. Production flow of staple fiber
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Polyester staple fiber is a kind of fiber that is transported to the spinning machine through melt, spun
into shape, cut into fibers of different lengths after drafting, crimping and heat setting, and then
packed into individual packages. The main process includes melt conveying, spinning, cooling,
winding, tube falling, bundling, drafting, tension heat setting, folding, crimping, cutting and
packaging.
Polyester melt Booster pump Melt cooler Static mixer
Metering pump
Spinning assembly Cutting off Packaging
Air cooling Drag tension machine Polyester staple fiber
Spinning oil Yarn guide
Spinning oil Dragger Feeding machine Relaxation heat setting
Reciprocating
Fiber-spreading machine
engine
Second drafter Draft bath First drafter Impregnating tank Yarn guide Bundling Crimping machine
Folding
Steam heater Tension heat setting Spray oiling Third drafter Tension machine Steam preheater
machine
7. Production flow of bottle flakes
The production process of bottle flakes, i.e. bottle grade flakes, is composed of two parts: melt
polymerization + solid phase polymerization. The main process of melt polymerization consists of
pulping, esterification, polycondensation, and dicing, and is basically the same as that of fiber
polymerization. The difference lies in that IPA, stabilizer and toner are added in the formula of bottle
flakes. The main process of solid phase polymerization is crystallization, preheating, reaction, and
cooling.
Nitrogen
Product Solid phase polycondensation
packaging Flake cooling reaction Preheating Crystallization
Auxiliary Demineralized water Basic flake conveying
solution
PTA
Slurry Esterification
preparation reaction Polycondensation reaction Cropping Drying
IPA
EG distillation Vacuum system Water filtration
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
(III) Main performance drivers
1. Actively promoting the transformation and implementation of scientific research
achievements, ushering in a new era of green development
The Company strengthened the independent R&D efforts, fully leveraged the technological
advantages in R&D, continued carrying out R&D of high-end polyester chemical fiber products and
green products, co-built research institutes, joint laboratories and other platforms with first-class
universities, completed the mechanism of "industry, academia, research, and application", accelerated
the transformation of scientific and technological achievements into industries, and comprehensively
promoted the transformation from “Industrial Hengyi" to “Technological Hengyi", continuously
enhancing the contribution of scientific research and technological innovation to the Company's main
business.
During the reporting period, the production and quality of the Company's green and environmentally-
friendly polyester product "Eticont" continued to be improved, achieving the industrialization of a
new generation of green, healthy, and environmentally-friendly polyester fibers, ushering in a new
era of green development for polyester fibers. In the field of differentiated products, the development
of functional composite materials of the Company, such as antibacterial and cationic dyes, has been
taking shape and gradually advancing to industrialization.
2. Seize the prosperity cycle of Southeast Asian product oil market and efficiently running the
Brunei Phase I Project
In 2022, the economy of Southeast Asia rebounded rapidly, and the demand for product oil received
strong support. Besides, due to the continuous withdrawal of outdated production capacity and the
comprehensive influence of geopolitical factors, the supply pattern of product oil continued to be
tight. Against the backdrop of supply shortage, the Southeast Asian product oil market maintained a
prosperous pattern, driving Brunei Refinery's profitability to improve.
Brunei Phase I Project has a crude oil processing capacity of 8 mtpa. Since the commercial operation
started, the project has been operating at full capacity and can be increased to 110% or more according
to market conditions. During the reporting period, the Company quickly adjusted the product structure
based on the product profitability, fully ensuring the optimal profitability of the project. While
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
ensuring the efficient operation of the Brunei Phase I Project, the Company has been fully promoting
the construction of the Brunei Phase II Project. After the completion of the Brunei Phase II Project, a
new “olefin-polyolefin" industrial chain will be added, which is conducive to improving the refining-
petrochemical integration of the Brunei Project, further enhancing the advantages of collaborative
operation between upstream and downstream industries, and improving the overall profitability of
the Company.
3. Flexibly adjusting the product structure to increase the proportion of high value -adde d
products
Closely following the fluctuations in the crack spread of product oil in the Singapore market, the
Brunei Project purchased more suitable types of raw materials for processing, reduced production
costs, and timely adjusted the production proportion of products. In the market situation where the
crack spread of jet fuel was weaker than that of diesel, the project promptly converted jet fuel into
diesel, striving to maximize profits. In addition, the production capacity of PTA and PIA of the
Company could also be flexibly converted according to market conditions, effectively improving the
utilization of capacities and the added value of products. Bottle flakes, due to their high transparency
and good glossiness, could increase the added value of packaged goods, which is beneficial for
increasing product premium rates and is highly favored by downstream manufacturers. As of the end
of the reporting period, the Company has a production capacity of 2.7 mtpa of polyester bottle flakes
(including RPET), with a large profit margin.
4. Continuously advancing key projects and strengthening the integrated industrial chain
through cohesion
The Company has been developed into a leading global enterprise that integrates the industrial "crude
oil - PX - PTA polyester" chain with the "crude oil - benzene CPL - polyamide” chain, continuously
extends the petrochemical industrial chain, enriches product types, and further improves product
structure, effectively consolidating the core competitiveness of the main business and enhancing the
ability to resist market risks.
During the reporting period, 1.1 mtpa New Environment-friendly Differentiated Fiber Project, 1.2
mtpa Caprolactam-Polyamide Industry Integration and Supporting Project, the Brunei Phase II
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Project and other projects under construction of the Company were orderly promoted; in addition, the
2.5 mtpa purified terephthalic acid (PTA) engineering project and 1.8 million mtpa functional
materials project of joint venture Hainan Yisheng have also been actively advancing. After the
completion and operation of the projects under construction, the Company's performance is expected
to further enhanced, so as to improve the Company's market share in the fields of staple fiber and
bottle flakes, etc., effectively strengthen the downstream industrial chain, and fully leverage the
unique advantages driven by both polyester and polyamide businesses, further enhancing the
advantages of a balanced and integrated industrial chain that highly matches the upstream and
downstream.
5. Building a self-owned logistics system to assist in the coordinated development of upstre am
and downstream industries
In order to meet the needs of business growth and production safety, the Company was vigorously
building a logistics system, creating its own transportation fleet of ships and that of trucks, so as to
enhance the competitiveness of the Company's main business and stabilize the supply of raw materials,
assisting in stable production capacity at home and abroad. The Company was developing digital
logistics, creating a TMS system that combines internal standardized management, information data
exchange with upstream and downstream factories, and online control of vehicle and road operation
safety, so as to reduce manual operations and improve accuracy while standardizing processes. The
industrial layout of "petrochemical + logistics" can reduce the logistics costs of internal raw materials
and products, better achieve upstream and downstream collaboration, and provide strong supports for
the development of the main business, comprehensively enhancing comprehensive competitiveness.
Procurement mode of main raw materials
Currency unit: RMB
Has the
Percentage of settlement Average price Average price
Main raw Procurement
total amount of method in the first half in the second
materials model
purchase changed of the year half of the year
significantly?
Crude oil Purchasing 30.84% No 5,442.68 5,223.07
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
inquiry
Purchasing
PX 10.89% No 7,479.70 7,559.86
inquiry
Purchasing
MEG 5.59% No 4,406.42 3,670.69
inquiry
Reasons for the significant change in the prices of raw materials compared with the previous
reporting period
During the reporting period, there were significant changes in the raw material prices of the Company
compared with that in the previous reporting period, mainly due to the escalation of the geopolitical
situation and fluctuations in global crude oil inventory and supply. In 2022, crude oil prices showed
an overall upward trend, with an increase in the first half of the year and a decrease in the second half.
According to CCF data, the average price of WTI crude oil in 2022 increased by 38.73% compared
with that in 2021, and the price of Brent crude oil increased by 39.65%. At the same time, the rise in
crude oil price also lifted the prices of downstream products in the industrial chain such as PX.
The purchase price of energy accounts for more than 30% of the total production cost
□ Applicable Not applicable
Reasons for significant changes in major energy types
□ Applicable Not applicable
Main production technologies
Stage of Core
Patented
Main products production technical Advantage in product R&D
technology
technology personnel
Advanced equipment and technology, high production
Mass Multiple Introduction
Gasoline
production persons and innovation capacity, low costs of raw materials and transportation, and
high level of eco-friendliness
Advanced equipment and technology, high production
Mass Multiple Introduction
Diesel capacity, low costs of raw materials and transportation, and
production persons and innovation
high level of eco-friendliness
Advanced equipment and technology, high production
Mass Multiple Introduction
Kerosene production persons and innovation capacity, low costs of raw materials and transportation, and
high level of eco-friendliness
Paraxylene Mass Multiple Introduction Advanced equipment and technology, high production
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Stage of Core
Patented
Main products production technical Advantage in product R&D
technology
technology personnel
production persons and innovation capacity, low costs of raw materials and transportation,
high product purity, and long operating cycle of the plant
Advanced equipment and technology, high production
Mass Multiple Introduction
Benzene capacity, low costs of raw materials and transportation,
production persons and innovation
high product purity, and long operating cycle of the plant
Purified High production capacity, low investment, low energy
Mass Multiple Introduction
terephthalic production persons and innovation consumption, convenient transportation and high level of
acid eco-friendliness
Mass Multiple Introduction Short process, high production capacity, low consumption
Polyester
production persons and innovation of raw materials and public works, etc.
The third and fourth monomers are added into the
polymerization reaction system, and a special equipment
structure is adopted. Through esterification,
prepolycondensation and final polycondensation reaction,
low-temperature dyeable cationic polyester is prepared,
Mass Multiple Introduction
Polyester lowering the cost of subsequent dyeing and reducing
production persons and innovation
environmental pollution. Additives such as compound
stabilizers are used to increase the melting point and
improve the heat resistance of melts, while increasing the
whiteness and improving the hue and heat resistance of the
products.
No dulling agent is added in the polymerization process to
Mass Multiple Introduction
Polyester produce super bright polyester products to meet the needs
production persons and innovation
of different customers with low production costs
By adding dulling agents in the polymerization process to
Mass Multiple Introduction produce full dull polyester products, the problem of low
Polyester production persons and innovation filter life due to the increase of dulling agents is solved and
energy consumption is reduced.
By optimizing the design of the reactor structure and
Wide range adding titanium-based catalysts instead of antimony-based
Multiple Introduction catalysts, the catalyst is uniformly dispersed in the
Polyester of persons and innovation material, and an environmentally-friendly antimony-free
applications
polyester product is produced, realizing a high level of eco-
friendliness.
The masterbatch preparation process has been improved,
the types and proportions of silver-based antibacterial
agent, PBT powder mixture and dispersant have been
Mass Multiple Introduction
Polyester
production persons and innovation studied, and the optimal proportions of the three have been
determined. The antibacterial masterbatch has been
prepared by melt blending and extrusion with outstanding
features.
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Stage of Core
Patented
Main products production technical Advantage in product R&D
technology
technology personnel
Wide range
Multiple Introduction Maximum output, highest conversion rate and lowest
Polyester of
persons and innovation energy consumption are realized
applications
Wide range By tapping the potential of equipment, the effect of
Multiple Introduction
Polyester of persons and innovation increasing production and efficiency has been achieved
applications without increasing investment
Through recycling, energy waste is reduced and energy
Wide range
Multiple Introduction utilization rate is improved; by continuously introducing
Polyester of persons and innovation energy-saving technologies, production costs have been
applications
reduced.
Wide range It extends the filter service life, reduces labor waste, and
Multiple Introduction
Polyester of saves packaging costs, bringing considerable economic
persons and innovation
applications benefits to the Company
Through modification during the polymerization reaction,
the fluidity and ductility of the polyester melt are
improved. With the same polymerization residence time,
Wide range
Multiple Introduction the intrinsic viscosity of the product is higher than that of
Polyester of persons and innovation the conventional polyester, and the processing
applications
performance of the melt is also improved. A utility model
patent has been granted for this technology. The patent
number is ZL201120219233.4.
Through independent R&D, the Company has successfully
Wide range
Multiple Introduction developed and produced titanium dioxide for polyamide,
Polymerization of persons and innovation and completed independent production and supply of
applications
auxiliary materials to replace imports.
Through independent R&D, the Company has successfully
Wide range
Multiple Introduction developed and produced titanium dioxide for polyamide,
Polymerization of
persons and innovation and completed independent production and supply of
applications
auxiliary materials to replace imports.
Using advanced AI technology, the Company can
Wide range automatically monitor the spinning process, and detect and
Multiple Introduction
Spinning of deal with abnormalities in a timely manner, thereby
persons and innovation
applications improving the product quality and production efficiency
and reducing the cost
Using advanced AI technology, the Company can
Wide range
Multiple Introduction automatically inspect the appearance defects of fully
Spinning of persons and innovation drawn yarn rolls, thereby improving the production
applications
efficiency and reducing the cost
Spinning Wide range Using advanced automation technology, the Company
Multiple Introduction
of realizes the automation of the production process, greatly
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Stage of Core
Patented
Main products production technical Advantage in product R&D
technology
technology personnel
applications persons and innovation reducing manual operations, improving the production
efficiency and reducing the cost
Using advanced technology, the Company shortens the
Mass Multiple Introduction process flow and increases the production capacity and
Spinning
production persons and innovation degree of differentiation, maintaining stable product
quality with low utility costs
Using the melt direct spinning POY→DTY process route,
the melt is ejected from the independently designed
"straight-line"-shaped spinneret hole, and then cooled,
Mass Multiple Introduction
Spinning production persons and innovation oiled, rolled and spun into flat special-shaped POY yarns.
POY yarns are then textured into flat DTY polyester fully
drawn yarn, which feature lower bulk density, lighter
weight and softer fabric feel.
Using the melt direct spinning POY→DTY process route,
the melt is ejected from the independently designed
"cross"-shaped spinneret hole, and then cooled, oiled,
Mass Multiple Introduction
Spinning production persons and innovation rolled and spun into cross-shaped POY yarns. POY yarns
are then textured into cross DTY polyester fully drawn
yarn, which feature lower bulk density, lighter weight,
better air permeability and softer fabric feel.
Using the melt direct spinning PDY process route, the melt
is ejected from the independently designed "tree"- or
Mass Multiple Introduction "star"-shaped and other special-shaped spinneret holes,
Spinning
production persons and innovation and then cooled, oiled, rolled and spun into "tree"- or
"star"-shaped and other special-shaped FDY yarns. This
type of polyester fully drawn yarn features lower bulk
density, lighter weight, special luster, and softer fabric feel.
The functional self-heating masterbatch is added to
produce the functional hollow polyester fiber. It can be
Mass Multiple Introduction used as the "core layer" of the heat retaining and
Spinning
production persons and innovation comfortable composite fiber, with double heat retaining
effects. A utility model patent has been granted for this
technology. The patent number is ZL201410481816.0.
Wide range With the use of advanced equipment and process
Multiple Introduction
Spinning of persons and innovation technology, short process, high degree of automation, and
applications low manufacturing cost are achieved.
Wide range Through technical improvement, the manual operation
Multiple Introduction
Spinning of cycle is extended, the product quality stability is improved,
persons and innovation
applications and the resource consumption and cost are reduced
By installing in-line addition equipment, dynamic and
Spinning Wide range Multiple Introduction
of persons and innovation static mixing equipment, oiling nozzles, winders, etc. on
the melt direct spinning line, the existing equipment has
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Stage of Core
Patented
Main products production technical Advantage in product R&D
technology
technology personnel
applications been transformed and upgraded, enabling the polyester
melt direct spinning line to produce differentiated and
high-end products. It solves the challenge of using the
large-capacity polyester plant to produce functional
differentiated chemical fibers of multiple varieties in small
batches. Functional modified fibers are produced,
including colored, flame-retardant, antibacterial and full
dull fibers.
The self-owned technology of the Company is applied to
the production of flame-retardant polyester. Single-
Wide range
Multiple Introduction component spinning or composite spinning technology is
Spinning of
persons and innovation used to produce single-component or two-component
applications
sheath-core composite flame-retardant and anti-dripping
POY-DTY polyester fully drawn yarn.
Through independent R&D, the Company produces
Wide range
Multiple Introduction polyester and polyamide, SPH, sea-island, cationic dyed
Spinning of
persons and innovation polyester and other composite yarns to meet the high-end
applications
market demand
Through independent R&D, the Company produces
Wide range
Multiple Introduction differentiated and functional products such as HOY and
Spinning of
persons and innovation medium-strength yarns for segment markets, meeting the
applications
needs of specific users
In the spinning process, the non-contact heating method is
adopted to reduce the friction and heating of the yarns
during processing to avoid the production of broken yarns.
Low-temperature stretching deformation-high-
Wide range temperature setting are adopted and appropriate tangle jets
Multiple Introduction
Spinning of are used to reasonably control the tangle air pressure
persons and innovation
applications bundling performance and other production processes to
produce ideal fully-drawn yarns (FDY) similar to the
products of parallel drafting machines. A utility model
patent has been granted for this technology. The patent
number is ZL200810059725.2.
Through independent R&D, the Company produces oils
Wide range
Multiple Independent suitable for the spinning process to improve the processing
Spinning of
persons R&D performance of the product, so that the weaving process
applications
can proceed smoothly and the product quality is excellent.
By using the programmable controller (PLC), the
composite yarn is stretched in multiple stages, and the
Wide range
Multiple Introduction order of the stretching ratio of each stage can be changed
Spinning of persons and innovation as needed within the range, so that the composite yarn has
applications different structural densities, resulting in the difference in
color absorption and dyeing rates, and realizing multiple
colors after dyeing. It has brought significant economic
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Stage of Core
Patented
Main products production technical Advantage in product R&D
technology
technology personnel
and social benefits. A utility model patent has been granted
for this technology. The patent number is
ZL200710070581.6.
The graphene masterbatch and PET flakes are blended and
spun into yarns. A spinneret with a 4C aperture is used to
prepare hollow graphene polyester fiber POY, and the
Wide range
Multiple Introduction fluffy curl of the polyester fiber is further improved in the
Spinning of
persons and innovation subsequent texturing process. This gives the polyester fiber
applications
the features of heat retaining and light weight in addition
to the functionality of graphene, expanding its application
prospect of graphene in the field of textiles.
The antimony-free polyester melt is produced by adding a
Wide range titanium-based catalyst to polyester to instead of
Multiple Introduction
Spinning of antimony-based catalysis, and then antimony-free staple
persons and innovation
applications fibers and fully drawn yarns are produced through a
spinning process, featuring high environment-friendliness.
By spinning and winding a bunch of POY and a bunch of
FDY, a new type of polyester/polyester composite yarn is
Wide range
Multiple Introduction made, and it can be used for weaving high-grade artificial
Spinning of
persons and innovation silk clothing fabrics and home textile fabrics, which has
applications
the advantages of rich hand feel, anti-wrinkle property and
good drapability.
Wide range
Multiple Introduction Through independent R&D, the spinning oil for FDY has
Spinning of persons and innovation been successfully prepared to replace imported oils.
applications
The antimony-free polyester melt is produced by adding a
Wide range titanium-based catalyst to polyester to instead of
Multiple Introduction
Spinning of persons and innovation antimony-based catalysis, and then antimony-free staple
applications fibers and fully drawn yarns are produced through a
spinning process, featuring high environment-friendliness.
By spinning and winding a bunch of POY and a bunch of
FDY, a new type of polyester/polyester composite yarn is
Wide range
Multiple Introduction made, and it can be used for weaving high-grade artificial
Spinning of persons and innovation silk clothing fabrics and home textile fabrics, which has
applications
the advantages of rich hand feel, anti-wrinkle property and
good drapability.
Wide range
Multiple Introduction Through independent R&D, the spinning oil for FDY has
Spinning of
persons and innovation been successfully prepared to replace imported oils.
applications
Mass Multiple Introduction By controlling the temperature of false twisting
Texturing production persons and innovation deformation, the linen type is achieved, which not only has
the style of natural linen fibers, but also has the stiffness of
55
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Stage of Core
Patented
Main products production technical Advantage in product R&D
technology
technology personnel
artificial linen fibers.
The airflow through the tangle jet is closed intermittently,
and a variety of polyester POY yarns of different colors are
composited through false twisting deformation to produce
a fancy composite polyester yarn interleaved with fluffy
Mass Multiple Introduction non-intermingled low-stretch fiber and intermingled
Texturing
production persons and innovation blended fiber. Colored polyester POY is used to produce
the colored composite yarn directly by texturing,
eliminating the complicated downstream dyeing process,
reducing the cost of the product, simplifying the process
and lessening the pollution to the environment
A double-solenoid valve opening and closing logic design
is adopted. The two solenoid valves arranged in parallel or
series are designed with a reasonable opening and closing
logic to jointly control them to realize intermittent
Mass Multiple Introduction switching of the tangle jet airflow and the intelligent
Texturing
production persons and innovation design of polyester fancy composite yarn tangling points.
At the same time, it reduces the frequency of use of a single
solenoid valve to prevent overheating damage to a single
solenoid valve, effectively improving the efficiency of
texturing.
The Company has a more mature technology for producing
products with a monofil fineness of 0.5-1.0dpf, which
provides technical support and experience accumulation
for the development of finer products. Through the
supporting of pre- and post-spinning equipment, the
Mass Multiple Introduction
Texturing production persons and innovation Company realizes independent R&D. At present, the
Company's production technology of ultra-fine fibers of
less than 0.5dpf is mature, the quality is stable, and
relevant production conditions are available. They are
mainly used for producing high-grade fabrics and
decorative fabrics.
In pre-spinning, the third monomer is introduced into the
reaction system to prepare low-temperature dyeable
Mass Multiple Introduction
Texturing production persons and innovation cationic POY, which is matched with post-spinning and
texturing to prepare DTY products, thereby reducing the
cost of subsequent dyeing and environmental pollution.
The technology is independently researched and
developed by the Company. Nubby products are produced
Mass Multiple Introduction under special process conditions such as stretching
Texturing
production persons and innovation temperature and stretching ratio. With the characteristics
of cotton and linen fabrics, they are widely used in summer
cotton and linen fabrics and popular in the market.
Texturing Mass Multiple Introduction Composite yarns are made by processing two or more
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Stage of Core
Patented
Main products production technical Advantage in product R&D
technology
technology personnel
production persons and innovation fibers. The processed products have the characteristics of
various fibers, such as fabric cotton feel, softness and
breathability, and different patterns of dyeing. Examples
include FDY-DTY composite yarn, high- and low-
viscosity composite yarn, cationic dyed polyester
compound, etc. This product is widely used in high-end
fabrics, and the market demand is great
The special-shaped section of the spinning spinneret
produces polyester fibers with different sections, which
improves the capillary effect of the fibers in the fabric, so
Mass Multiple Introduction that sweat can quickly migrate to the surface of the fabric
Texturing
production persons and innovation and disperse due to the effects of wicking, diffusion and
transmission, achieving the purpose of moisture
conductivity and fast drying, and improving the moisture
permeability of polyester fabrics
By producing the S+Z products on a twin-strand machine,
the torques of the two yarns cancel each other after
stranding, resulting in a torque-free product. This
Mass Multiple Introduction
Texturing technology has the advantages of flat surface, easy
production persons and innovation
weaving, rich hand feel, and even dyeing. In particular, it
shows good effect in oxford fabric, so it is very suitable for
high-end decorative fabrics
Using the production technology of wool-like fibers, POY
yarns are drawn and falsely twisted on the DTY machine,
and then compounded with DTY of the PTT component.
The PTT fiber floats on the surface of the yarn and exerts
Wide range
Multiple Introduction its excellent wearing performance. The high-shrinkage
Texturing of
persons and innovation modified PET fiber is placed in the inner layer of the yarn
applications
to exert its rigid supporting effect and bring out a stronger
sense of uprightness. A utility model patent has been
granted for this technology. The patent number is
ZL201010174972.4.
The false-twisting texturing technology is used to produce
Wide range
Multiple Introduction polyester fully drawn yarn with good hollowness and clear
Texturing of persons and innovation profiled outline, and high requirements for conformal
applications
properties such as profile degree and hollowness
The technology is independently developed by the
Wide range Company and is used to process DTY of various colors
Multiple Introduction such as black, red, gray, and yellow. The color is uniform
Texturing of persons and innovation and not easy to fade in daily use. No dyeing is required
applications
after weaving, and the yarn is mostly used for making
special-purpose fabrics.
Multifunctional Leading in Multiple Introduction The core technology of this product is the current
polyester bottle China persons and innovation international advanced high-temperature crystallization
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Stage of Core
Patented
Main products production technical Advantage in product R&D
technology
technology personnel
flakes and solid-phase polycondensation process with short
process and low energy consumption. The comprehensive
energy consumption per unit of product has reached the
leading level in China
Production capacity of main products
Please refer to I. Major businesses engaged in by the Company during the reporting period of
Section III, Business Summary of the Company.
Product categories of major chemical parks
Major chemical parks Main product categories
PMB Industrial Park Gasoline, diesel, jet fuel, PX, and benzene
Linjiang High-tech Industrial Park Flake, staple fiber, POY, and FDY
Haining Economic Development Zone
Flake, POY, FDY, and DTY
(Jianshan New District)
Suqian High-tech Industrial Development
Flake and staple fiber
Zone
Jiaxing Xiuzhou High-tech Industrial
Flake, POY, and FDY
Development Zone
Shaxi Town Industrial Park Flake and POY
Ningbo Petrochemical Economic and
PTA
Technological Development Zone
Dalian Economic and Technological
PTA and bottle flake
Development Zone
Yangpu Economic Development Zone PTA and bottle flake
EIA approvals being applied for or newly obtained during the reporting period
□ Applicable Not applicable
Unusual suspension of production of the listed company during the reporting period
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
□ Applicable Not applicable
Relevant approvals, permits, qualifications and validity periods
Mainly including: Production Safety Permit, Emission Permit, and Cargo Transportation Permit.
Engaged in petroleum processing and petroleum trading.
Validity
SN Holder Certificate name Certificate No. Issuer
period
Beilun Branch of
Zhejiang 91330200744973411 Ningbo Municipal December
1 Emission Permit
Yisheng W001W Ecology and 15, 2026
Environment Bureau
Department of
Zhejiang Radiation Safety Ecology and November
2 ZHFZ No. B2005
Yisheng Permit Environment of 17, 2024
Zhejiang Province
Department of
Zhejiang Production Safety (ZJ) WHAXZZ Emergency January 03,
3
Yisheng Permit (2019)-B-1448 Management of 2025
Zhejiang Province
Hangzhou
91330000765215943 Municipal Ecology August 27,
4 Hengyi Limited Emission Permit
G001Y and Environment 2023
Bureau
Work Safety Hangzhou
Standardization Hangzhou Municipal Bureau of
5 Hengyi Limited 2023.08
Level-3 Enterprise AQBFZⅢ202100807 Emergency
(Textile) Management
Hangzhou
Hengyi High- 913301006680033406 Municipal Ecology November
6 Emission Permit
Tech 001Q and Environment 25, 2026
Bureau
Work Safety Hangzhou
Hengyi High- Standardization HZ Municipal Bureau of January
7 2023
Tech Level-3 Enterprise AQBFZⅢ201900974 Emergency
(Textile) Management
Hangzhou
Hengyi 913301097245283880 Municipal Ecology November
8 Emission Permit
Polymer 001P and Environment 2, 2026
Bureau
59
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Validity
SN Holder Certificate name Certificate No. Issuer
period
Department of
Hengyi Radiation Safety Ecology and September
9 ZHFZ No. A2255
Polymer Permit Environment of 19, 2024
Zhejiang Province
Work Safety Hangzhou
Hengyi Standardization Hangzhou Municipal Bureau of
10 April 2023
Polymer Level-3 Enterprise AQBFZⅢ202100038 Emergency
(Textile) Management
91330411MA28BLM Jiaxing Ecology and December
11 Jiaxing Yipeng Emission Permit
Y30001V Environment Bureau 1, 2023
Port Operations Jiaxing Municipal
March 11,
12 Jiaxing Yipeng Permit of People's (ZJNH) GJZ (1265) Port and Shipping 2023
Republic of China Administration
Jiaxing Inland Port
Jiaxing Municipal
Shoreline Use March 11,
13 Jiaxing Yipeng JNHAZ No. (1265) Port and Shipping
Registration 2054
Administration
Certificate
Xiuzhou District
Agriculture, Rural
QS (JXNS) Z (2019) November
14 Jiaxing Yipeng Water Use Permit and Water
No. 007 12, 2023
Resources Bureau of
Jiaxing City
Suzhou Municipal
91320585MA1P1GP December
15 Taicang Yifeng Emission Permit Ecology and
BXM001V 30, 2027
Environment Bureau
Hangzhou
Shuangtu New 91330100566050736P Municipal Ecology November
16 Emission Permit
Materials 001Y and Environment 26, 2026
Bureau
Department of
Shuangtu New Radiation Safety Ecology and December
17 ZHFZ No. A3048
Materials Permit Environment of 26, 2023
Zhejiang Province
Work Safety Hangzhou
Shuangtu New Standardization Hangzhou Municipal Bureau of October
18
Materials Level-3 Enterprise AQBFZⅢ202101128 Emergency 2023
(Textile) Management
91350582MA31G07Q Quanzhou April 7,
19 Fujian Yijin Emission Permit
8C001V Municipal Ecology 2026
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Validity
SN Holder Certificate name Certificate No. Issuer
period
and Environment
Bureau
91321311MA1UXUC Suqian Ecology and July 18,
20 Suqian Yida Emission Permit
8XJ001R Environment Bureau 2026
Radiation Safety Suqian Ecology and January 12,
21 Suqian Yida SHFZ No. 0199
Permit Environment Bureau 2027
Haining 91330481MA29HXM Jiaxing Ecology and July 22,
22 Emission Permit
Thermal Power L34001R Environment Bureau 2025
Haining New 91330481MA29HRX Jiaxing Ecology and July 27,
23 Materials Emission Permit 724001V Environment Bureau 2023
Zhejiang Zhejiang Provincial
Special Equipment April 1,
24 Hengyi Production License TS3833335-2024 Administration for 2024
Engineering Market Regulation
Construction Hangzhou Urban
Zhejiang
Enterprise and Rural December
25 Hengyi D333903322
Qualification Construction 31, 2023
Engineering
Certificate Committee
Road Transport Hangzhou
Zhejiang
Operations Permit of ZJYGXKHZ No. Municipal August 31,
26 Hengyi
People's Republic of 330109186475 Transportation 2025
Logistics
China Bureau
Beilun District
Hazardous Branch of Bureau of
Ningbo Hengyi November
27 Chemicals YLAJ (2022) 0085 Emergency
Trading 25, 2024
Operations Permit Management of
Ningbo
Road Transport Shaoxing Keqiao
Shaoxing
Operations Permit of ZJYGXKSZ No. District April 12,
28 Hengyi
People's Republic of 330621104701 Transportation 2031
Logistics
China Bureau
Work Safety Ministry of
Hengyi Standardization Transport of the January 9,
29 2018-01-101490
Logistics Level-1 Enterprise People's Republic of 2024
(Road Transport) China
Hangzhou
Hangzhou 91330109MA28M4D Municipal Ecology November
30 Emission Permit
Yijing D8Y001P and Environment 4, 2026
Bureau
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Validity
SN Holder Certificate name Certificate No. Issuer
period
Department of
Hangzhou Radiation Safety Ecology and May 22,
31 ZHFZ No. A2259
Yijing Permit Environment of 2027
Zhejiang Province
Work Safety Hangzhou
Hangzhou Standardization Hangzhou Municipal Bureau of January
32 AQBFZⅢ2019 2023
Yijing Level-3 Enterprise Emergency
(Textile) Management
Department of
Hengyi Production Safety (ZJ) WHAXZZ Emergency December
33
Caprolactam Permit (2019)-A-2191 Management of 5, 2023
Zhejiang Province
Department of
Hengyi Radiation Safety Ecology and January 16,
34 ZHFZ No. A3044
Caprolactam Permit Environment of 2027
Zhejiang Province
Work Safety
Department of
Standardization
Hengyi Zhejiang AQBWH Emergency June 2023
31 Level-2 Enterprise Ⅱ202100002
Caprolactam Management of
(Hazardous
Zhejiang Province
Chemicals)
Engaged in petroleum processing and petroleum trading
Yes □ No
Engaged in fertilizer industry
□Yes No
Engaged in pesticide industry
□Yes No
Engaged in chlor-alkali and soda ash industry
□Yes No
III. Analysis of core competitiveness
1. Leading international industrial strategy by adhering to industrial business and
highlighting main business
Focusing on the strategic policy of “consolidating, highlighting and optimizing the competitiveness
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
of main business”, the Company takes the lead in applying polyester melt direct spinning technology,
large-scale PTA technology and high-end green caprolactam technology, and optimizes and expands
the terminal production capacity of chemical fiber industry through mergers and acquisitions to
realize the grafting of its advantages in petrochemical and chemical fiber industry; and substantially
improves the technology level and competitiveness in the above-mentioned fields of industry to boost
the high-quality development of petrochemical and chemical fiber industry.
Following the “headquarters + scientific research + base" trinity model, the Company has been
actively creating one platform, two centers, and six bases, and build a market pattern that "backs on
the Yangtze River Delta, the Pearl River Delta, and the Bohai Bay, and faces the blue sea", steadily
operating to help accelerate the cycle, and comprehensively enhancing the development momentum
of the Company. The Company took the lead in overseas layout of the Brunei Project to respond to
the "the Belt and Road" policy, seize the development opportunities of the Southeast Asian market,
and realize the international layout and operation of the industry, which helped the Company complete
the integration of the vertical industrial chain to solve the bottleneck of raw materials. The Brunei
Project is the first large-scale overseas petrochemical project that fully implements Chinese standards,
the largest foreign direct investment project in Brunei and the largest overseas investment project of
Chinese private enterprises so far, and has been listed in the first batch of key construction projects
under the "the Belt and Road” initiative.
2. High-end R&D advantages by focusing on innovation and environmental protection
The Company has long been focusing on R&D and application of high-end technologies and products
in the field of petrochemical and chemical fibers. Relying on the university-enterprise platform, the
Company has established its leading position in technology and a product portfolio featuring
"diversification, serialization, quality, and uniqueness". Through comprehensive R&D of new
products and technologies related to the whole industry chain, the Company realizes full-process,
flexible development of high-tech products (technologies) and transformation of scientific and
technological achievements, and the technology level is industry-leading.
The Hengyi Research Institute, a subsidiary of the Company, is committed to the R&D of advanced
materials and green chemicals, actively enhances the Company’s ability to lead innovation, and takes
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
the initiative to assume the main responsibility for the transformation of scientific and technological
achievements, the launch of new products on the market, and the realization of economic benefits to
accelerate the implementation of technological achievements.
The Company adheres to the concept of green and environmentally-friendly development,
transforming technological advantages into sustainable development momentum. The Company
focuses on the recycling of polyester throughout its life cycle, breaking through existing technical
difficulties and realizing high-quality recycling of polyester. Through independent project
establishment and R&D, the Company has produced safe, high-quality and environment-friendly
green polyester products, launched the self-developed green polyester product "Eticont", and
prepared high-performance polyester from bio-based materials. By promoting green manufacturing,
the environmental pollution caused by production has been effectively reduced, and the green loop
of textile life cycle has been realized.
3. Advantages of vertical balance and intensive development in large-scale layout
The Company has been developed into a global leader integrating the industrial chain of "PX-
Polyester" with that of "Benzene-Polyamide”. Through the construction of upstream refineries
overseas, the expansion of midstream and downstream enterprises in China, the implementation of
mergers and acquisitions and restructuring and other differentiated development models, the
Company has built a "columnar" balanced and integrated industrial chain covering "crude oil -
aromatics - PTA - polyester" and "crude oil - benzene - CPL - polyamide". The Company coordinated
the matching of upstream, mid-stream and downstream raw materials, and has achieved balanced and
coordinated development of the entire industry chain from unique large-scale refining and
petrochemical industry to supporting PX, PTA, and polyester (PET) production capacities. After the
Brunei Phase II Project is completed and put into operation, a new "olefin - polyolefin" industrial
chain will be formed, which will improve the intensification, large-scale operation and integration
level of the Brunei Refining and Petrochemical Project, is conducive to the integrated, globalized and
balanced synergistic operation of the Company's products, equipment and utilities, and will help
enhance the Company's sustainable profitability and anti-risk ability.
The Company's production capacity ranks among the top of the industry, with obvious scale
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
advantages. Currently, the refining and petrochemical design capacity of the Company is 8 mtpa, the
PTA production capacity of shareholding and joint-stock companies is 19 mtpa, the polymer
production capacity of shareholding and joint-stock companies is 10.765 mtpa, the caprolactam
production capacity is 400,000 tpa, and the production capacities of both PTA and polymer of
shareholding and joint-stock companies rank first in the world. The Company has been continuously
upgrading and optimizing the industrial model, consolidating and expanding the production capacity
advantages of each link, advancing the quantitative change of the Company's operation scale and the
qualitative change of the business structure, and promotes the investment and application of large-
scale equipment and energy-saving and consumption-reducing technologies. The Company's
advantage in scale promotes the stability of production plant operation, improves product quality and
production efficiency, and greatly reduces the unit investment cost and unit energy consumption,
giving the Company a significant advantage in unit manufacturing cost in the industry. Besides, the
large-scale procurement enables the Company to form strong operational capabilities and obtain
advantageous prices, saving procurement costs and providing a strong guarantee for the profitability
of final products.
4. Intelligent operation advantages of digital-intelligence integration and efficient operation
The Company has established the "Petrochemical + Industrial Internet" information strategy to
promote the deep integration of new-gen information and communication technologies and the
petrochemical manufacturing industry and drive the digitalization, networking and intelligent
development of the chemical fiber manufacturing industry, so as to realize the highly coordinated
operation of the whole industrial chain. As a leading enterprise in the industry, the Company has
actively been building digital workshops and intelligent factories, and has built the first polyester
factory in China equipped with a full process intelligent storage and transportation system; has
creatively proposed a single-spindle data flow system, achieving data-driven production operations
and operational management; has independently developed a cloud-table finished product storage
system to achieve efficient logistics operation and automatic quality control of products in the
workshop warehouse, achieving process optimization, information sharing, and efficiency
improvement among various production processes; and, has been promoting information
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
interconnection between intelligent manufacturing devices such as automatic winding, automatic
packaging, intelligent appearance inspection, AGV cars, robots, and three-dimensional warehouses.
The Company has pioneered a full-life product quality traceability system and a smart sales supply
chain system in the industry, and independently developed a visual "Hengyi Brain" to assist the
management personnel of the Company in achieving digital management.
The Company has innovated customer service ecosystem and a chemical fiber supply chain platform
integrating micro mall, supply chain finance, warehousing and logistics. Externally, it combines
Internet marketing and customer social experience management, providing various services including
independent order placement, supply chain support, data display through the whole process of sales,
and multi-dimensional portraits; internally, it realizes data sharing among various business systems,
improves the efficiency of data interaction, eliminates barriers to information flow, and forms a
closed-loop process for supply chain operations such as sales, collection, scheduling, delivery,
dispatching, shipment, and invoicing.
Besides, keeping in mind the aim of becoming a leader in the Internet of chemical fiber industry, the
Company gives full play to its own supply chain supporting strength, actively builds an industry
ecosystem, and strives to create an industrial platform of "online trading + online finance +
warehousing and logistics" to provide various digital solutions such as digital management, intelligent
manufacturing, online trading, logistics services, market analysis, production, supply and marketing
synergy, and supply chain finance, deeply empowering the development of the chemical fiber industry.
5. Professional talent advantages of being rooted in China and having a global perspective
Learning the advanced domestic and foreign organizational management experience, the Company
has established a sound internal system to further optimize its organizational structure, continuously
improve its organizational management and operation efficiency, and bring into play the advantages
of scale synergy.
The Company has created an international, specialized, and professional management and operation
team, providing strong supports for the high-quality development of the Company. The Company has
attached great importance to talent introduction and cultivation, including strengthening the
construction of management and technical talent teams, actively introducing senior management and
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
technical talents from both domestic and foreign sources through various channels, and improving
the internal talent cultivation model by combining industry, academia, research, and application,
providing employees with a good career development channel. The Brunei Project of the Company
has been steadily improving the localization level of employees, vigorously supporting the growth of
local youth in Brunei, achieving win-win talent cooperation.
In terms of employee incentive, in addition to providing employees with competitive remuneration
and incentive mechanisms in the industry, the Company has implemented two phases of restricted
stock incentive plans, four phases of employee stock ownership plans and two phases of share
repurchase plans to reserve for the subsequent employee stock ownership plans or stock incentive
plans since 2015, which has fully mobilized the enthusiasm of employees and effectively attracted
more high-caliber talents. Through the establishment of the long-term development sharing
mechanism, the sense of belonging and cohesion of employees is effectively enhanced, which lays
the talent foundation for the Company's long-term development.
IV. Analysis of main business
1. Overview
In 2022, in the face of complex and severe domestic and international situations, increasingly fierce
market competition, and industry landscape, the Company withstood the pressures and successfully
completed the tasks and goals set at the beginning of the year. All employees worked together to
achieve steady production and improved quality and efficiency by optimizing production organization,
implementing refined business measures, advocating cost reduction and energy conservation, and
strengthening risk control. At the end of the reporting period, the Company realized operating income
of RMB 152.05 billion. The net profit attributable to shareholders of the listed company was RMB -
1.080 billion; the total assets of the Company was RMB 111.965 billion, and the net assets attributable
to shareholders of the listed company was RMB 25.447 billion; the basic earnings per share was RMB
-0.30 /share, and the weighted average net return on assets was -4.31%. During the reporting period,
the Company implemented the dividend distribution plan for 2021, distributing cash dividend totaling
RMB 717 million, which accounted for 21.05% of the Company's net profit attributable to the parent
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
company in 2021.
During the reporting period, the Company implemented the third-phase share repurchase plan. As of
March 31, 2023, the cumulative number of shares repurchased by the Company reached 122,499,800,
which accounted for 3.34% of the total share capital of the Company, and the total amount paid was
approximately RMB 900 million. With the first- and second-phase share repurchases of RMB 510
million and RMB 624 million, as of the end of 2022, the cumulative repurchase amount of Hengyi
Petrochemical reached about RMB 2.034 billion. The third-phase share repurchase plan once again
injected a shot of energy in the market, demonstrating the Company's confidence in future
development.
(1) The Company seized opportunities in the Southeast Asian market to achieve high-quality
operations
During the reporting period, international oil prices fluctuated sharply, resulting in a significant
increase in overall costs and a decline in efficiency. In the first half of 2022, affected by the
international turmoil and tight supply pattern, the Southeast Asian product oil market ushered in a
boom cycle, with the crack spread of product oil rising across the industry, and the price difference
of product oil hitting a historic high. However, after entering the second half of the year, due to the
impact of the low consumption season and the Federal Reserve's interest rate hike, the corresponding
product price difference in the Brunei refining and petrochemical business has fallen, and the costs
for the Company's production and operation have significantly increased. Throughout the year,
although the average price difference has expanded, it has not covered the overall cost increase caused
by the rise in oil prices, resulting in a year-on-year decline in the benefits of the Brunei Project.
During the reporting period, in order to maintain stable production and operation of the Brunei Project,
the Company took measures to actively respond to fluctuations in crude oil prices and product price
differences, e.g., purchased various types of crude oil raw materials suitable for the Company's
processing, reduced upstream costs, and closely followed market changes in the product structure.
Besides, the Company also made reasonable adjustments to the production of chemical light oil,
gasoline, diesel, jet fuel, benzene, and PX products, with clean oil accounting for one-third of the
total production capacity, and aromatics (Benzene and PX) and diesel accounting for one-third
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
respectively, striving to maximize the operational benefits of the Brunei Project. During the reporting
period, the Brunei Project had been operating efficiently. It mainly produced production oil products
such as diesel, gasoline, chemical light oil, and liquefied gas, and chemicals such as PX and benzene.
The outputs of the two categories were 6.4225 mtpa and 2.0239 mtpa, the sales volumes were 6.3912
mtpa and 2.0179 mtpa, and the sales revenues (sales amounts) were RMB 41.531 billion and RMB
8.599 billion respectively. The products further promoted the global popularity of the brand "Hengyi",
and the improvement of vertical industrial chain integration enhanced the Company's competitiveness.
As of the disclosure date of this Report, the advantages of international operations of the Hengyi
Brunei Project have more prominent, including:
(1) In the medium to long term, the Southeast Asian product oil market will have a strong demand
while the supply remains tight, and the Company's Brunei Refinery is expected to continue to be
benefited.
(2) The powerful support of China and Brunei will provide the Company with long-term tax
incentives and other favorable policies.
Brunei has a stable political situation and the project meets Brunei's 2035 Vision and promotes
the economic growth of the Belt and Road Initiative countries;
The project is not restricted by trade barriers and belongs to the ASEAN Free Trade Area; the
import and export of products are duty-free;
The overall tax burden is obviously reduced. Brunei does not levy personal income tax, business
tax, payroll tax, production tax and export tax. The project has received eleven years of tax exempt ion
and export enterprise discounts from pioneer enterprises, and can enjoy a longer-term of enterprise
income tax reduction and exemption.
The project is in line with the "Belt and Road Initiative" strategy, and the syndicated loans are of
national strategic support.
(3) The plant is stable, operates at high load, and the industrial chain is integrated and stable.
The project is closer to the crude oil supply place and Singapore's crude oil trade market, boasting
convenient crude oil procurement and lower logistics cost;
The product oil produced by the project is sold to Southeast Asia and Australia, which has strong
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
demand; Brunei Project has a short sales radius and low logistics cost;
All chemical products are digested downstream of the own industrial chain to realize the
integrated operation of the industrial chain.
(4) The cost advantage is significant, and the cost of energy transportation is reduced.
The project is fully equipped with power generation units, and thus the cost advantage of utilities
is evident;
The main production plants, such as Hydrocracking, Reforming and PX units, adopt the latest
advanced technology, which has the technical characteristics of low operating cost, high product
conversion rate, etc., thus reducing the production cost of PX;
The low-temperature heat reuse technology is adopted with waste heat used for seawater
desalination, which reduces the operation cost of seawater desalination and the comprehensive energy
consumption index of PX production;
Residual oil is treated with the latest flexicoking process, which can be continuously produced
and reduce labor cost; by-product fuel gas reduces fuel cost; compared with the traditional process,
closed production of the plant is more environmentally friendly and harmless treatment of residual
oil is realized;
The liquid phase diesel hydrogenation technology can meet the new international diesel standard,
and at the same time reduce the unit investment and operation energy consumption.
Brunei has a mild climate all year round and no natural disasters. As a rich oil-producing country,
Brunei has abundant oil and gas resources, which can provide some crude oil and reduce the logistics
cost of crude oil.
Hengyi (Brunei) PMB Petrochemical Project, as the first overseas large-scale petrochemical project
of the Company that fully implements Chinese standards, is the first private refining-petrochemical
project for the Company to realize the international layout of production capacity and practice "the
Belt and Road" initiative, and it has received unanimous supports from both China and Brunei
governments. In 2022, the project won the Award for China Construction Engineering - the highest
award in the Chinese construction industry, the "Luban Prize", which promoted the coordinated
development of Brunei and self-development of the Company and was highly praised by government
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
media.
At present, all work in the Brunei Phase II Project is being carried out in an orderly manner, and the
construction work such as embankment reclamation is underway. After the completion, the Brunei
Phase II Project will help the Company further reduce production costs, stabilize raw material supply,
and optimize product structure, playing an integrated and collaborative operation role. In combination
with the geographical advantage, i.e., the project is located in the hinterland of the Southeast Asian
product oil demand market, the overall profitability of the Company is expected to be improved
continuously. In addition, the project will further promote the employment in Brunei, assist in
industrial upgrading, and achieve diversified economic development.
(2) With the increased sales volume and expanded market, the polyester leader welcomed a
recovery
In the first half of 2022, under the influence of various factors such as international geopolitics, energy
prices continued to rise, and overseas inflation continued to ferment, resulting in a sharp increase in
the cost of polyester raw materials; in the second half of the year, as the tightened US monetary policy
and the Federal Reserve’s interest rate hikes, domestic and foreign demand continued to weaken.
Under the dual suppression of high costs of the upstream and low demand of the downstream,
polyester product prices fell and product benefits were compressed.
In 2023, the Company will continue to optimize the customer structure in the field of fully drawn
yarn production, especially increasing the expansion of customers with high-quality requirements and
high added-value; and, consolidate the existing market share and maintain the core market of the
original Hengyi system. In terms of staple fiber, the Company will rely on innovation in sales models
to develop personalized procurement models for each customer and to increase sales. In terms of
flakes, the Company will focus on expanding customers with semi-gloss additives and expanding
customers with glossy films and industrial yarn. With the increase in industry operating rates and the
boost in demand during traditional peak seasons, it is expected to drive the recovery of the polyester
industrial chain, and the polyester efficiency is expected to be stabilized and to rebound in 2023.
(3) Continuously emerging scientific research and innovation achievements promoted the
upgrading of Hengyi products
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
During the reporting period, the Company invested approximately RMB 688 million in R&D. As of
December 31, 2022, the Company has applied for a total of 511 patents, including 310 authorized
patents, among which there are 203 authorized invention patents and 107 authorized utility model
patents; Currently, 123 patents are being processed; participated in the formulation of 34 standards,
including 10 national standards, 18 industry standards, and 6 group standards (including associations).
During the reporting period, the Company actively responded to the national "carbon peaking and
carbon neutrality" strategy, adhered to the guidance of "green manufacturing" and "circular economy",
arranged the recycling of waste textiles in the medium and long term, and upgraded the R&D towards
high end and differentiation. Among them, flame-retardant and antibacterial products were in a
leading position in the country, and the production capacity continued to increase; bio-based PLO,
PPS, PPET, and FDC patents ranked among the top in China, with more prominent barrier advantages;
the application and development of the bio-based PTT elastic memory fiber series products have been
completed and industrialized, greatly reducing production costs and improving market competitive
advantages.
The Company realized the industrialization of melt direct spinning antimony-free polyester fully
drawn yarn, and large-scale production of environmentally-friendly polyester product "Eticont",
which is widely used in facial mask, baby clothes, etc., realizing full industrialization and variety
coverage. The development of functional composite materials, such as antibacterial and cationic dyes,
was taking shape, and the industrialization of these materials was gradually being promoted, with the
technical level reaching international leading levels.
In order to further improve R&D conditions, the Company has invested in the construction of the
Hengyi Global Innovation Center in Hangzhou, which is used for R&D of future advanced
technologies, and has established a joint R&D platform with Zhejiang University, Donghua
University, and Nanjing University of Technology to build a new technology innovation system that
combines industry, academia, research, and application, so as to promote the collaborative innovation
between schools and enterprises, provide innovation impetus for the long-term development of the
Company, and continue to collaborate with multiple well-known universities. Besides, the Company
also collaborated with research institutions and well-known domestic and foreign enterprises to form
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
a comprehensive scientific and technological innovation mechanism that combines industry,
academia, research, and application to effectively achieve the sharing and complementarity of
technological innovation resources, so as to rapidly improve the Company's technological innovation
ability, scientific research level, and market response ability.
(4) The Company promoted the digital transformation strategy and made fruitful
achievements in intelligent transformation
Under the strategy of "Petrochemical + Industrial Internet”, the Company actively carried out
industrial digital transformation, promoted the deep integration of new-gen information and
communication technologies and the petrochemical manufacturing industry, diving the digitalization,
networking and intelligent development of the chemical fiber manufacturing industry. The Company
has been focusing on building a visual "Hengyi Brain". The construction of Phase II was being
steadily advanced, and a chemical fiber supply chain platform integrating the Micro Mall, supply
chain finance, warehousing and logistics was under construction. Besides, the Company has
creatively proposed the concept of “single-spindle data flow” to strengthen the construction of digital
infrastructure, striving to promote the digital transformation and upgrading of enterprises and
promoting high-quality business development of the Company.
In order to promote intelligent transformation, the Company has built the first domestic polyester
factory with a full process intelligent storage and transportation system. In 2022, the equipment
management system began to be promoted and applied, and the level of intelligence has significantly
improved. The Company also introduced automated and intelligent equipment such as intelligent
appearance inspection and automatic packaging lines to reduce labor costs and improve work
efficiency. The subsidiary Haining Hengyi New Materials has built the first digital black-light factory
in the industry, of which the degree of automation is as high as 95% and the overall efficiency reaches
92% or above. It achieved transparency in production information and rapidly promoted the
digitalization and intelligence process of the enterprise, and was awarded the title of "2022 Best
Practice in Intelligent Manufacturing in China" by www.e-works.net.cn.
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
2. Revenue and cost
(1) Composition of operating income
Currency unit: RMB
2022 2021 Year-on-
year
Percentage in Percentage in increase/de
Amount Amount crease
operating income operating income
Total operating
152,050,274,944.64 100% 129,666,931,795.26 100% 17.26%
income
By industry
Petrochemical
59,269,682,296.57 38.98% 36,094,837,257.96 27.84% 64.21%
industry
Chemical fiber
46,316,793,158.99 30.46% 45,814,836,579.30 35.33% 1.10%
industry
Supply chain
46,463,799,489.08 30.56% 47,757,257,958.00 36.83% -2.71%
services
By product
Refinery
41,531,346,473.30 27.31% 24,081,670,289.03 18.57% 72.46%
products
Chemical
8,599,075,610.04 5.66% 4,553,199,820.35 3.51% 88.86%
products
PTA 8,966,680,849.79 5.90% 6,388,792,085.43 4.93% 40.35%
PIA 172,579,363.44 0.11% 1,071,175,063.15 0.83% -83.89%
Polyester yarn 41,123,434,064.32 27.05% 41,337,835,963.34 31.88% -0.52%
Flake 5,193,359,094.67 3.42% 4,477,000,615.96 3.45% 16.00%
Supply chain
46,463,799,489.08 30.56% 47,757,257,958.00 36.83% -2.71%
services
By region
Domestic 98,119,165,712.07 64.53% 96,384,470,426.22 74.33% 1.80%
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Overseas 53,931,109,232.57 35.47% 33,282,461,369.04 25.67% 62.04%
By sales model
Direct sales 150,056,276,149.80 98.69% 127,962,603,313.47 98.69% 17.27%
Distribution 1,993,998,794.84 1.31% 1,704,328,481.79 1.31% 17.00%
(2) Industries, products, regions, and sales models that account for more than 10% of the
Company's operating income or profit
The Company shall comply with the disclosure requirements for petrochemical industry
specified in Guidelines No. 3 for Self-Regulation of Listed Companies of Shenzhen Stock
Exchange - Industry Information Disclosure
Currency unit: RMB
Increase or
Increase or
Increase or decrease in
decrease in
decrease in gross profit
Gross operating
operating cost margin
Operating income Operating cost income
profit compared with compared
margin compared with
the same period with the
the same period
of the previous same period
of the previous
year of previous
year
year
By industry
Petrochemical
59,269,682,296.57 56,742,187,026.59 4.26% 64.21% 68.70% -2.55%
industry
Chemical
46,316,793,158.99 45,630,114,979.64 1.48% 1.10% 9.46% -7.53%
fiber industry
Supply chain
46,463,799,489.08 46,143,208,516.15 0.69% -2.71% -1.83% -0.89%
services
By product
Refinery
41,531,346,473.30 39,071,409,441.34 5.92% 72.46% 68.33% 2.31%
products
Chemical
8,599,075,610.04 8,376,249,628.83 2.59% 88.86% 137.61% -19.99%
products
PTA 8,966,680,849.79 9,088,501,918.59 -1.36% 40.35% 49.13% -5.97%
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
PIA 172,579,363.44 206,026,037.83 -19.38% -83.89% -74.37% -44.34%
Polyester yarn 41,123,434,064.32 40,586,001,652.13 1.31% -0.52% 8.40% -8.11%
Flake 5,193,359,094.67 5,044,113,327.51 2.87% 16.00% 18.83% -2.32%
Supply chain
46,463,799,489.08 46,143,208,516.15 0.69% -2.71% -1.83% -0.89%
services
By region
Domestic 98,119,165,712.07 97,404,511,107.95 0.73% 1.80% 6.91% -4.75%
Overseas 53,931,109,232.57 51,110,999,414.43 5.23% 62.04% 63.70% -0.96%
The Company's main business data in the year adjusted according to the caliber at the end of
the reporting period as the statistical caliber of the Company's main business data was
adjusted during the reporting period
□ Applicable Not applicable
Currency unit: RMB
Production
Product Sales volume Price trend during the Reason for
name capacity (10,000 tons) Income realized reporting period change
(10,000 tons)
Refinery First up and then down;
products 642.25 639.12 41,531,346,473.30 overall up
Market
reasons
Polyester First up and then down;
608.50 603.47 41,123,434,064.32
yarn overall stable
The operating income or net profit generated by overseas business accounts for more than 10%
of the audited operating income or net profit of the Company in the latest fiscal year
Name of
Operation Impact of tax policies on overseas business during the reporting
overseas Company's response
status period
business
Both China and
The overall tax burden during the reporting period was low,
Stable Brunei provided
because Brunei does not levy personal income tax, business tax,
Brunei powerful support. The
operation salary tax, production tax and export tax. A local pioneer
project enjoyed long-
Project under high enterprise certificate and an export enterprise certificate have
load term tax incentives
been issued for the project, so it can enjoy a long-term corporate
income tax exemption. and other favorable
policies.
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
(3) Whether the Company's income from product sales is greater than its income from labor
services
Year-on-year
Industry Item Unit 2022 2021
increase/decrease
10,000
Sales volume 639.12 589.78 8.37%
tons
production 10,000
Refinery products 642.25 587.17 9.38%
volume tons
10,000
Inventory 14.73 11.60 26.98%
tons
10,000
Sales volume 201.79 211.37 -4.53%
tons
production 10,000
Chemical products 202.39 208.38 -2.87%
volume tons
10,000
Inventory 8.80 8.20 7.32%
tons
10,000
Sales volume 286.27 450.39 -36.44%
tons
production 10,000
PTA 285.13 451.19 -36.80%
volume tons
10,000
Inventory 1.97 3.11 -36.66%
tons
10,000
Sales volume 2.11 15.67 -86.53%
tons
production 10,000
PIA 1.07 13.56 -92.11%
volume tons
10,000
Inventory 0.01 1.05 -99.05%
tons
10,000
Polyester products Sales volume 684.97 740.69 -7.52%
tons
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
production 10,000
692.19 723.38 -4.31%
volume tons
10,000
Inventory 52.47 45.25 15.96%
tons
Description of the reasons for the year-on-year change of more than 30% in relevant data
During the reporting period, the production and sales of PIA and PTA have changed by more than 30%
compared with the same period of previous year, mainly because the joint impact of the shutdown for
maintenance and production reduction of the Company, resulting in a decrease in operating load.
(4) Performance of the major sales contracts and major purchase contracts entered into by the
Company as of the Reporting Date
□ Applicable Not applicable
(5) Composition of operating cost
By industry and product
Product Classification of Hengyi Brunei
Currency unit: RMB
2022 2021 Year-on-
year
Industry Item
Percentage in Percentage in increase/d
Amount Amount ecrease
operating cost operating cost
Raw
37,827,012,569.00 96.82% 22,068,840,115.45 95.08% 71.40%
materials
Energy 425,050,466.17 1.09% 435,640,277.36 1.88% -2.43%
Refinery
products
Depreciation
819,346,406.17 2.09% 707,213,095.03 3.04% 15.86%
and others
Total 39,071,409,441.34 100.00% 23,211,693,487.84 100.00% 68.33%
Raw
7,647,487,621.92 91.30% 3,229,472,939.74 91.61% 136.80%
Chemical materials
products
Energy 500,515,083.07 5.98% 162,281,960.64 4.60% 208.42%
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Depreciation
228,246,923.84 2.72% 133,393,061.60 3.79% 71.11%
and others
Total 8,376,249,628.83 100.00% 3,525,147,961.98 100.00% 137.61%
By domestic industry and product
Currency unit: RMB
2022 2021
Year-on-year
Product Item
Percentage in Percentage in increase/decrease
Amount Amount
operating cost operating cost
Raw
materials 144,253,439.63 70.02% 589,219,138.02 73.31% -75.52%
Energy 16,491,918.19 8.00% 64,929,361.11 8.08% -74.60%
PIA
products
Depreciation
45,280,680.01 21.98% 149,632,383.00 18.61% -69.74%
and others
Total 206,026,037.83 100.00% 803,780,882.13 100.00% -74.37%
Raw
8,104,904,977.86 89.18% 5,337,995,524.43 87.59% 51.83%
materials
Energy 263,544,052.57 2.90% 207,810,074.87 3.41% 26.82%
PTA
products
Depreciation
720,052,888.16 7.92% 548,579,521.79 9.00% 31.26%
and others
Total 9,088,501,918.59 100.00% 6,094,385,121.09 100.00% 49.13%
Raw
37,624,877,259.76 82.46% 33,887,658,918.72 81.29% 11.03%
materials
Energy 3,093,599,154.96 6.78% 2,601,291,569.11 6.24% 18.93%
Polyester
products
Depreciation
4,911,638,564.92 10.76% 5,198,414,401.73 12.47% -5.52%
and others
Total 45,630,114,979.64 100.00% 41,687,364,889.56 100.00% 9.46%
Notes
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
(6) Whether there was any change in the scope of consolidation during the reporting period
A total of 48 subsidiaries were included in the scope of consolidation in FY2022. For details, please
refer to Note VIII "Equity in Other Entities” in "Section X, Financial Report". Compared with the
previous year, 5 subsidiaries were included in and 1 excluded from the Company's consolidation
scope in this fiscal year. For details, please refer to Note VII "Changes in the Scope of
Consolidation” in "Section X, Financial Report".
(7) Significant changes or adjustments in the Company's business, products or services
during the reporting period
□ Applicable Not applicable
(8) Major customers and suppliers
Major customers
Total sales amount of the top five customers (RMB) 28,299,442,006.78
Percentage of the total sales amount of the top five customers in total 18.61%
annual sales amount
Percentage of sales amount of related parties among the top five customers 0.00%
in total annual sales amount
Top 5 customers
Percentage in total annual sales
SN Customer name Sales amount (RMB)
amount
1 Customer 1 8,498,995,728.05 5.59%
2 Customer 2 7,995,935,856.45 5.26%
3 Customer 3 4,418,284,215.90 2.91%
4 Customer 4 3,841,798,920.42 2.53%
5 Customer 5 3,544,427,285.95 2.33%
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Total -- 28,299,442,006.77 18.61%
Other information about major customers
□ Applicable Not applicable
Major suppliers
Total purchase amount of top five suppliers (RMB) 44,379,336,725.33
Percentage of the total purchase amount of the top five suppliers in the total 29.88%
annual purchase amount
Percentage of purchase amount of related parties among the top five 15.32%
suppliers in total annual sales amount
Top 5 suppliers
Percentage in total annual purchase
SN Supplier name Purchase amount (RMB)
amount
1 Supplier 1 22,348,038,778.91 15.05%
2 Supplier 2 6,987,350,219.75 4.70%
3 Supplier 3 6,396,317,334.53 4.31%
4 Supplier 4 5,251,769,399.49 3.54%
5 Supplier 5 3,395,860,992.62 2.29%
Total -- 44,379,336,725.30 29.88%
Other information about major suppliers
□ Applicable Not applicable
3. Expenses
Currency unit: RMB
Year-on-
2022 2021 year Description of major changes
increase/dec
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
rease
Selling 247,443,749.81 228,081,384.04 8.49%
/
expenses
Administrati 1,084,986,983.70 1,087,267,658.53 -0.21%
/
on expenses
The main reasons include: the rise in
crude oil prices, which has driven the
Financial rise in the prices of various raw and
2,787,697,495.20 2,133,576,548.94 30.66% auxiliary materials in the industrial
expenses
chain; the demand for daily working
capital of the Company increased; the
borrowing scale increased.
R&D 668,706,028.57 686,980,217.98 -2.66%
expenses /
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
4. R&D investment
Name of major Expected impact on the future
Project purpose Project progress Intended goal
R&D projects development of the Company
R&D of To improve and optimize the preparation
preparation process of titanium-based polyester catalyst to To meet the standards of high-quality PET By further optimizing the catalyst
technology of produce titanium-based PET flakes with Completed and flakes and fibers produced by large-scale preparation process and polymerization
polyester excellent performance and good hue, and then production lines with the PET flakes process to improve product quality, the
industrialized
titanium-based conduct spinning and post-processing as produced with the titanium-based catalyst project has high eco-friendliness value and
polycondensati needed to produce heavy metal-free titanium- developed. social significance.
on catalyst based polyester products.
Research and
application To break the monopoly of foreign enterprises, To form a complete set of key preparation
It has high application value and
development of reduce the raw material cost of downstream Completed and technologies for the development and
prospects, and will greatly reduce
bio-based PTT textile enterprises, and facilitate the promotion production of PTT and composite yarns,
industrialized production costs and improve the
elastic shape and application of bio-based PTT textile and establish stable mass production of competitive advantage in the market.
memory fiber materials. bio-based PTT flake series.
series
To prepare phase-change temperature-
Intelligent temperature-regulating fiber is a regulating functional masterbatch to form
R&D of key new type of fiber with bi-directional a mature set of key technologies for
technologies for temperature regulation function. This type of preparing intelligent temperature-
intelligent textile can regulate the temperature Completed and regulating fibers. The raw material loss It will expand the market of functional
temperature- fluctuations within a certain temperature range during the production process is low, and fiber products and enhance the
industrialized
regulating fiber for the space between the human body and the the resulting fabric has functions such as competitiveness of the Company.
melt-spinning environment, avoiding discomforts caused by energy storage and temperature
forming large temperature fluctuations and making regulation, anti-static, cool body feel,
people feel more comfortable and be healthy. good elasticity, moisture absorption and
breathability.
R&D of low- To solve the problems that the current low- Low-melting- It will greatly improve the flame
To form a mature technology for
melting-point melting polyester produced has a low melting point PET flakes retardancy of flakes, and is of great
producing and processing low-melting-
PET flake point, resulting in no crystallinity or low have been significance to expansion of the market of
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Name of major Expected impact on the future
Project purpose Project progress Intended goal
R&D projects development of the Company
preparation crystallinity of polymers, and it is difficult to produced and point PET flakes the Company's differentiated products.
process achieve industrialized mass production. samples sent to
customers for
trial
Antistatic
R&D of key modified
technology of To solve the problems of high price, limited polyester staple The project will produce antistatic staple
To form a mature technology for
antistatic specification options, and great susceptibility fibers have been fibers, expand the market of the
producing and processing antistatic
modified to environmental humidity on the antistatic produced and Company's product, and enhance the
modified polyester staple fibers
polyester staple polyester products on the market. samples sent to Company's competitiveness
fiber customers for
trial
Related
R&D of highly
technologies
hygroscopic
To complete the polymer modification by have been To form a mature technology for The project will expand the market of the
and dyeable
adding cellulose microcrystalline slurry in extended to producing and processing highly Company's products and is of great
microcrystallin
situ, so that the modified polyester fiber has mass production hygroscopic and dyeable microcrystalline significance to the development of the
e cellulose
moisture wicking and anti-static effects. to realize the cellulose modified polyester fibers. chemical fiber industry.
modified
industrialization
polyester fiber
of products.
Related
To produce a hydrophilic polyester fiber technologies
R&D of through secondary esterification by have been The project will expand the market of the
To form a mature technology for
hydrophilic and endcapping sorbitol, followed by extended to Company's products and is of great
producing and processing hydrophilic and
dyeable polycondensation and melt spinning, which mass production significance to the development of the
dyeable polyester fibers.
polyester fiber can effectively improve the hydrophilicity and to realize the polyester industry.
flammability of the polyester fiber. industrialization
of products.
R&D of melt To develop the product by adding a new The project has To form a mature technology for The project will improve the hygroscopic
direct spinning composite flame-retardant agent during the passed the pilot producing and processing flame-retardant effect of fiber, improve the wearing
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Name of major Expected impact on the future
Project purpose Project progress Intended goal
R&D projects development of the Company
flame-retardant spinning process. Various properties of the test and is polyester fibers that can be directly spun. performance of polyester fiber, greatly
polyester fiber new composite flame-retardant agent will transferred for improve the coloring performance, reduce
bring many excellent properties to the flame- industrialization the dyeing temperature and save energy.
retardant polyester fiber compared with test.
conventional flame-retardant polyester fiber.
To explore and master the core
Related The development of heat retaining and
R&D of technology for the preparation of heat
technologies self-heating fibers will enrich our range of
polyester To solve the problem that the heat retention retaining and self-heating polyester
have been differentiated chemical fibers, enhance the
elastomeric and self-heating effects of fibers on the current elastomeric yarn through a series of R&D
extended to competitive advantage of our products,
yarn integrating market cannot be integrated, and propose a work, enable the relevant functional
mass production improve the Company's reputation in the
heat retention process for producing heat retaining and self- indicators of the prepared heat retaining
to realize the industry, and also help promote the
and self-heating heating fibers. and self-heating fibers to meet the testing
effects industrialization development of the entire sector of
of products. standards, and realize the transformation functional fiber.
of the project results.
To carry out systematic chemical engineering
basic research on three key aspects of the The implementation of this project will
industrial preparation technology of high- realize the industrialization of bio-based
R&D and purity FDCA: fructose dehydration, HMF furandicarboxylic acid monomer, provide
industrial oxidation and FDCA refining; to screen necessary monomer raw materials for
demonstration efficient "catalytic + solvent" system for producing high-performance bio-based
project of dehydration reaction to find the technical key polyamide and polyester materials, help
The project has To form a complete industrial preparation
efficient to HMF preparation with high selectivity; to been established technology for producing polymer-grade promote the development of renewable
preparation optimize HMF oxidation process conditions, and is under FDCA through the R&D and industrial resources and technologies in China, and
technology of hydrogenation catalyst carriers and implementation implementation of this project. provide an alternative technological route
polymer-grade catalytically active components, and break for China's "carbon peaking and carbon
2,5- through the core technology of FDCA neutrality". It is of great significance for
furandicarboxyl refining; to establish a mathematical model cultivating strategic emerging bio-
ic acid through determination of basic data, carry out industries and breaking the bottleneck
process simulation calculation, propose constraints of resources and environment
process flow, and compile process package in economic development.
and industrial design to obtain an industrially
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Name of major Expected impact on the future
Project purpose Project progress Intended goal
R&D projects development of the Company
implementable polymer-grade FDCA
preparation technology.
To explore the influence of types and
contents of bio-based monomers,
catalysts, and impurities on
polymerization reactions, study the
kinetics and thermodynamics of
polymerization reactions, and clarify the
mechanism by which the heterocyclic
structure of bio-based polyamides affects
This project applies bio-based monomers to the formation and crystallization behavior
carry out polymerization and modification of hydrogen bonds; to develop large-scale
research on semi-aromatic bio-based and and continuous salt forming technology This project will enhance the
aliphatic bio-based polyamides, develop high- and online multi-parameter salt quality competitiveness of enterprises and
R&D of high- The project has
temperature resistant material bio-based control technology, develop efficient promote the R&D and preparation
performance been established
polyamides, establish a thousand-ton high- mass transfer and heat transfer continuous technology of bio-based high-temperature
bio-based and is under
temperature resistant bio-based polyamide polymerization technology and key resistant polyamides in national strategic
polyamide implementation
polymerization device, and carry out equipment, and achieve stable production emerging industries such as electronics,
application research on bio-based polyamides of bio-based polyamides; to determine the electronics, and automobiles.
in the electronic, electrical, and automotive composite technology of reinforcement
industries. and polyamide matrix and the evolution
law of condensed state structure, laying
the foundation for the development of key
production technologies for high-
temperature resistant bio-based
polyamide and modified resin; to
establish a demonstration line for
continuous polymerization of 1,000-ton
bio-based polyamides.
Green synthesis The research and production of bio-based The project has To conduct in-depth research on the The unique properties of FDCA polyester
and efficient monomer raw materials is a key point for been established liquid-phase catalytic oxidation process make it important for applications in
catalyst promoting the large-scale industrial and is under of HMF and its derivatives to produce bottles, membranes, fibers, and
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Name of major Expected impact on the future
Project purpose Project progress Intended goal
R&D projects development of the Company
development of application of bio-based plastics, and it implementation FDCA, and obtain kilogram-grade FDCA engineering plastics. In the future, the
bio-based urgently needs to be taken seriously. The 14th products, opening up the entire process demand for FDCA polyester will reach 10
furandicarboxyl Five-Year Plan for Key R&D in China also route of preparing FDCA from fructose. mtpa, and the market prospects are very
ic acid (FDCA) clearly prioritizes the development of bio- broad. Enterprise profits are expected to be
polyester based polymer materials, with independent further improved.
innovation as the core, and focuses on the
development of low-cost bio-based
monomers, polymers, and back-end
applications throughout the entire industrial
chain, addressing the issues of high cost of bio-
based polymer materials and limited number
of high-performance engineering plastic
grades.
In the spreading process of pathogenic
bacteria, textiles are one of the main carriers,
while ordinary textiles cannot resist most
pathogenic bacteria. The environment they are
used in, including humidity, temperature, To develop key technologies for efficient Application scenarios of this product:
Key
sweat stains, and oils, can become a source of in-situ polymerization and composite Sanitary materials, high-performance
technologies for
nutrition for the survival and reproduction of high-speed spinning of antibacterial home textiles, sportswear, automotive
efficient
various bacteria. Especially with the The project has polyester based on technological interiors, and ultra clean work clothes and
antibacterial
continuous expansion of textiles in public been established breakthroughs, and develop high-quality other fields, to meet people's demand for
polyester in-situ
places, the harm of pathogenic bacteria and is under antibacterial functional polyester and "hygiene and health". The prospects for
polymerization
breeding and cross infection to human health implementation fiber products, so as to achieve stable technological application and
and composite
is even more difficult to estimate. Textiles mass production and ensure that the industrialization are promising, with
high-speed
spinning have become an important medium for the overall technical level of the project can significant practical significance and
spread of pathogenic bacteria, and giving them reach a leading level in China. significant social benefits.
antibacterial functions has also received
increasing attentions. The development of
long-lasting antibacterial functional fibers is of
great significance.
R&D of TiO2 Due to the technical difficulties in production, Industrialization To develop a mature set of domestically The product can achieve the performance
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Name of major Expected impact on the future
Project purpose Project progress Intended goal
R&D projects development of the Company
localization the supply of titanium dioxide for polyamide 6 and stable mass produced TiO2 production technology of Sachtleben polyamide extinction
technology and extinction is mainly monopolized by production are and equipment, to produce polyamide titanium dioxide product and replace
device project Germany's Sachtleben Chemie GmbH. Not achieved. The specific titanium dioxide by combining imported polyamide extinction titanium
only is the price high, but also the supply cycle products are developed organic modification dioxide. This is of great significance for
is long, which is prone to accidents, making promoted and processes, so as to meet the requirements the Company to master the core
the Company's production in a passive applied in the of production equipment and processes technology, reduce production costs,
situation. Therefore, on the basis of domestic market. for titanium dioxide. improve supply and demand conditions,
titanium dioxide, modification is carried out to and even promote the development of the
make it close to or even reach the performance entire industry.
of titanium dioxide products used in the
extinction of Sachtleben polyamide, thereby
achieving the goal of partially or completely
replacing imported titanium dioxide used in
the extinction of polyamide.
By utilizing the thermodynamic performance
differences between PET and PA6, to achieve
the effect of three-dimensional crimping and
that of elasticity and moisture absorption. Copolyesteramide flakes improve the
Related
Copolymerized However, due to the poor compatibility To produce composite crimped elastic compatibility between polyester and
technologies
polyester amide between PET and PA, it is not possible to fibers to solve the compatibility problem polyamide due to the regular molecular
have been
(PET-PA6)/PA6 achieve functional integration between them. between polyester and nylon, avoid high- structure and hydrophilicity of
extended to
parallel Therefore, the composite compatibility temperature degradation of nylon chain conventional polyester products. Their
mass production
composite problem of polyester and polyamide cannot be segments, reduce by-products, low composite crimped elastic fibers have
to realize the
crimped elastic solved for a long time and cannot be thermal degradation, good product color, excellent elasticity, can increase the added
industrialization
fibers industrialized. In order to solve the and good performance. value of products, and have broad
of products.
compatibility problem of PET and PA6 application prospects.
composite spinning, this project proposes a
preparation method for copolymerized
polyester amide.
R&D of Polyester fiber is the world's largest synthetic The project has To form a mature process production The fabric is quite wide and not prone to
polyamide ester fiber, with a wide fabric that is not easily passed the pilot technology for synthesizing polyamide wrinkles, moisture absorption and
synthesis and wrinkled and has low production costs. test and is ester and comfort fibers with excellent breathability, anti-pilling, and easy to dye.
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Name of major Expected impact on the future
Project purpose Project progress Intended goal
R&D projects development of the Company
comfort fibers However, it also has disadvantages such as transferred for moisture absorption performance and It will have broad application prospects in
poor moisture absorption and insufficient industrialization good comfort of the produced fabric, so as sports, denim, business leisure, work
softness of the fabric. Polyamide, due to the test. The series to achieve functional upgrading of clothes and other clothing fields,
hydrophilic groups in its molecules, has good of products of polyester fibers. expanding the differentiated polyester
moisture absorption and soft fabric, but it also this project are product market of the Company and
has disadvantages such as low modulus and promoted and improving the economic benefits of the
poor dimensional stability. After comparison, applied in the Company.
it was found that the advantages and market.
disadvantages of them can complement each
other. Polyamide ester fibers refer to fibers
containing both ester and amide groups in their
molecules. They possess some excellent
properties of polyester and polyamide, and
their softness and comfort are similar to those
of cotton fibers. Therefore, it is necessary to
develop a polyamide ester synthetic and
comfort fiber for this purpose.
The project adopts fiber-forming polymer
To complete all the development plan
grafting technology. By adding aluminum-
tasks under the project, and form a mature
R&D of key doped zinc oxide (AZO) conductive powder technology for producing and processing The development and enrichment of the
and hydrophilic molecular segments (PEE) to
technology of The project has antistatic modified polyester staple fiber; Company's differentiated polyester fiber
PET polyester, more water in the environment
antistatic been established to make full use of the Company's product range will broaden the market of
can be absorbed, causing a reduction in
modified and is under existing equipment, technologies and the Company's products, and will be of
electrostatic charge accumulation on the
polyester staple implementation related supporting conditions to great significance to the development of
polymer surface, effectively achieving
fiber successfully realize the transformation of the polyester chemical fiber industry.
uniform dispersion and grafting of AZO and
the project's achievements and industrial
hydrophilic PEE segments, and improving the production.
antistatic properties of the co-polyester.
R&D of This is to develop a two-color wool-like The project has To complete all the planned tasks under The development of the Company's
cationic dyed polyester fiber. After the fabric woven with the passed the pilot the project, and form a mature technology differentiated polyester fiber product
polyester two- composite fiber is processed and dyed, it will test and is for producing and processing cationic range will broaden the market and
color composite not only have obvious contraction effect, but transferred for dyed polyester two-color composite improved the Company's economic
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Name of major Expected impact on the future
Project purpose Project progress Intended goal
R&D projects development of the Company
wool-like also show two colors prominently. After the industrialization wool-like polyester fiber; to make full use benefits.
polyester fiber fabric is sanded, the fibers are not easy to fall, test. The series of the Company's existing equipment,
and feel thicker and plump like real wool. of products of technologies and related supporting
this project are conditions to successfully realize the
promoted and transformation of the project's
applied in the achievements and industrial production.
market.
Independent R&D is carried out for this
To improve the beauty and comfort of project. Dull black masterbatches are
Industrialization
clothing, further raise the grade of polyester added to the Company's existing semi-
and stable mass
R&D of in-line products, and enhance product dull PET flakes for melt spinning. The The development of the Company's
production are
competitiveness and the Company’s technical focus is on the design and differentiated polyester fiber product
addition full achieved. The
profitability; to reduce pollutant emissions in manufacture of special-shaped spinnerets, range will broaden the market and
dull rabbit hair- products are
the downstream dyeing and finishing process, the precise control of dull black improved the Company's economic
like fiber promoted and
improve the level of eco-friendliness, and masterbatch addition amount and the benefits.
applied in the
achieve economic benefits for the Company market. development of spinning and drafting
and the society. process for full dull rabbit hair-like black
silk.
Highly oriented yarn (HOY) is also known
as fully oriented yarn. One-step high-
To complete all the planned tasks under speed spinning process is adopted.
Industrialization
the project, and form a mature technology Compared with FDY and DT
and stable mass technologies, this technology eliminates
To develop a hollow curly wool-like fiber for producing and processing HOY
production are
R&D of HOY based on HOY yarn, with comfortable wool hollow curly wool-like fiber. to make full the need for drafting components or
achieved. The
hollow curly feel, warmth and breathability, to be used for use of the Company's existing equipment, drafting equipment. After the polymer is
products are
wool-like fiber making Altai, small teddy velvet, big teddy technologies and related supporting melt-sprayed, cooled and cured and oiled,
promoted and
velvet, wheat ear, granular cashmere, etc. conditions to successfully realize the it can be wound into polyester fully drawn
applied in the
market. transformation of the project's yarn directly used for weaving. Therefore,
achievements and industrial production. the total equipment cost is low. HOY
production features high efficiency, simple
process, low energy consumption and
equipment investment. Meanwhile, the
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Name of major Expected impact on the future
Project purpose Project progress Intended goal
R&D projects development of the Company
product is dyeable, the fiber feels soft, and
the velvet made is desirable. It can be used
to make various high-grade clothing
fabrics and decorative fabrics, showing
good prospects for development in the
field of chemical fiber.
To determine a technical scheme for
producing flame-retardant cationic
polyester and flame-retardant high-
In view of the future development direction shrinkage polyester, and prepare flame-
and market demand of flame-retardant It has passed the retardant cationic PET flakes and flame-
polyester fibers and based on the R&D and retardant high-shrinkage PET flakes; to
pilot test and is
production of flame-retardant polyester fibers, research and confirm the spinning process
R&D of flame- transferred for
this project is implemented to study the and produce flame-retardant cationic PET It will enrich the Company's differentiated
retardant industrialization
feasibility of producing flame-retardant high- flakes and flame-retardant high-shrinkage product range, increase the market share,
cationic test to achieve
polyester fiber shrinkage fiber, flame-retardant cationic PET flakes that meet customer needs. The and achieve better economic benefits
stable mass
dyeable fiber and other composite functional technology is owned by the Company,
production and
polyester fibers, and launch high-quality and the Company's existing equipment,
promotion
functional composite flame-retardant technology and related supporting
polyester fibers conditions are fully used. The Company
has completed the lab test and pilot test
and will provide technical support for
industrialization
R&D of high To achieve good hydrophilicity of the
It will increase the added value of the
brightness product and greatly improve the
To improve the blending performance of PET
polyester Completed and transparency of polyester, while keeping Company's products, meet the needs of
and inorganic filler melt, so as to enhance the industrialized downstream customers, and is of great
prepared by transparency of PET materials the conventional properties of polyester
significance for the sustainable
transesterificati basically unchanged, and providing good
development of the Company.
on spinning processing performance.
R&D of To study the flake crystallization ability, It has passed the To complete all the planned tasks under The low-melting-point polyester sheath-
environmentall drying process, sheath-core composite plate pilot test and is the project, and form a mature technology core composite fiber will partially melt
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Name of major Expected impact on the future
Project purpose Project progress Intended goal
R&D projects development of the Company
y-friendly design, composite spinning process, etc. by transferred for for producing and processing antimony- and bond with other materials. It features
antimony-free screening out antimony-free low-melting- industrialization free low-melting-point polyester sheath- environment-friendliness, safety, and high
low-melting- point PET flakes that meet the spinning test to achieve core composite fiber; to make full use of bonding strength, and has broad
point polyester requirements, form a complete technology for stable mass the Company's existing equipment, development prospects. The
sheath-core producing antimony-free low-melting-point production and technologies and related supporting implementation of this project and product
composite fiber polyester sheath-core composite fiber, and promotion conditions to successfully realize the promotion will further increase the market
successfully realize the transformation and transformation of the project's share of differentiated polyester fibers,
industrial production of the project achievements and industrial production. thereby enhancing the Company's
economic benefits
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
R&D personnel
2022 2021 Change ratio
Number of R&D staff 1065 643 65.63%
(person)
Percentage of R&D
6.81% 3.82% 2.99%
personnel
Educational
background of R&D —— —— ——
personnel
PhD 69 33 109.09%
Master 118 52 126.92%
Bachelor 335 149 124.83%
Junior college degree 314 192 63.54%
High school and below 229 217 5.53%
Age of R&D personnel —— —— ——
Under 30 457 241 89.63%
30~40 373 247 51.01%
40~50 166 117 41.88%
50~60 64 36 77.78%
60 and above 5 2 150.00%
R&D investment
Change
2022 2021
ratio
R&D investment amount (RMB) 688,229,267.31 691,226,781.85 -0.43%
R&D investment as a percentage of operating 0.45% 0.53% -0.08%
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
income
Capitalized R&D investment (RMB) 19,523,238.74 4,246,563.87 359.74%
Capitalized R&D investment as a percentage 2.84% 0.61% 2.23%
of R&D investment
Reasons for and effects of significant changes in the composition of R&D personnel
□ Applicable Not applicable
Reasons for the significant changes in the percentage of total R&D investment in operating
income compared with the previous year
□ Applicable Not applicable
Reasons for the substantial changes in the capitalization rate of R&D investment and
Description of their reasonableness
□ Applicable Not applicable
5. Cash flow
Currency unit: RMB
Year-on-year
Item 2022 2021
increase/decrease
Subtotal of cash inflows from
162,080,383,545.53 137,940,305,883.49 17.50%
operating activities
Subtotal of cash outflows from
159,374,850,062.17 130,219,784,744.09 22.39%
operating activities
Net cash flow from operating
2,705,533,483.36 7,720,521,139.40 -64.96%
activities
Subtotal of cash inflows from
2,401,958,320.75 2,597,646,523.70 -7.53%
investing activities
Subtotal of cash outflows from
4,528,249,402.63 10,115,000,453.57 -55.23%
investing activities
Net cash flows from investing
-2,126,291,081.88 -7,517,353,929.87 71.71%
activities
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Subtotal of cash inflows from
67,702,995,578.82 47,569,372,668.77 42.32%
financing activities
Subtotal of cash outflows from
66,030,295,613.61 44,628,796,599.91 47.95%
financing activities
Net cash flows from financing
1,672,699,965.21 2,940,576,068.86 -43.12%
activities
Net increase in cash and cash
2,689,332,661.19 3,058,411,003.67 -12.07%
equivalents
Description of the main factors influencing significant year-on-year changes in relevant data
1) The decrease in net cash flow generated from operating activities is mainly attributable to various
factors such as international geopolitical and domestic demand contraction in 2022, resulting in a
significant decline in the operating efficiency of the Company compared with that in the same period
of previous year.
2) The increase of net cash flow generated from investment activities is mainly attributable to a
decrease in the new construction projects of the Company and a decrease in cash outflows from
investment activities.
3) The decrease of net cash flow generated from financing activities is mainly attributable to an
increase in the Company’s debt repayment in current period and an increase in cash outflows from
financing activities.
Description of the reasons for the significant difference between the net cash flows generated
by the Company's operating activities and the net profit of the year during the reporting period
For details, please refer to the supplementary information in the cash flow statement in the Company's
annual audit report.
V. Analysis of non-main business
Currency unit: RMB
95
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Percentage
Sustainabl
Amount of total Reasons
e or not
profit
It was mainly attributable to the provision of the
Investment
745,260,076.32 67.19% investment income of subsidiaries from the main Yes
income
business.
Profits and
It was mainly attributable to changes in fair value of
losses from
-211,436,484.36 -19.06% foreign exchange and commodity derivatives during No
changes in fair
the reporting period
value
Assets It was mainly attributable to the Company's
-368,677,441.03 -33.24% No
impairment loss provision of inventory depreciation reserves
It was mainly attributable to the compensation and
Non-operating fine income during the reporting period, and
14,943,253.23 1.35% No
income governmental subsidies irrelevant to daily enterprise
activities
It was mainly attributable to external donations and
Non-operating
20,261,590.79 1.83% fixed asset retirement losses during the reporting No
expenses
period
VI. Analysis of assets and liabilities
1. Significant changes in asset composition
Currency unit: RMB
End of 2022 Early 2022 Proportio
n increase Description of
Percentage in Percentage in or major changes
Amount Amount
total assets total assets decrease
Monetary
17,358,475,538.50 15.50% 14,322,716,793.82 13.57% 1.93%
funds
Accounts
6,857,913,648.22 6.13% 6,436,842,058.88 6.10% 0.03%
receivable
Inventory 14,083,484,571.18 12.58% 12,145,955,534.77 11.51% 1.07%
Long-term
equity 12,831,505,320.53 11.46% 12,085,626,559.38 11.45% 0.01%
investments
Fixed assets 47,466,461,676.63 42.39% 46,102,729,538.71 43.69% -1.30%
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Construction
3,751,889,400.94 3.35% 3,875,588,007.79 3.67% -0.32%
in progress
Right-of-use
430,002,663.24 0.38% 411,032,649.33 0.39% -0.01%
assets
Short-term
37,875,833,338.09 33.83% 33,778,694,677.24 32.01% 1.82%
loans
Contract
989,622,772.97 0.88% 1,723,901,780.92 1.63% -0.75%
liabilities
Long-term
16,107,140,036.35 14.39% 15,996,229,686.31 15.16% -0.77%
loans
Lease
431,285,378.29 0.39% 380,145,523.29 0.36% 0.03%
liabilities
High proportion of foreign assets
Proportion of Whether there
Specific
Operation Controls to ensure asset Income overseas assets in is significant
content of Reason Asset size Location
mode security status the Company's net risk of
assets
assets impairment
Strengthen the parent
Subsidiaries USD Built by Company's
Overseas Hong
controlled by 6870.8773 the management control Good 188.05% No
investment Kong/Brunei/Singapore
the Company million Company over overseas
subsidiaries
Other information None
2. Assets and liabilities measured at fair value
Currency unit: RMB
Item Beginning balance Ending balance
Financial assets
1. Held-for-trading financial assets (excluding derivative 251,021,508.33
388,958,054.67
financial assets)
2. Derivative financial assets 0.00 1,872,460.80
3. Investment in other equity instruments 5,600,000.00 5,600,000.00
Subtotal of financial assets 394,558,054.67 258,493,969.13
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
financial liabilities 25,375,802.83 62,965,410.64
Other changes
Whether the measurement attributes of the Company's main assets changed significantly
during the reporting period
□Yes No
3. Restricted asset rights as of the end of the reporting period
Ending book value of
Item Reason for restriction
the year
Monetary funds 4,424,405,925.47 Margin
Notes receivable 53,822,104.39 Pledge to open acceptance bills
Long-term equity investments 5,928,738,265.27 Mortgage loan
Sale and leaseback financial leases
Fixed assets 21,934,801,647.52
and mortgage loan
Mortgage loan and financial lease
Intangible assets 781,335,552.81
guarantee
Inventory 2,550,641,487.83 Mortgage loan
Total 35,673,744,983.29 --
VII. Analysis of investment status
1. General situation
Investment amount during the Investment amount in the same
Range of change
reporting period (RMB) period of previous year (RMB)
5,186,854,861.36 5,315,505,561.36 -2.42%
2. Significant equity investments acquired during the reporting period
□ Applicable Not applicable
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
3. Significant non-equity investments in progress during the reporting period
Currency unit: RMB
Amount Cumulative actual
Whether it is Industry Disclosure
Investment invested during investment amount Sources Project
Project name fixed asset involved in date (if Disclosure index (if any)
method the reporting as of the end of the of funds progress
investment the project any)
period reporting period
Self-
raised http://www.cninfo.com.cn/new/disclosure/detail?plate=szse&o
Brunei Phase II Built by the Petrochemic September
Yes 508,247,308.49 2,079,913,992.24 funds 2.35%
Project Company al industry 16, 2020 rgId=gssz0000703&stockCode=000703&announcementId=12
and 08444483&announcementTime=2020-09-16
loans
Suqian Yida New Self-
Environment- Chemical raised http://www.cninfo.com.cn/new/disclosure/detail?plate=szse&o
Built by the June 1,
friendly Yes fiber 391,874,017.27 521,514,887.05 funds 13.71% rgId=gssz0000703&stockCode=000703&announcementId=12
Company 2021
Differentiated industry and 10132115&announcementTime=2021-06-01
Fiber Project loans
The 1.2 mtpa
Caprolactam-
petrochemic
Polyamide http://www.cninfo.com.cn/new/disclosure/detail?plate=szse&o
Built by the al chemical Self- January
Industry Yes 122,120,259.75 143,465,895.02 1.36% rgId=gssz0000703&stockCode=000703&announcementId=12
Company fiber funded 22, 2022
Integration and 12243026&announcementTime=2022-01-22
industry
Supporting
Project
Total -- -- -- 1,022,241,585.51 2,744,894,774.31 -- -- -- --
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
4. Investment in financial assets
(1) Investment in securities
The Company's made no investment in securities in the reporting period.
(2) Investment in derivatives
1) Investments in derivatives for hedging purposes during the reporting period
Currency unit: RMB 10,000
Profits and Ending investment
losses from Accumulated fair amount as a
Beginning
Type of Hedging changes in value changes Ending percentage of the
Investment investment amount
amount fair value in recognized in Company's net assets
the reporting equity at the end of the
period reporting period
Foreign exchange
hedging 0 -437 -589 -1,165 -0.05%
Commodity hedging 38,729 -20,707 -223 20,158 0.79%
Total 38,729 -21,144 -812 18,993 0.75%
Explanation on
whether there is any
significant change in
the accounting policy No. The Company accounted for the hedging investment carried out in accordance with
and specific the relevant provisions of the Ministry of Finance's Accounting Standards for Business
principles of Enterprises No. 22 - Recognition and Measurement of Financial Instruments,
accounting for Accounting Standards for Business Enterprises No. 24 - Hedging, Accounting Standards
hedging business of for Business Enterprises No. 23 - Transfer of Financial Assets, Accounting Standards
the Company in the for Business Enterprises No. 37 - Presentation of Financial Instruments and relevant
reporting period guidelines to reflect the relevant items of the balance sheet and profit and loss statement.
compared with that in
the previous
reporting period
Explanation on actual During this reporting period, the actual profit and loss amount was RMB -448.91 million,
profit or loss in the of which the profit and loss from changes in fair value was RMB -211.44 million, and
reporting period the investment income was RMB -237.47 million.
Explanation on The profits and losses generated from the Company's hedging tools can offset the value
hedging effects changes of the hedged items, and the hedging business has a good hedging effect.
Source of funding for
investments in Self-owned funds
derivatives
100
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
1. Market risks When the market changes drastically, the Company may not be able to
fully lock in the price of raw materials or products, thereby resulting in losses. 2.
Liquidity risks Commodity hedging transactions are ordered within the authority
specified in the Company's Management System for Commodity Derivatives
Transactions. If the market fluctuates drastically, losses may be caused by forced
liquidation of positions due to lack of time for margin replenishment. 3. Operational
Risk analysis and risks As futures and forward transactions are highly specialized and complex,
description of control unexpected losses may be caused due to defects in information systems or internal
measures for controls. 4. Credit risks When the price fluctuates greatly to the disadvantage of the
derivatives positions counterparty, the counterparty may violate the relevant provisions of the contract and
during the reporting cancel the contract, resulting in losses to the Company. 5. Legal risks Due to changes in
period (including but relevant legal systems or violations of relevant legal systems by the counterparty, the
not limited to market contract may not be executed normally, resulting in losses to the Company. Risk control
risk, liquidity risk, measures taken by the Company: The BOD of the Company has reviewed and approved
credit risk, the Management System for Foreign Exchange Derivatives Transactions and the
operational risk, and Management System for Commodity Derivatives Transactions, which stipulate that the
legal risk) Company engages in hedging investment business with the main purpose of hedging,
and speculation and arbitrage transactions are prohibited. The systems clearly stipulate
the principles of the Company's business operations, approval authority, internal audit
process, responsible departments and responsible persons, information isolation
measures, internal risk reporting system and risk handling procedures, which are in line
with the relevant requirements of regulatory authorities and meet the needs of actual
operations. The specified risk control measures are practical and effective.
Changes in market
price or air value of
products involved in
invested derivatives
during the reporting The Company's hedging investment was priced at fair value, and forward foreign
period; the analysis exchange was basically determined according to the price provided by or obtained from
of the fair value of banks, the Reuters system and other pricing service agencies. The Company conducted
derivatives shall fair value measurement and confirmation every month; the transaction price of futures
disclose the specific was the fair price.
methods used and the
setting of relevant
assumptions and
parameters
Involvement in
lawsuits (if None
applicable)
Date of disclosure of
announcement of the
BOD for approval of January 22, 2022
derivatives
investment (if any)
Date of disclosure of
announcement of
shareholders meeting
February 15, 2022
for approval of
derivatives
investment (if any)
101
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
The hedging investment carried out by the Company for the purpose of hedging was
Special opinions of
closely related to the Company's daily business needs and complied with relevant laws
independent directors
and regulations. The Company formulated the Management System for Foreign
on the Company's
Exchange Derivatives Transactions and the Management System for Commodity
derivatives
Derivatives Transactions, which have strengthened the Company’s risk management
investment and risk
and control abilities and improved the Company's ability to withstand market risks,
control
causing no damage to the interests of the Company and all shareholders.
The Company shall comply with the disclosure requirements for petrochemical industry
specified in Guidelines No. 3 for Self-Regulation of Listed Companies of Shenzhen Stock
Exchange - Industry Information Disclosure
During the reporting period, the Company carried out hedging investment for the purpose of
reasonably avoiding the risk of price and exchange rate fluctuations of raw materials and finished
products, reducing the impact of price and exchange rate fluctuations of raw materials and finished
products on the normal operation of the Company, and ensuring the stable operation and sustainable
profitability of the Company. The commodities involved in the hedging transactions included raw
materials, finished products, and foreign exchange related to the Company's production and operation.
2) Investments in derivatives for speculative purposes during the reporting period
□ Applicable Not applicable
There were no investments in derivatives for speculative purposes during the reporting period
102
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
5. Use of raised funds
(1) Overall use of raised funds
Currency unit: RMB 10,000
Total amount
Proportion of Amount of
of raised Cumulative
Total amount Total amount of cumulative raised
Year of funds with total amount Total amount
Mode of Total funds of raised funds raised funds total amount Usage and destination of raised funds not yet funds idle
fund fund raising raised changed of raised funds of raised funds used
used in this used of raised funds for more
raising usage during with changed not yet used
period cumulatively with changed than two
the reporting usage
usage years
period
On April 25, 2022, the seventeenth meeting of
the eleventh session of the BOD of the
Company reviewed and approved the Proposal
Issue of on Closing Investment Projects with Raised
shares to Funds and Permanently Replenishing Working
purchase Capital with Surplus Raised Funds, agreeing
2019 assets and 291,091.12 0 288,785.36 0 156,300 53.69% 0 to permanently supplement the working capital 0
raise with the balance of supporting funds from
supporting share issuance by the Company in 2019. As of
funds December 31, 2022, the Company has
permanently replenished RMB 18.3541
million, with the remaining RMB 25.2216
million not replenished or transferred out.
Public
issuance of
convertible
2020 198,737.74 0 198,737.74 0 0 0.00% 0 / 0
corporate
bonds in
2020
Public As of December 31, 2022, the unused raised
2022 issuance of 298,367.92 127,694.64 127,694.64 0 0 0.00% 170,673.28 funds amounted to RMB 1706.7328 million, of 0
convertible which RMB 1.5 billion had not yet been
corporate returned as temporary supplementary working
103
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
bonds in capital due. The balance of the Company's
2022 raised funds special account was RMB
209.2097 million (including RMB 108,500 of
unpaid issuance fees).
Total -- 788,196.78 127,694.64 615,217.74 0 156,300 19.83% 170,673.28 -- 0
General description of the use of raised funds
1. As approved by the [2018] No. 1937 CSRC Permit issued by the China Securities Regulatory Commission and agreed by the Shenzhen Stock Exchange, the Company raised a total of RMB
2,949,999,987.00 through non-public issuance of 213,768,115 ordinary shares (A shares) to eligible investors, which was verified by Ruihua Certified Public Accountants (Special General
Partnership). After deducting the broker’s underwriting fees and related issuance expenses, the actual net amount of funds raised was RMB 2,910,911,218.99. As of December 31, 2022, the
Company has used RMB 2887.8536 million from the funds.
2. As approved by the [2020] No. 522 CSRC Permit issued by the China Securities Regulatory Commission and agreed by the Shenzhen Stock Exchange, the Company publicly issued 20 million
convertible corporate bonds to eligible investors, each with a face value of RMB 100. The total issuance amount was RMB 2 billion, the conversion price was RMB 11.50 per share, and the
bonds were listed on the Shenzhen Stock Exchange on November 16, 2020. The total amount of funds raised from the public issuance of convertible corporate bonds was RMB 2 billion. After
deducting the underwriting and recommendation fees excluding taxes and related issuance fees, the actual net amount of funds raised was RMB 1,987.3774 million, all of which will be used for
the "1 mtpa intelligent differentiated eco-friendliness functional fiber construction project" implemented by Haining Hengyi New Materials Co., Ltd.
3. As approved by CSRC Permit [2022] No. 565 issued by the China Securities Regulatory Commission and agreed by the Shenzhen Stock Exchange, the Company publicly issued 30 million
convertible corporate bonds to eligible investors, each with a face value of RMB 100. The total issuance amount was RMB 3 billion, the conversion price was RMB 10.50 per share, and the
bonds were listed on the Shenzhen Stock Exchange on August 11, 2022. The total amount of funds raised from the public issuance of convertible corporate bonds was RMB 3 billion. After
deducting the underwriting and recommendation fees excluding taxes and related issuance fees, the actual net amount of funds raised was RMB 2983.6792 million. As of December 31, 2022,
the Company has used RMB 1276.9464 million from the funds.
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
(2) Projects for committed investment with raised funds
Currency unit: RMB 10,000
Whether
there is
Projects for Date when Whether a
Whether the Amount Cumulative Investment Benefits
committed Adjusted the project the significa
project has Total committed invested investment progress as of realized
investment and total reaches its expected nt
been changed investment of during the amount as of the end of the during the
investment raised funds investment scheduled benefits change
(or partially amount (1) reporting the end of the period reporting
direction of over- availability are in the
changed) period period (2) (3)=(2)/(1) period
raised funds date achieved feasibilit
y of the
project
Projects for committed investment
Brunei PMB
No more than November
Petrochemical No 376,562.33 0 377,633.81 100.28% $9,711.32 No No
376,562.33 2019
Project
500,000 tpa
differentiated
functional fiber No more than August
No 93,500 93,500 0 93,647.49 100.16% 2020 -12,458.8 No No
upgrading and
transformation
project
Intelligent
upgrading and No more than August Not Not
No 28,170 28,170 0 25,621.7 90.95% 2020 applicable applicable No
transformation
project
Differentiated
chemical fiber
energy saving and
consumption No more than Not Not
No 8,500 0 8,399.34 98.82% May 2019 No
reduction 8,500 applicable applicable
upgrading and
transformation
project
250,000 tpa
environmentally-
friendly functional No more than Not Not Not
Yes 416.05 0 416.05 100.00% Yes
fiber upgrading 141,500 applicable applicable applicable
and transformation
project
Intelligent
upgrading and No more than Not Not Not
Yes 5,283.95 0 3,406.99 64.48% Yes
transformation 20,500 applicable applicable applicable
project
1 mtpa intelligent
environmentally-
No more than 2020 and Not
friendly functional No 200,000 0 198,737.74 99.37% -53,097.45 No
200,000 June 2022 applicable
fiber construction
project
500,000 tpa New-
type Functional January and
No more than
fiber technological No 70,000 33,398.74 33,398.74 47.71% August -17,701.35 No No
70,000
transformation 2021
projects
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
1.1 mtpa New
Environment- No more than Not Not Not
friendly No 230,000 230,000 94,295.9 94,295.9 41.00% applicable applicable applicable No
Differentiated
Fiber Project
Subtotal of
committed No more than 127,694.6
-- 1,012,432.33 835,557.76 -- -- / -- --
investment for the 1,168,732.33 4
projects
Investment direction of over-raised funds
None
No more than 127,694.6
Total -- 1,012,432.33 835,557.76 -- -- / -- --
1,168,732.33 4
Description of the
situation and
reasons why the
planned progress
and expected
benefits have not Brunei PMB Petrochemical Project Due to significant fluctuations in crude oil and product prices during the reporting period, the project
been achieved by benefits did not meet expectations
projects (including
the reason for Other projects: Due to significant fluctuations in raw material prices and the weak downstream demand, some project benefits did not meet
selecting "not expectations
applicable" for
"whether the
expected benefits
have been
achieved")
Description of
significant
Not applicable
changes in project
feasibility
Amount, purpose
and progress of Not applicable
use of over-raised
funds
Change of location
for
implementation of Not applicable
projects for
committed
investment
Adjustment of
implementation
mode of projects Not applicable
for committed
investment
1. On February 2, 2019, the twenty-fourth meeting of the tenth session of the BOD of the Company reviewed and approved the Proposal on
Using Raised Funds to Replace Self-raised Funds and Intermediary Fees and Related Taxes Pre-paid for Relevant Investment Projects,
agreeing to use RMB 1,147,288,319.73 from the raised funds to replace the self-raised funds and the intermediary fees and related taxes that
Preliminary had been paid for relevant investment projects, of which the self-raised funds that had been invested in the projects were RMB
investment and 1,141,188,319.73 and the intermediary fees and related taxes paid in advance by the Company with its own funds were RMB 6,100,000.00.
replacement of On June 18, 2019, the thirtieth meeting of the tenth session of the BOD of the Company reviewed and approved the Proposal on Using Raised
projects for Funds to Replace Self-raised Funds Pre-paid for Relevant Investment Projects, agreeing to use RMB 331,666,503.97 from the raised funds to
committed replace the self-raised funds that had been paid for relevant investment projects
investment
2. According to the Proposal on the Company's Public Issuance of Convertible Corporate Bonds reviewed and approved at the twenty-ninth
meeting of the tenth session of the BOD on April 25, 2019 and the 2018 Annual General Meeting of Shareholders on May 9, 2019, it is agreed
that if the Company has invested self-raised funds in the construction of the above projects first before the funds raised from the issuance of
convertible corporate bonds are in place, the funds can be replaced in accordance with the p rocedures prescribed by relevant laws and
106
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
regulations after the funds raised are available. As of October 23, 2020, the Company had invested RMB 4,606,157,244.19 in th e above-
mentioned project with self-raised funds. After deducting the supporting fund of RMB 756,000,000.00 raised by the Company on January 30,
2019 through the non-public issuance of RMB ordinary shares to specific objects for the construction of the 1 mtpa intelligent environment-
friendly functional fiber construction project, the remaining amount was RMB 3,850,157,244.19. The Company decided to replace its own
funds, RMB 1,987,377,358.49, invested in the project with the raised funds. As of December 31, 2022, the Company has replaced the self-
raised funds invested in advance of RMB 1,987,377,358.49.
3. According to the resolution of the tenth meeting of the eleventh session of the BOD on May 31, 2021, and the Proposal on the Company's
Public Issuance of Convertible Corporate Bonds reviewed and approved at the third Extraordinary General Meeting (EGM) of Shareholders
2021 on June 16, 2021, it is agreed that if the Company has invested self-raised funds in the construction of the above projects first before the
funds raised from the issuance of convertible corporate bonds are in place, the fund s can be replaced in accordance with the procedures
prescribed by relevant laws and regulations after the funds raised are available. As of July 28, 2022, the Company has invested RMB
1,042,688,264.58 in the above-mentioned raised funds investment project with self-raised funds in advance, and has made the advance
payment of intermediary fees and related taxes of RMB 1,550,000.00 with self-owned funds. After the review of the BOD of the Company,
it was decided to replace the self-raised funds invested in the raised funds investment project with the raised funds, with an amount of RMB
1,042,688,264.58, and to replace the self-raised funds with the raised funds for the paid issuance fees, with an amount of RMB 1,462,264.15
(excluding tax). As of December 31, 2022, the Company has replaced the self-raised funds invested in advance of RMB 1,044,150,528.73.
Temporary
replenishment of As of December 31, 2022, the Company has temporarily replenished its working capital with id le raised funds of RMB 1.5 billion, and there
working capital is no situation where any fund has not been returned upon maturity.
with idle raised
funds
Amount and
reasons for the Due to the long payment cycle of contract payments agreed with s ome suppliers, the Company will continue to make relevant payments as
balance of raised agreed in the contract after the project is completed.
funds in project
implementation
On April 25, 2022, the seventeenth meeting of the eleventh session of the BOD of the Company reviewed and approved the Proposal on
Closing Investment Projects with Raised Funds and Permanently Replenishing Working Capital with Surplus Raised Funds, agreeing to
Usage and permanently supplement the working capital with the balance of supporting funds from share issuance by the Company in 2019. A s of
December 31, 2022, the Company has permanently replenished RMB 18.3541 million, with the remaining RMB 25.2216 million not
destination of
replenished or transferred out.
unused raised
funds
As of December 31, 2022, the unused amount of funds raised from the public issuance of convertible corporate bonds in 2022 was RMB
1,706.7328 million, of which RMB 1.5 billion had not yet been returned as temporary supplementary working capital due. The balance of the
Company's raised funds special account was RMB 209.2097 million (including RMB 108,500 of unpaid issuance fees).
Problems or other
situations in the
Not applicable
use and disclosure
of raised funds
(3) Changes of projects for investment with raised funds
During the reporting period, there was no change of the projects for investment with raised funds.
VIII. Sales of major assets and equity
1. Sales of major assets
□ Applicable Not applicable
2. Sales of major equity
Net Net Whethe Whethe
Impact Whethe
Transac profit profit Pricing Relatio r the r it is
of the r it is a Disclos
Counter Sold Date of tion contribu contribu principl nship equity implem Disclos
sale on related-
price ted by ted by e of with involve ented as ure
party equity sale the party ure date
(RM B the the equity counter d has planned index
Compa transact
10,000) equity equity disposal party been ; if not,
ny ion
to the sale to fully explain
listed the transfer the
107
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
compan listed red reasons
y from compan and the
the y as a measure
beginni percent s the
ng of age of Compa
current the total ny has
period net taken
to the profit
date of
sale
(RM B
10,000)
To be
negotiat
Hangzh
Hangzh ed and
ou ou determi
Jingxin
Chenha ned
Supply Septem Non-
o based
Chain ber 26, 29,400 65.51 None 17.23% No related Yes Yes
Textile 2022 on the party
M anage
Finishin value
ment
g Co., evaluate
Ltd. Co.,
Ltd. d by a
third
party
108
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
IX. Analysis of major subsidiaries and JV companies
Major subsidiaries and JV companies with an impact of 10% or more on the net profit of the
Company
Currency unit: RMB 10,000
Company Type of Registered Operating Operating
Main business Total assets Net assets Net profit
name company capital income profit
USD
Hengyi Refining and
Subsidiary 1.0309 4,675,858.29 1,000,800.15 5,631,775.07 65,304.93 65,336.76
Brunei petrochemical
billion
USD
Zhejiang
Subsidiary PTA and PIA 514.4471 1,876,955.57 893,494.69 2,138,615.21 -15,767.22 -17,193.75
Yisheng
million
Hainan JV PTA and bottle
458,000 1,234,567.09 642,597.75 2,271,698.29 121,806.70 104,001.29
Yisheng company flake
Yisheng JV PTA and bottle
201,800 1,753,393.73 763,653.88 2,974,782.89 32,849.78 40,524.44
Investment company flake
Yisheng
JV Production and
New 300,000 1,228,897.79 286,002.94 3,370,855.32 -33,559.80 -25,199.76
company sales of PTA
Materials
Hengyi
Subsidiary DTY 300,000 3,630,936.24 832,947.39 6,800,415.00 28,911.14 29,805.95
Limited
Hengyi PET flakes,
Subsidiary 275,725 1,071,883.91 443,671.20 977,880.38 -3,159.94 1,781.81
High-Tech POY, etc.
Haining
PET flakes,
New Subsidiary 328,500 973,324.61 277,953.42 918,957.43 -58,513.84 -54,815.87
POY, etc.
Materials
Shuangtu
POY, FDY, and
New Subsidiary 60,000 519,583.00 212,555.37 605,398.89 -11,702.25 -10,008.43
flakes
Materials
Jiaxing
Subsidiary FDY 300,000 535,337.15 268,126.74 480,326.41 -20,648.27 -18,629.96
Yipeng
USD
Hong Kong Investment and
Subsidiary 1.5095 1,397,336.09 1,122,629.30 740,213.39 33,599.29 33,599.29
Tianyi trade
billion
China
JV
Zheshang Finance 2,126,870 262,193,000 16,593,000 6,108,500 1,584,700 1,398,900
company
Bank
109
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Acquisition and disposal of subsidiaries during the reporting period
Methods of acquiring and disposing of subsidiaries
Company name
during the reporting period
Haining Hengqi Environmental Protection
Disposal
Technology Co., Ltd.
Guangxi Free Trade Zone Yihai Port Co., Ltd. Establishment
Hangzhou Lanxing Chemical Fiber Oiling
Establishment
Agent Co., Ltd.
Lianyungang Junbo Shengda Logistics Co.,
Establishment
Ltd.
Suqian Hengyuan Thermal Energy Co., Ltd. Establishment
Suqian Huida Port Co., Ltd. Establishment
Description of major subsidiaries and JV companies
(1) Hengyi Brunei
The Company holds 70% of the shares of Hengyi Industries Sdn. Bhd. through Hong Kong Tianyi
International Holding Co., Ltd. Hengyi Brunei has a registered capital of USD 1.0309 billion, and the
scope of business covers: Petroleum refining and petrochemical.
(2) Zhejiang Yisheng
The Company holds 70% of the shares of Zhejiang Yisheng Petrochemical Co., Ltd. through Zhejiang
Hengyi Petrochemical Co., Ltd. Zhejiang Yisheng has a registered capital of USD 514.4471 million,
and the scope of business covers: production of chemical products (excluding chemical products
subject to license); manufacture of basic chemical raw materials (excluding chemical products subject
to license, such as hazardous chemicals); manufacture of synthetic fibers; sales of chemical products
(excluding chemical products subject to license); sales of synthetic materials; sales of synthetic fibers;
sales of new membrane materials; sales of petroleum products (excluding hazardous chemicals);
general cargo warehousing services (excluding hazardous chemicals and other items subject to license
and approval); technology services, technology development, technology consulting, technology
exchange, technology transfer, technology promotion; technology import and export; goods import
110
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
and export; import and export agency (except for business subject to approval according to law, other
business activities can be carried out independently and legally with the business license). The
Company currently has three large PTA production lines, with a PTA production capacity of 5 mtpa
and a PIA production capacity of 300,000 tpa.
(3) Yisheng Investment
The Company holds 30% of the shares of Dalian Yisheng Investment Co., Ltd. through Zhejiang
Hengyi Petrochemical Co., Ltd. Scope of Business: Project investment, domestic general trade,
import and export of goods, technology import and export, and trade intermediary agency. (Except
for business prohibited by laws and administrative regulations, business restricted by laws and
administrative regulations can be operated only after obtaining corresponding permit). (Business
activities subject to approval according to laws can be carried out only after by relevant departments.)
The legal representative is Li Shuirong, and the registered capital is RMB 2.018 billion.
(4) Hainan Yisheng
The Company holds 50% of the shares of Hainan Yisheng Petrochemical Co., Ltd. through Zhejiang
Hengyi Petrochemical Co., Ltd. Hainan Yisheng has a registered capital of RMB 4.58 billion. The
scope of business: production, processing, wholesale and retail of purified terephthalic acid, PET
flakes, polyester bottle flakes, polyester staple fibers, POY yarns, FDY yarns, crude cobalt oxide and
manganese oxide, and chemical fiber raw materials; purchase and sales of paraxylene (PX), acetic
acid, and ethylene glycol; self-supporting and acting as an agent for the import and export of various
goods and technologies; terminal facilities operation, general cargo handling service in the terminal
area, terminal tugboat operation, ship service, fresh water supply for ships, collection of ship
pollutants (including oily sewage, residual oil, tank washing water, domestic sewage and garbage),
and supply of oil containment boom.
(5) Yisheng New Materials
The Company holds 49% of the shares of Zhejiang Yisheng New Materials Co., Ltd. through
Zhejiang Hengyi Petrochemical Co., Ltd. The scope of business: import and export of technologies;
import and export of goods; import and export of agency (Business activities subject to approval
according to laws can be carried out only after approved by relevant departments. Specific business
111
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
activities are subject to the approval results). General business: Sales of new membrane materials;
sales of synthetic materials; sales of chemical products (excluding chemical products subject to
license); sales of petroleum products (excluding hazardous chemicals); production of chemical
products (excluding chemical products subject to license); manufacturing of synthetic materials
(excluding hazardous chemicals); technical services, technical development, technical consultation,
technical exchange, technology transfer, and technology promotion (except for business subject to
approval according to laws, business activities shall be carried out independently and legally with the
business license). The legal representative is Xu Baoyue, and the registered capital is RMB 3 billion.
(6) Hengyi Limited
The Company directly holds 99.72% of the shares (actually enjoys 100% of the rights) of Zhejiang
Hengyi Petrochemical Co., Ltd. Hengyi Limited has a registered capital of RMB 3 billion. The scope
of business: production, processing and sales of chemical fibers and chemical raw materials
(excluding hazardous chemicals); import and export.
(7) Haining New Materials
The Company holds 100% of the shares of Haining Hengyi New Materials Co., Ltd. through Zhejiang
Hengyi Petrochemical Co., Ltd., and the registered capital of Haining New Materials is RMB 3.285
billion. Scope of Business of Haining New Materials: Manufacturing, processing, and wholesale of
differentiated chemical fibers, PET flakes, POY yarns, FDY yarns, and chemical fiber raw materials;
export of the company’s own products and technologies; import of raw and auxiliary materi als,
mechanical equipment, and spare parts required for production of the company; warehouse
management.
(8) Hengyi High-Tech
The Company holds 90.67% of the shares of Zhejiang Hengyi High-Tech Materials Co., Ltd. through
Zhejiang Hengyi Petrochemical Co., Ltd. Hengyi High-Tech has a registered capital of RMB 2.75725
billion, and the scope of business covers: production, processing and sales of PET flakes, POY yarns,
FDY yarns, and chemical fiber raw materials; export of the company’s own products and technologies
and import of self-use products and technologies (except for those that are prohibited or restricted
according to national laws and regulations); all other legal business not subject to approval.
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
(9) Shuangtu New Materials
The Company holds 100% of the shares of Zhejiang Shuangtu New Materials Co., Ltd., and the
registered capital of Shuangtu New Materials is RMB 600 million. Scope of Business: General
business: general business: production of chemical products (excluding chemical products subject to
license); sales of chemical products (excluding chemical products subject to license); sales of
synthetic fibers; synthetic fiber manufacturing; sales of synthetic materials; manufacture of synthetic
materials (excluding hazardous chemicals) (except for business subject to approval according to law,
other business activities can be carried out independently and legally with the business license).
Licensed business: import and export of goods; import and export of technologies (Business activities
subject to approval according to law can only be carried out after approved by relevant departments.
Specific business activities are subject to the approval results). The main products are FDY, POY and
fiber grade PET flakes.
(10) Jiaxing Yipeng
The Company holds 100% of the shares of Jiaxing Yipeng Chemical Fiber Co., Ltd. Jiaxing Yipeng
has a registered capital of RMB 3 billion, and the scope of business covers: manufacture, processing
and sales of PET flakes and FDY fully drawn yarns; sales of chemical fiber raw materials; import and
export of goods. (excluding hazardous chemicals). The main products are FDY and fiber grade PET
flakes.
(11) Hong Kong Tianyi
The Company holds 100% of the shares of Hong Kong Tianyi International Holding Co., Ltd. through
Zhejiang Hengyi Petrochemical Co., Ltd. The registered capital of Hong Kong Tianyi is USD 1.5095
billion, and its business scope involves investment and trading.
(12) China Zheshang Bank
The Company holds a total of 748,069,283 shares of China Zheshang Bank Co., Ltd. through its
subsidiary Zhejiang Hengyi Petrochemical Co., Ltd. and its indirect subsidiary Zhejiang Hengyi
High-Tech Materials Co., Ltd., accounting for 3.52% of the total share capital of China Zheshang
Bank. Scope of Business: financial business (For details, please refer to the approval of the China
Banking and Insurance Regulatory Commission). Established in 2004, the company is one of the 12
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national joint-stock commercial banks approved by the China Banking and Insurance Regulatory
Commission. China Zheshang Bank was listed on the main board of the Hong Kong Stock Exchange
on March 30, 2016 (stock code: 02016.HK) and on the Shanghai Stock Exchange on November 26,
2019 (stock code: 601916.SH.
X. Information on structured entities controlled by the Company
□ Applicable Not applicable
XI. Prospects for the future development of the Company
In 2023, the Company will continue to closely focus on the strategic development policy of
"consolidating, highlighting and enhancing the competitiveness of our main business", realize
resource sharing, systematically build upstream and downstream synergy, consolidate integration
advantages, enhance domestic and overseas linkage, improve the "polyester + polyamide"-driven
industry chain, deepen the "petrochemical +" multi-layered and multi-dimensional industrial layout,
enhance the overall competitiveness, and build the Company into one of the leading international
chemical groups.
(I) Strategic prospects for the development of the Company
In 2023, the Company actively will adapt to economic changes, reshape the entrepreneurial passion,
and strictly adhere to the two bottom lines of legality, compliance, and production safety. The
Company will adhere to the unchanged industrial strategic direction, continue to consolidate,
highlight, and optimize the core competitiveness of the main business, increase scientific research
and innovation to improve product quality, improve operational efficiency, expand and strengthen the
petrochemical and chemical fiber industrial chain, improve the “polyester + polyamide"-driven
industrial chain, and deepen the multi-level and three-dimensional industrial layout of
"petrochemical+". In the future, the Company will focus on consolidating the "petrochemical+"
industrial layout of the petrochemical industry, petrochemical trade, and petrochemical finance.
Through continuous R&D investment, the Company will increase the development of differentiated
products, leverage internal and external resources, achieve resource sharing and industrial
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coordination, and comprehensively enhance comprehensive competitiveness, striving to become an
international first-class and influential petrochemical industry group.
(II) Prospects for the industrial development of the Company
See I. Industrial situation of the Company during the reporting period (II) - industrial situation
(III) Business strategy of the Company for 2023
The Company will continue to increase investments in scientific and technological R&D based on
the requirements of high-quality development in the new era and the new pattern of industrial
development, guided by "green manufacturing" and "circular economy", and improve the conversion
efficiency of new materials and technologies; continuously promote the planning and construction of
the Company's key strategic projects, enhance the Company's sustained profitability and risk
resistance ability; deepen the digital transformation strategy to meet the growing demand for
intelligent logistics technology; optimize the grassroots organizational model, continuously improve
the efficiency and efficiency of human resource allocation, and accumulate momentum for the
Company to achieve sustainable development.
1. Move forward with cohesion, steadily operate existing production capacity and promote
the construction of major projects
In 2023, the Company will continue to operate domestic PTA and polyester related production
capacity safely and steadily, promote the stable construction of projects under construction such as
Qinzhou "1.2 mtpa Caprolactam-Polyamide Industry Integration and Supporting Project" and Suqian
"1.1 mtpa New Environment-friendly Differentiated Fiber Project", and continue to steadily promote
the construction of Brunei Phase II Project.
After the completion of the Brunei Phase II Project, it will further increase the Company's market
share, thicken the profits, and bring new growth and synergy. The newly added “olefin-polyolefin"
industrial chain will be conducive to the Company's further improvement of industrial chain
integration and scale advantages, reducing product production costs, ensuring the stability of raw
material supply, and enhancing the Company's sustained profitability and risk resistance.
2. Realize fine management for long-cycle, stable, safe and full-load operation and optimal
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scalability of equipment to ensure smooth production of the Brunei Project
The Company will continue to do a good job in the production and operation of the Phase I of the
refining-petrochemical project in Brunei, always put safety and environmental protection work at the
top of the refinery operation, adhere to the principle of "affordable, stable, and long-term" device
operation, and continue to maintain good HSE performance. Besides, based on the actual operating
characteristics of the equipment, the Company will take "short, flat, and fast" technical renovation
measures and further improve and optimize the entire factory's processing process, so as to effectively
ensure the production safety, production capacity improvement, process optimization, and cost
reduction and efficiency increase of the equipment of the Phase I Project.
In 2023, in order to comprehensively improve the safety performance and efficiency creation ability
of production equipment, further optimize product structure, reduce comprehensive energy and
material consumption in the production process, and enhance the comprehensive profitability of the
refining-petrochemical project in Brunei, in accordance with industry practices and the characteristics
of production equipment in petrochemical enterprises and based on the changing trends of product
oil and chemical market conditions, the Company will implement routine maintenance improvement
and technical renovation work for the PMB Petrochemical Project in Brunei. The routine maintenance
improvement and technical renovation plan is a routine arrangement made by the management
personnel of the Company and Brunei Company, which is conducive to the improvement of
production and operation. After the completion of this maintenance improvement and technical
renovation, the efficiency creation ability of the production equipment will be further enhanced,
product quality, production efficiency and operational efficiency will be improved, which is
conducive to the sustainable operation of the refining-petrochemical project in Brunei in the future.
In the future, the Company will adhere to the principle of "market orientation, benefit orientation, and
serving for production", focus on the process control for incoming raw materials, the production of
products, the blending and transportation, and the sales and delivery, and timely solve any conflicts
in production, transportation, and sales, ensuring the smooth implementation of production and sales
plans.
3. Increase efforts to drive innovation, focus on R&D innovation, and promote achievement
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transformation
In 2023, the Company has begun to enter the forefront of industry technology in some advantageous
areas. Next, it will continue to leverage the independent innovation spirit of the research institute,
increase R&D investment, and continue to focus on product development and fruit transformation
around three major themes: green environmental protection, functional, and bio-based types. The
Company will continuously increase the promotion of "Eticont" products, increase the promotion and
application of environmentally-friendly polyester technology and product sales, and successfully
complete the trial spinning, trial use, production stability evaluation, and customer trial evaluation of
the developed titanium catalyst; increase the development scale and promote industrialization of
functional composite materials such as antibacterial, cationic dyeable, and flame-retardant materials.
Besides, the Company will focus on promoting the R&D process of technologies such as gas phase
rearrangement, synthetic ammonia, hydrogen peroxide, chemical fiber oils, and polyamide specific
titanium dioxide, promoting the high-quality development of the green petrochemical industry.
Furthermore, by leveraging the functional positioning and advantages of linkage with universities and
research institutes, the Company will participate in basic research through various forms and channels,
carry out scientific and technological cooperation in the front-end, promote application
implementation in the back-end, and create a flexible mechanism with strong R&D motivation, high
conversion efficiency, and smooth management operation, so as to continuously promote the
generation of new achievements, promote their transformation, and actively play a role in back-end
innovation. The Company will build a multi-agent collaborative innovation ecosystem that integrates
technological innovation, application demonstration, talent cultivation, model innovation, and
business integration. The Company will closely focus on the industrial layout, aim at the world's
scientific and technological frontier, gather global innovation resources, cultivate high-end innovation
achievements, build a world-class R&D base for refining-petrochemical integration key common
technologies and high-end chemical products, and will be committed to the R&D of green chemicals
and advanced materials, becoming the technology leader of the whole industry.
4. Strengthen the digital-intelligence integration technologies to promote the construction of
information operation standardization system
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Based on a digital intelligent factory, the Company is accelerating the construction of a standardized
information operation system. In 2023, the Company will continue to consolidate and improve the
service experience of Hengyi Brain, establish a comprehensive application based on AI technology
for continuous upgrading, and provide the Company's senior management with a scientific decision-
making system that integrates production and sales; realize online management of information assets,
operation knowledge base, and system operation configuration, as well as online display and analysis
of operation data; improve the construction of information infrastructure, promote the value mining
of production and operation big data, establish the construction of daily operation standardization
system, and realize the digital transformation development of traditional industries.
Besides, with the growing demand of the petrochemical industry for intelligent logistics technology,
the Company will focus on building an efficient MES system to achieve the consistency and
interconnection of the data of the entire factory, and constantly improve and upgrade the chemical
fiber industrial Internet platform, which is a trinity of "online transaction + online finance +
warehousing logistics", so as to effectively reduce the logistics costs of the Company's internal raw
materials and products, achieve upstream and downstream collaboration, and provide a strong boost
for the development of the main industry, comprehensively enhancing comprehensive
competitiveness of the Company.
5. Improve corporate governance to help achieve strategic goals
In 2023, the Company will take the opportunity of the change of the Board of Director and the BOS
to increase organizational change efforts, create a management team that matches the Company's
strategy, stimulate the vitality of the organization and mechanisms, carry forward the guiding spirit
of hard work and entrepreneurship, maximize the enthusiasm and creativity of employees, and
promote their active contributions to the Company. The Company will continue to strengthen the
construction of talent echelons, normalize the promotion of stable frontline work, and increase
employees' sense of belonging and stimulate the internal power of the enterprise by continuously
improving systems and the policy transparency, and enhancing the grassroot atmosphere.
6. Improve the management system to continuously improve the operational efficiency
In 2023, the Company will continue to establish and improve an advanced operational management
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system, continuously improve production organization efficiency and operational management
performance, actively promote the construction of a lean production system, strengthen the awareness
of cost reduction and efficiency increase among all employees from top to bottom, deeply implement
cost reduction and control throughout the entire process, all elements, and all aspects, establish a
scientific and efficient management system, and further refine the management of procurement costs,
production costs, operational costs, etc., effectively reducing various costs and expenses of the
Company, achieving collaborative improvement in operational efficiency, and ensuring the sustained,
stable, and healthy development of the Company.
(IV) Risks faced by the Company and countermeasures
1. Macroeconomic risks
The Company is engaged in the production and sales of petrochemical and polyester chemical fiber
products. The petrochemical and polyester fiber industry is closely related to the development of the
world economy and China's economy, and people's livelihood. The product prices and sales are
affected by macroeconomic fluctuations and changes in supply and demand. With the acceleration of
economic globalization and integration, national macro-control and cyclical fluctuations of the world
economy will have an impact on the development of the industry. If the global economic growth
slows down or declines, it will directly have a direct impact on the Company's business, operating
results and financial position end demand.
2. Safety and environmentally-friendly production risks
As the awareness of eco-friendliness increases and the government's environmentally-friendly
requirements become stricter, the Company strictly implements the Production Safety Law of the
People's Republic of China, Environmental Protection Law of the People's Republic of China and
other relevant laws and regulations to ensure safe and environmentally-friendly production, and
earnestly fulfills our social responsibility. Since the operation of the main production entity, no major
safety and eco-friendliness incidents have occurred. With the expansion of the Company's production
scale and the extension of the industry chain, preventing safety and eco-friendliness accidents has
become the focus of the Company's operation and management.
In order to reduce industrial safety and environmental production risks, the Company strengthens
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subsequent investment in eco-friendliness, including but not limited to the purchase and update of
equipment and facilities, the construction and implementation of organizational systems, etc. The
Company will actively carry out safety standardization and acceptance work in accordance with the
arrangements for the construction of Class 1, 2, and 3 national safety standards, and focus on building
a safety standard management system. The Company will implement the dual-prevention work
mechanism combining safety risk classification and control and hidden danger investigation and
management, strengthen safety training, increase safety investment, practice the strategy of
promoting safety based on science and technology, promptly remove safety and eco-friendliness
hazards, and eliminate all possibilities of major accidents.
3. Risk of significant fluctuations of crude oil price
In 2023, the United States imposed restrictions on Russia's crude oil exports, and OPEC countries
responded by reducing production. Crude oil prices may fluctuate significantly with the international
situation, geopolitics, and other factors. More than 80% of the cost of the industrial chain where the
Company is located is determined by upstream raw materials. Fluctuations in crude oil prices will
affect the price fluctuations of various products in the industrial chain, exacerbating the uncertainty
of raw material costs and operating costs, as well as the accompanying increase in sales risks and
fluctuations in enterprise benefits. The Company will continue to optimize the inventory strategy to
reduce the adverse impact of product price fluctuations in the industry chain on the Company’s
operations as a result of crude oil price fluctuations.
4. Environmental protection risks
The production and operation of the Company must comply with multiple environmental protection
laws and regulations related to air, water quality, waste disposal, and public health and safety, obtai n
relevant environmental protection permits, and accept inspections from relevant national
environmental protection departments. In recent years, the Company has invested a large amount of
funds and technical strength in the transformation of environmental protection equipment and
production processes, and has treated and discharged pollutants in accordance with national
environmental protection requirements. However, with the promotion of vertical integration of the
industrial chain of listed companies, the expansion of production scale, and the possibility of stricter
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environmental protection standards and broader and stricter pollution control measures being
implemented in China or Brunei in the future, the Company's environmental protection costs and
management difficulties will also increase.
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XII. Reception of research, communication, interview and other activities during the reporting period
Main content of
Reception Visitor
Time Location Visitor communication and Index of basic facts of research
method type
information provided
Record Form of 2022 Hengyi Petrochemicals’ Investor Relation
Five institutions including Company operation Activities as of March 1, 2022 on SZSE (cninfo.com.cn):
The Company’s
February 28, 2022 Field research Institution Guosen Securities and Springs and industry
meeting room Hengyi Petrochemical: 2022 年 2 月 28 日恒逸石化调研活动
Capital development trend
信息.pdf (cninfo.com.cn)
Record Form of Hengyi Petrochemical’s Investor Relation
Company operation Activities as of March 11, 2022 on SZSE (cninfo.com.cn):
The Company’s One institution, i.e., CITIC
March 10, 2022 Field research Institution and industry
meeting room Securities Hengyi Petrochemical: Hengyi Petrochemical: 2022 年 3 月 10
development trend
日恒逸石化调研活动信息.pdf (cninfo.com.cn)
Record Form of Hengyi Petrochemical’s Investor Relation
93 institutions including Company operation Activities as of April 27, 2022 on SZSE (cninfo.com.cn):
Telephone
April 26-27, 2022 Teleconference Institution Shenwan Hongyuan and TF and industry
communication Hengyi Petrochemical: Hengyi Petrochemical: 2022 年 4 月 27
Securities development trend
日恒逸石化调研活动信息.pdf (cninfo.com.cn)
Institution Record Form of Hengyi Petrochemical’s Investor Relation
Investors who participated in the Company operation Activities as of May 7, 2022 on SZSE (cninfo.com.cn): Hengyi
s and
May 6, 2022 Teleconference Others Company's 2021 annual results and industry
individual Petrochemical: Hengyi Petrochemical: 2022 年 5 月 7 日恒逸
briefing development trend
s 石化调研活动信息.pdf (cninfo.com.cn)
Record Form of Hengyi Petrochemical’s Investor Relation
12 institutions including Haitong Company operation
The Company’s Telephone Activities as of June 15, 2022 on SZSE (cninfo.com.cn):
June 15, 2022 Institution Securities and Haitong and industry
meeting room communication Hengyi Petrochemical: 000703 恒 逸 石 化 调 研 活 动 信 息
International development trend
20220615.pdf (cninfo.com.cn)
Record Form of Hengyi Petrochemical’s Investor Relation
Company operation
The Company’s Telephone Three institutions including Activities as of June 17, 2022 on SZSE (cninfo.com.cn):
June 17, 2022 Institution and industry
meeting room communication HSBC Qianhai Securities Hengyi Petrochemical: 000703 恒 逸 石 化 调 研 活 动 信 息
development trend
20220617.pdf (cninfo.com.cn)
July 8, 2022 Field research Institution 25 Company operation Record Form of Hengyi Petrochemical’s Investor Relation
The Company’s institutions including
and industry Activities as of July 11, 2022 on SZSE (cninfo.com.cn): Hengyi
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Main content of
Reception Visitor
Time Location Visitor communication and Index of basic facts of research
method type
information provided
meeting room Northeast Securities development trend Petrochemical: 000703 恒逸石化调研活动信息 20220708.pdf
(cninfo.com.cn)
p5w.net
Institution Investors who participated in the Record Form of Hengyi Petrochemical’s Investor Relation
"Investor Company operation
s and online roadshow for the issuance Activities as of July 20, 2022 on SZSE (cninfo.com.cn): Hengyi
July 20, 2022 Relations Others and industry
individual of convertible bonds of the Petrochemical: 000703 恒逸石化调研活动信息 20220720.pdf
Interactive development trend
s Company (cninfo.com.cn)
Platform"
Record Form of Hengyi Petrochemical’s Investor Relation
Company operation
Telephone 157 institutions including CITIC Activities as of August 24, 2022 on SZSE (cninfo.com.cn):
August 23-24, 2022 Teleconference Institution and industry
communication Securities and TF Securities Hengyi Petrochemical: 000703 恒 逸 石 化 调 研 活 动 信 息
development trend
20220824.pdf (cninfo.com.cn)
p5w.net Record Form of Hengyi Petrochemical’s Investor Relation
Institution
"Investor Investors who participated in the Company operation Activities as of August 31, 2022 on SZSE (cninfo.com.cn):
s and
August 30, 2022 Relations Others Company's 2022 semi-annual and industry
individual Hengyi Petrochemical: Hengyi Petrochemical: 2022 年 8 月 31
Interactive results briefing development trend
s 日恒逸石化调研活动信息.pdf (cninfo.com.cn)
Platform"
Record Form of Hengyi Petrochemical’s Investor Relation
157 institutions including CITIC Company operation
Telephone Activities as of October 31, 2022 on SZSE (cninfo.com.cn):
October 28, 2022 Teleconference Institution Securities and Shenwan and industry
communication Hengyi Petrochemical: 000703 恒 逸 石 化 调 研 活 动 信 息
Hongyuan Securities development trend
20221031.pdf (cninfo.com.cn)
Record Form of Hengyi Petrochemical’s Investor Relation
Company operation
The Company’s 10 institutions including CITIC Activities as of November 11, 2022 on SZSE (cninfo.com.cn):
November 10, 2022 Field research Institution and industry
meeting room Securities Hengyi Petrochemical: 000703 恒 逸 石 化 调 研 活 动 信 息
development trend
20221111.pdf (cninfo.com.cn)
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Section IV Corporate Governance
I. Basic status of corporate governance
During the reporting period, the Company strictly complied with the Company Law, Securities Law,
Code of Corporate Governance for Listed Companies in China, Rules Governing the Listing of Shares
on Shenzhen Stock Exchange, Shenzhen Stock Exchange Self-Regulatory Guidelines for Listed
Companies No. 1 - Standardized Operation of Listed Companies on the Main Board and other
relevant laws and regulations. Based on the actual situation of the Company, we continuously
improved and enhanced the standardized operation of corporate governance, and established a sound
internal management and control system to regulate the operation of the Company. The Company's
internal control system has been increasingly improved, and the standardization level of governance
has been continuously increased.
1. Shareholders and shareholders' general meetings
During the reporting period, the Company strictly complied with laws and regulations, and convened
and held shareholders' general meetings in a standardized manner. The convening and holding
procedures of the shareholders' general meetings, the qualifications of the persons attending the
shareholders' general meetings, the voting procedures and voting results of the shareholders' general
meetings all complied with the Company Law, Rules for the Shareholders' Meetings of Listed
Companies and other laws and regulations and the Company's Rules of Procedure for the General
Meeting of Shareholders, which ensured that all shareholders, especially minority shareholders, could
fully exercise their rights. The Company's shareholders' general meetings during the repor ting period
were convened by the BOD, and lawyers were engaged to witness the meetings on site, ensuring the
legality of the meeting convening, holding and voting procedures, and safeguarding the legitimate
rights and interests of the Company and shareholders.
2. The Company and the controlling shareholder
The Company is completely independent from the controlling shareholder and its subsidiaries in
terms of business, personnel, assets, organization, and finance. The Company has independent and
complete business and the ability to operate independently. The Company's BOD, BOS and internal
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
organizations operate independently. The controlling shareholder of the Company can strictly
regulate its behavior. Major decisions of the Company were made by the shareholders’ general
meetings in accordance with the law. The controlling shareholder exercised its shareholder rights in
accordance with the law, and did not directly or indirectly interfere with the decision-making and
operating activities of the Company beyond the shareholders’ general meetings of the Company.
3. Directors and the BOD
The Company elected directors in strict accordance with the selection and appointment procedures
stipulated in the Company Law and the Articles of Association of the Company. The number and
composition of the BOD of the Company met the requirements of laws and regulations. All directors
of the Company could carry out their work in accordance with the Rules of Procedure of the BOD,
attend the board meetings and shareholders' general meetings on time with a conscientious and
responsible attitude, faithfully perform their duties in the interests of the Company and all
shareholders, actively participate in training on relevant knowledge, study relevant laws and
regulations, and promote the standardized operation and scientific decision-making of the BOD. The
independent directors of the Company could perform their duties independently in accordance with
the corresponding rules and regulations, without being influenced by the actual controller of the
Company or other units or persons that have an interest in the Company.
During the reporting period, the procedures of the meetings of the BOD of the Company were in
compliance with relevant regulations, the minutes of the meeting were complete and true, and the
disclosure of relevant information at the meetings was timely, accurate and adequate. The BOD of
the Company set up four special committees, namely the Remuneration Assessment and Nomination
Committee, the Risk Control Committee, the Audit Committee and the Strategy and Investment
Committee, which have played an important role in promoting the standardized operation and healthy
development of the Company.
4. Supervisors and the BOS
The Company's BOS consists of three supervisors, one of whom is an employee representative. The
number and personnel of the Company's BOS met the requirements of relevant laws and regulations
and the Company's Articles of Association. All the supervisors of the Company could perform their
duties conscientiously in accordance with the requirements of the Company's Rules of Procedure of
the BOS and other relevant regulations, attend the shareholders’ general meeting, attend the meetings
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
of the BOD as nonvoting delegates, convene the meetings of the BOS according to the prescribed
procedures, diligently and conscientiously supervise the legality and compliance of the Company's
financial situation, directors and senior executives, and safeguard the legitimate rights and interests
of the Company and its shareholders.
5. Stakeholders
The Company fully respected and safeguarded the legitimate rights and interests of relevant
stakeholders to achieve a win-win situation for customers, suppliers, employees, shareholders and
other stakeholders and jointly promote the Company's sustainable and steady development.
6. Information disclosure and transparency
The Company strictly followed the requirements of relevant laws and regulations as well as the
Information Disclosure Management System and the Investor Relations Management System to
conscientiously fulfill our information disclosure obligations, disclose the Company's operation and
management and matters that have significant impact on the Company in a true, accurate, complete
and timely manner, coordinate the relationship between the Company and investors, receive investors’
visits, and answer investors’ inquiries. The Company's designated newspapers and websites such as
STCN, China Securities Journal, Shanghai Securities News, Securities Daily and CNINFO
(http://www.cninfo.com.cn) for the Company's information disclosure.
7. Performance evaluation and incentive and restraint mechanisms
The Company is gradually improving and establishing fair and transparent performance evaluation
standards and incentive and restraint mechanisms for directors, supervisors and senior executives.
The appointment of senior executives of the Company was open and transparent, in line with laws
and regulations.
Whether there is any material difference between the actual situation of corporate governance
of the Company and the laws, administrative regulations and the rules on the governance of
listed companies issued by the China Securities Regulatory Commission
□Yes No
There is no material difference between the actual situation of corporate governance of the Company
and laws, administrative regulations and the rules on the governance of listed companies issued by
the China Securities Regulatory Commission.
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II. Independence of the Company in guaranteeing the Company's assets, personnel, finance,
organization, and business relative to the controlling shareholder and actual controller
The Company carried out operations in strict accordance with the Company Law, Articles of
Association and other laws, regulations and rules, established a sound corporate governance structure
of the Company, and maintained independent from the controlling shareholder in terms of business,
personnel, assets, organization, and finance. The Company has an independent and complete business
system and the ability to operate independently.
1. Business: The Company has an independent and complete supply, R&D, production and sales
system, has the ability to operate independently in the market, conduct business, accounting and
decision-making, assume responsibilities and risks independently, and does not rely on the controlling
shareholder or other any related parties.
2. Personnel: The Company has formed a complete system for labor, personnel and salary
management, and an independent human resources management department to manage labor,
personnel and salary independently of the controlling shareholder. The Company has an independent
workforce. The Company's directors, supervisors and senior executives are legally elected in
accordance with the Company Law, Articles of Association and other relevant laws, regulations and
rules. The Company's senior executives all work in the Company and receive remuneration, and do
not hold any positions other than directors and supervisors in the controlling shareholder and its
subsidiaries.
3. Assets: The Company has a clear property relationship with the controlling shareholder, and
independently owns complete legal person assets, production and supporting facilities, land, plant,
machinery and equipment related to production and operation, as well as ownership and right to use
of trademarks, patents and non-patented technologies. The Company has full control over all assets,
and its assets and funds are not occupied by the controlling shareholder to the detriment of the
interests of the Company.
4. Organization: The Company established a sound organizational system to meets its own
production and operation needs. The functional departments operate independently and smoothly,
and there is no subordination relationship between the controlling shareholder and the functional
departments.
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5. Finance: The Company has an independent financial and accounting department equipped with
full-time financial personnel. The Company established an independent accounting system and a
standardized financial management system, and financial decisions were made independently. The
Company opened an independent bank account to independently make tax declarations and perform
tax obligations in accordance with the law. There is no shared bank account or mixed tax payment
with the controlling shareholder.
III. Competition in the same industry
□ Applicable Not applicable
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IV. Information on the annual general meeting and extraordinary general meetings of shareholders held in the reporting period
1. Annual general meeting of shareholders held during the reporting period
Percentage
Type of Date of Disclosure
Session of meeting of Resolutions
meeting meeting date
investors
Extraordinary
First Extraordinary General
general January 17, January 18, 1. Reviewed and approved the Proposal on Changing the Scope of Business of the
Meeting of Shareholders in 49.002%
meeting of 2022 2022 Company and Amendment of the Articles of Association;
2022
shareholders
1. Reviewed and approved the Proposal on the Estimated Amount of Daily
Related-party Transactions in 2022;
2. Reviewed and approved the Proposal on Determining the Company's
Guarantee to its Controlled Subsidiaries and Mutual Insurance Amount between
Controlled Subsidiaries in 2022;
3. Reviewed and approved the Proposal on Carrying out Foreign Exchange
Hedging Business in 2022;
Extraordinary
The second Extraordinary
general February 14, February 15, 4. Reviewed and approved the Proposal on Carrying out Commodity Hedging
General Meeting of 42.853% Business in 2022;
meeting of 2022 2022
Shareholders in 2022
shareholders 5. Reviewed and approved the Proposal on the Provision of Financial Support to
the Company by the Controlling Shareholder and Related-party Transactions;
6. Reviewed and approved the Proposal on Purchasing Liability Insurance for the
Company's Directors, Supervisors and Senior Executives;
7. Reviewed and approved the Proposal on the Subsidiary’s Investment and
Construction of the 1.2 mtpa Caprolactam-Polyamide Industry Integration and
Supporting Project;
8. Reviewed and approved the Proposal on Guarantee Provision to Hainan
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Percentage
Type of Date of Disclosure
Session of meeting of Resolutions
meeting meeting date
investors
Yisheng Petrochemical Co., Ltd. and related-party transactions.
1. Reviewed and approved the Proposal on the " nnual Report 2021"and Its
Summary;
2. Reviewed and approved the Work Report of the BOD for the Year 2021;
3. Reviewed and approved the Work Report of the BOS for the Year 2021;
4. Reviewed and approved the Report on the Financial Accounts for the Year 2021;
5. Reviewed and approved the Proposal on Profit Distribution of the Company for
the Year 2021;
6. Reviewed and approved the Self-Evaluation of Internal Control for the Year
2021;
Annual
2021 Annual General general May 17, May 18, 7. Reviewed and approved the Proposal on the Annual Deposit and Use of Raised
52.644% Funds in 2021;
Meeting of Shareholders meeting of 2022 2022
shareholders 8. Reviewed and approved the Proposal on Renewal of the Appointment of the
Accounting Firm;
9. Reviewed and approved the Proposal on Addition of Daily Related-party
Transactions for the Year 2022;
10. Reviewed and approved the Proposal on Extending the Validity Period of the
Resolution of the Shareholders' Meeting on the Public Issuance of Convertible
Corporate Bonds;
11. Reviewed and approved the Proposal on Submission to the General Meeting
of Shareholders to Extend the Validity Period of Authorizing the BOD to Handle
Specific Matters Regarding the Company’s Public Offering of Convertible
Corporate Bonds.
The Third Extraordinary Extraordinary 48.98%
August 15, August 16, 1. Reviewed and approved the Proposal on Changing the Registered Address and
General Meeting of general
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Percentage
Type of Date of Disclosure
Session of meeting of Resolutions
meeting meeting date
investors
Shareholders in 2022 meeting of 2022 2022 Amending the Articles of Association of the Company
shareholders
Extraordinary 1. Reviewed and approved the Proposal on Increase in Estimated Amount of Daily
The Forth Extraordinary
general November November Related-party Transactions for in 2022;
General Meeting of 51.58%
meeting of 14, 2022 15, 2022 2. Reviewed and approved the Proposal on Providing Affiliated Entrusted Loans
Shareholders in 2022
shareholders to a JV Company - Yisheng New Materials.
1. Reviewed and approved the Proposal on the Estimated Amount of Daily
Related-party Transactions in 2023;
2. Reviewed and approved the Proposal on Determining the Company's
Guarantee to its Controlled Subsidiaries and Mutual Insurance Amount between
Controlled Subsidiaries in 2023;
3. Reviewed and approved the Proposal on Carrying out Foreign Exchange
Hedging Business in 2023;
4. Reviewed and approved the Proposal on Carrying out Commodity Hedging
Extraordinary Business in 2023;
The Fifth Extraordinary
general December December
General Meeting of 51.444% 5. Reviewed and approved the Proposal on the Provision of Financial Support to
meeting of 22, 2022 23, 2022
Shareholders in 2022 the Company by the Controlling Shareholder and Related-party Transactions;
shareholders
6. Reviewed and approved the Proposal on Guarantee Provision to Hainan
Yisheng Petrochemical Co., Ltd. and related-party transactions;
7. Reviewed and approved the Proposal on Purchasing Liability Insurance for the
Company's Directors, Supervisors and Senior Executives;
8. Reviewed and approved the Proposal on Electing Company Directors;
9. Reviewed and approved the Proposal on Increasing the Expected Amount of
Daily Related-party Transactions for 2022 and Adjusting the Implementation
Entities of related-party transactions;
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
2. The preference shareholders whose voting rights have been restored request the convening of an extraordinary general meeting
□ Applicable Not applicable
V. Directors, supervisors and senior executives
1. Basic information
Number of Increase Decrease
Number of Number of Reasons for
Employ shares held at of shares of shares Other
Stock restricted shares held at increase or
Name Title ment Gender Age Start date of term End date of term the beginning of in current in current changes
options shares granted the end of the decrease of
status the period period period (shares)
(shares) period (shares) shares
(shares) (shares) (shares)
President and
Qiu Yibo Current Male 36 May 15, 2015 September 13, 2023 1,365,000 1,365,000
CEO
Fang Vice President and
Current Male 59 May 16, 2011 September 13, 2023 4,777,500 4,777,500
Xianshui Financial Director
Ni
Director Current Male 45 August 25, 2017 September 13, 2023 6,051,500 6,051,500
Defeng
Lou Director, Vice
Current Male 61 September 14, 2021 September 13, 2023 0 0
Jianchang President
Director, Financial
Mao Ying Director, Vice Then Female 42 September 14, 2021 December 6, 2022 0 0
President
Wu Director, Vice
Current Male 34 September 14, 2021 September 13, 2023 109,200 109,200
Zhong President
Luo Dan Director Current Female 40 December 22, 2022 September 13, 2023 0 0
Current Male 58 August 25, 2017 September 13, 2023 0 0
Chen Independent
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Number of Increase Decrease
Number of Number of Reasons for
Employ shares held at of shares of shares Other
Stock restricted shares held at increase or
Name Title ment Gender Age Start date of term End date of term the beginning of options in current in current changes
shares granted the end of the decrease of
status the period period period (shares)
(shares) period (shares) shares
(shares) (shares) (shares)
Sanlian Director
Yang Independent
Current Male 66 August 25, 2017 September 13, 2023 0 0
Bozhang Director
Yang Independent
Current Male 59 August 25, 2017 September 13, 2023 0 0
Liuyong Director
Wang Executive Vice
Current Male 53 May 16, 2011 September 13, 2023 5,778,500 5,778,500
Songlin President
Chen
Vice President Current Male 56 August 25, 2017 September 13, 2023 3,640,000 3,640,000
Liancai
Zhao
Vice President Current Male 38 September 15, 2021 September 13, 2023 327,600 327,600
Donghua
Zheng Secretary of the
Current Male 44 August 28, 2017 September 13, 2023 2,912,000 2,912,000
Xingang BOD
Li Chairman of the
Current Male 46 September 15, 2021 September 13, 2023 218,400 218,400
Yugang BOS
Jin
Supervisor Current Female 37 September 14, 2021 September 13, 2023 109,200 109,200
Danwen
Ni Jinmei Supervisor Current Female 48 August 28, 2021 September 13, 2023 273,000 273,000
Total -- -- -- -- -- -- 25,561,900 25,561,900 --
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Where there is any dismissal of directors, supervisors or senior executives during the
reporting period
Due to job adjustments, Ms. Mao Ying applied in writing to resign from her position as a director,
vice president, and financial director of the Company on December 6, 2022. According to the relevant
provisions of the Company's Articles of Association, the written resignation application submitted by
Ms. Mao Ying took effect immediately.
Changes in directors, supervisors and senior executives of the Company
Name Positions held Date Reason
Mao Director, Vice President and
Then December 6, 2022 Job changes
Ying Financial Director
Fang Currently Currently
Financial Director December 6, 2022
Xianshui employed employed
Currently Currently
Luo Dan Director December 22, 2022
employed employed
2. Employment status
Professional background, main work experience and main responsibilities of the current
directors, supervisors and senior executives of the Company
(1) Directors
Qiu Yibo, male, born in December 1987, Chinese nationality, with a bachelor degree and used to
work as Manager of Investment Management Department of Sinopec Chemical Sales Co., Ltd. East
China Branch and Hengyi Petrochemical Co., Ltd. He is currently President and CEO of Hengyi
Petrochemical Co., Ltd., and concurrently serves as Director of Zhejiang Hengyi Group Co., Ltd.,
Executive Director of Suqian Yida New Materials Co., Ltd., Executive Director of Zhejiang Yizhi
Information Technology Co., Ltd., President of Fujian Yijin Chemical Fiber Co., Ltd., Vice President
of Zhejiang Hengyi Polyamide Co., Ltd., Director of Zhejiang Baling Hengyi Caprolactam Co., Ltd.,
Director of Dongzhan Shipping Co., Ltd., Executive Director of Ningbo Jinhou Industrial Investment
Co., Ltd., Director of Zhejiang Xianfeng Data Technology Co., Ltd., Executive Director of Zhejiang
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Hengyi Hanlin Enterprise Management Co., Ltd., Executive Director of Hangzhou Yibo Investment
Management Co., Ltd., and Director of Zhejiang Hengyi Polymer Co., Ltd.
Fang Xianshui, male, born in March 1964, Chinese nationality, senior economist with a bachelor
degree and has more than 30 years of production management experience in chemical fiber industry.
He used to work as General Manager of Hangzhou Hengyi Industrial Corporation, General Manager
of Hangzhou Hengyi Chemical Fiber Co., Ltd., and General Manager of Zhejiang Hengyi Group Co.,
Ltd. He is currently the Vice President of Hengyi Petrochemical Co., Ltd., and concurrently serves
as the Director of Zhejiang Hengyi Group Co., Ltd., President and CEO of Hangzhou Hengyi
Investment Co., Ltd., Executive Director and President of Zhejiang Hengyi Petrochemical Co., Ltd.,
President of Zhejiang Hengyi Polymer Co., Ltd., President of Zhejiang Yisheng Petrochemical Co.,
Ltd., President of Zhejiang Hengyi High-Tech Materials Co., Ltd., Director of Zhejiang Baling
Hengyi Caprolactam Co., Ltd., Director of Hong Kong Tianyi International Holding Co., Ltd.,
Director of Good Park International Investment Co., Ltd., Director of Yisheng Dahua Petrochemical
Co., Ltd., Executive Director of Hainan Yisheng Trading Co., Ltd., Executive Director of Zhejiang
Yixin Chemical Fiber Co., Ltd., Executive Director and CEO of Ningbo Hengyi Engineering
Management Co., Ltd., President of Hainan Yisheng Petrochemical Co., Ltd., Executive Director and
President of Zhejiang Hengyi Petrochemical Sales Co., Ltd., President of Ningbo Hengyi Trading
Co., Ltd., Director of Hong Kong Yisheng Co., Ltd., Executive Director of Shanghai Hengyi
Polyester Fiber Co., Ltd., President of Zhejiang Hengyi International Trading Co., Ltd., Director of
Fujian Yijin Chemical Fiber Co., Ltd., Director of Zhejiang Yisheng New Materials Co., Ltd.,
Director of Zhejiang Hengyi Polyamide Co., Ltd., Executive Director of Zhejiang Hengkai Energy
Co., Ltd., Executive Director of Zhejiang Shuangtu New Materials Co., Ltd., Executive Director of
Zhejiang Hengyi Energy Co., Ltd., Executive Director of Zhejiang Xiaoyi Supply Chain Management
Co., Ltd., Director of Dalian Yisheng Investment Co., Ltd., and Director of Haining Hengyi New
Materials Co., Ltd.
Ni Defeng, male, born in January 1978, Chinese nationality, a Senior Economist with a doctoral
degree and has nearly 20 years of work experience in finance and investment. He used to work as
Auditor of Pan-China Certified Public Accountants, Manager of Finance Department, Manager of
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Investment Development Department, and Assistant to CEO of Zhejiang Hengyi Group Co., Ltd.,
and investment Director of Hengyi Petrochemical Co., Ltd. He is currently Director of Hengyi
Petrochemical Co., Ltd., and concurrently serves as Director and CEO of Zhejiang Hengyi Group Co.,
Ltd., Director of Zhejiang Xianfeng Data Technology Co., Ltd., Director of Hangzhou Hengyi
Investment Co., Ltd., Director of Zhejiang Hengyi Polyamide Co., Ltd., Director of Lanping County
Qingdian Bay Zinc Industry Co., Ltd., Director of Hainan Hengshengyuan International Tourism
Development Co., Ltd., Executive Director and CEO of Hangzhou Jinglin Asset Management Co.,
Ltd., Director of Dalian Yishengyuan Real Estate Co., Ltd., and President and CEO of Hangzhou
Jinyi Industrial Co., Ltd.
Lou Jianchang, male, born in November 1962, Chinese nationality, a professor-level senior engineer
with a master degree of engineering conferred by China University of Petroleum (Beijing) and an
MBA degree conferred by University of Houston. He used to worked as Deputy Chief Dispatcher of
General Dispatching Office, Deputy Plant Manager, and Plant Manager of Sinopec Yanshan
Petrochemical Company Refinery; Deputy General Manager of Sinopec Yanshan Petrochemical
Company; Deputy Director of Sinopec Materials and Equipment Department and Deputy General
Manager of Sinopec International Business Co., Ltd. He is currently Director and Vice President of
Hengyi Petrochemical Co., Ltd., and concurrently serves as Director of Fujian Yijin Chemical Fiber
Co., Ltd., and Director of Zhejiang Baling Hengyi Caprolactam Co., Ltd.
Wu Zhong, male, born in July 1989, Chinese nationality, with a bachelor degree conferred by
Zhejiang Gongshang University. He used to worked as Deputy General Manager of Zhejiang Hengyi
Petrochemical Sales Co., Ltd. and General Manager of Ningbo Hengyi Industrial Co., Ltd. He is
currently Director and Vice President of Hengyi Petrochemical Co., Ltd., and concurrently serves as
Director of Fujian Yijin Chemical Fiber Co., Ltd., Executive Director of Hainan Hengjing Trading
Co., Ltd., and Executive Director of Zhejiang Hengyi International Trade Co., Ltd.
Luo Dan, female, born in September 1983, Chinese nationality, with a bachelor's degree from
Zhejiang Agricultural and Forestry University and a master's degree in MPA from Wuhan University
of Technology. The former Manager of the Comprehensive Department of the Comprehensive
Management Center of Hengyi Petrochemical Co., Ltd., and the current General Manager of the
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Investment Management Department of Hengyi Petrochemical Co., Ltd.
Chen Sanlian, male, Chinese nationality, born in November 1964, without overseas permanent
residency or party affiliation; holds a bachelor of law degree, an independent director qualification
certificate and a lawyer qualification certificate. He successively served as Editorial Director and
Deputy Editor of Lawyers and Legal System magazine, lawyer of High Mark Law Firm, and Deputy
Secretary-general and Secretary-general of the Lawyers Association of Zhejiang. He is currently full-
time Vice President of the Lawyers Association of Zhejiang, Member of the Zhejiang Provincial
Political Consultative Conference, Vice President of the Association of Intellectuals of Zhejiang,
Visiting Professor of the Law School of Zhejiang University of Technology, arbitrator of the
Shanghai International Economic and Trade Arbitration Commission, and arbitrator of the Hangzhou
Arbitration Commission. He is an independent director of Hengyi Petrochemical Co., Ltd. and
concurrently serves as an independent director of Calxon Group Co., Ltd., Zheshang Development
Group Co., Ltd., and Viewshine Ltd.
Yang Liuyong, male, born in March 1964, Chinese nationality, and a doctoral degree. He is currently
a professor of finance at Zhejiang University and Deputy Dean of Academy of Financial Research,
Zhejiang University. He joined the Communist Party of China in 1984 and started working in 1987.
He studied agricultural economics at Zhejiang University from 1980 to 1984 for a bachelor degree
and from 1984 to 1987 for a master degree. He has been a teacher in the Department of Finance of
Zhejiang University since 1987 (including studying in the Department of Agricultural Economics and
Management of Zhejiang University from 1996 to 2001 [as a doctoral student]), and is also an
independent director of Hengyi Petrochemical Co., Ltd.
Yang Bozhang, male, born in July 1957, Chinese nationality, a senior accountant with a junior college
degree. He used to work as Vice President of Zhejiang Association of CFO, Director and Vice
President of Transfar Group Co., Ltd., General Manager of Zhejiang Transfar Jiangnan Dadi
Development Co., Ltd., CEO of Hangzhou Transfar Science and Technology City Company,
Secretary of the Party Committee of Transfar Logistics Group Co., Ltd., President of the BOS of
Zhejiang Wynca Chemical Industrial Group Co., Ltd. (600596), and Director of Zhejin Trust Co.,
Ltd. He is currently President of Transfar Group Finance Co., Ltd., President of Hangzhou Kezhu
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Investment and Development Co., Ltd., and the President of Hangzhou Kerong Real Estate Co., Ltd.
He is also an independent director of Hengyi Petrochemical Co., Ltd.
(2) Supervisors
Li Yugang, male, born in November 1977, Chinese nationality, economist, international registered
internal auditor, and company lawyer; with a master degree and more than ten years of audit work
experience. He used to work as First Deputy Director of Audit Department of the BOD and Deputy
Director of Legal Department of Shagang Group, and is currently Audit and Legal Director of Hengyi
Petrochemical Co., Ltd.
Jin Danwen, female, born in April 1986, Chinese nationality, with a master of accounting degree
conferred by Hangzhou Dianzi University. She holds qualifications of Chinese certified public
accountant and intermediate accountant. She used to work as Director of Finance Department of
Hengyi Industries Sdn. Bhd. She is currently General Manager of Fund Management Department of
Hengyi Petrochemical Co., Ltd. and Director of Finance Department of Hengyi Industries Sdn. Bhd.
She concurrently serves as Director of Hangzhou Jinyi Industrial Co., Ltd., and Director of Zhejiang
Hengyi High-Tech Materials Co., Ltd.
Ni Jinmei, female, born on March 21, 1976; Chinese nationality, economist. She used to work as
General Manager of Zhejiang Hengyi Polymer Co., Ltd., and General Manager of Comprehensive
Management Center of Zhejiang Hengyi Petrochemical Co., Ltd. Currently, she is Executive Director
and General Manager of Hangzhou Yijing Chemical Fiber Co., Ltd.
(3) Senior management
Wang Songlin, male, born in April 1970, Chinese nationality, master degree, has more than 20 years
of experience in the petrochemical fiber industry. He used to be the deputy director of CTPIC, the
office director of CNCFC, the general manager of China Chemical Fiber Economic Information
Network, and the general manager of Beijing Cotton Zhanwang Information Consulting Co., Ltd. He
is currently the executive vice president of Hengyi Petrochemical Co., Ltd., the director of Zhejiang
Baling Hengyi Caprolactam Co., Ltd., the chairman of Haining Hengyi New Materials Co., Ltd., the
executive director and president of Haining Hengyi Thermal Power Co., Ltd., and director of Jiangsu
New Horizon Advanced Functional Fiber Innovation Center Co., Ltd.
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Chen Liancai, male, born in June 1967, Chinese nationality, bachelor degree, senior engineer, with
more than 20 years of experience in the petrochemical industry. He used to be the deputy general
manager of Sinopec Zhenhai Refining & Chemical Branch, the deputy general manager of Guodian
Sinopec Ningxia Energy Chemical Co., Ltd., and the general manager of Sinopec Great Wall Energy
Chemical (Ningxia) Co., Ltd. He is currently the Chief Executive Officer (CEO) of Hengyi Brunei
and the Vice President of Hengyi Petrochemical Co., Ltd.
Zhao Donghua, male, born in February 1985, Chinese nationality, Master of Law from Zhejiang
University, and EMBA from China Europe International Business School; intermediate economist.
He used to serve as the representative of securities affairs, the deputy manager of the legal affairs
department, and the assistant general manager of the marketing center of Hengyi Petrochemical Co.,
Ltd. He is currently the general manager of Zhejiang Hengyi Petrochemical Sales Co., Ltd. and the
vice president of Hengyi Petrochemical Co., Ltd.
Zheng Xingang, male, born in December 1979, Chinese nationality, bachelor degree from Huazhong
University of Science and Technology, master degree from Wuhan University, EMBA degree from
Fudan University, senior economist. He has more than 10 years of investment and financing work
experience. He once served as deputy manager of the capital operation department, deputy manager
of the investment development department, and director of the office of the BOD of Hengyi
Petrochemical Co., Ltd. He is currently the secretary of the BOD and assistant to the president of
Hengyi Petrochemical Co., Ltd.
Posts held in corporate shareholders
Whether to
Name of receive
Name of corporate shareholder Post held Start date of term remuneration
incumbent
allowance in
shareholder units
Zhejiang Hengyi Group Co.,
Qiu Yibo Director September 26, 2017 No
Ltd.
Zhejiang Hengyi Group Co.,
Fang Xianshui Director October 18, 1994 No
Ltd.
Hangzhou Hengyi Investment
Fang Xianshui President & GM October 8, 2022 No
Co., Ltd.
139
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Zhejiang Hengyi Group Co.,
Ni Defeng Director & President September 26, 2017 Yes
Ltd.
Hangzhou Hengyi Investment
Ni Defeng Director December 28, 2016 No
Co., Ltd.
Description of the position in the shareholder unit None
Posts held in other entities
Name of Is remuneration
Posts held in other
incumbe Name of other entities Start date of term paid by other
entities
nt entities?
Qiu Hangzhou Yibo Investment
Executive Director March 17, 2016 No
Yibo Management Co., Ltd.
Qiu Ningbo Jinhou Industry Manager &
May 3, 2016 No
Yibo Investment Co., Ltd. Executive Director
Qiu Zhejiang Yizhi Information Executive Director
Yibo Technology Co., Ltd. & GM February 7, 2022 No
Zhejiang Hengyi Hanlin
Qiu Executive Director
Yibo Enterprise Management Co., & GM August 20, 2021 No
Ltd.
Qiu Fujian Yijin Chemical Fiber Co.,
President January 26, 2018 No
Yibo Ltd.
Qiu Zhejiang Hengyi Polyamide Co.,
Vice President January 14, 2022 No
Yibo Ltd.
Qiu Zhejiang Baling Hengyi
Yibo Caprolactam Co., Ltd. Director June 9, 2022 No
Qiu Suqian Yida New Materials Co.,
Executive Director January 19, 2018 No
Yibo Ltd.
Qiu
Dongzhan Shipping Co., Ltd. Director November 30, 2017 No
Yibo
Qiu Zhejiang Xianfeng Data
Director June 7, 2016 No
Yibo Technology Co., Ltd.
Qiu Zhejiang Hengyi Polymer Co.,
Yibo Ltd. Director November 29, 2022 No
140
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Name of Is remuneration
Posts held in other
incumbe Name of other entities Start date of term paid by other
entities
nt entities?
Fang Zhejiang Yixin Chemical Fiber
Executive Director July 26, 2017 No
Xianshui Co., Ltd.
Fang Hainan Yisheng Trading Co.,
Xianshui Ltd. Executive Director August 14, 2014 No
Fang Zhejiang Hengkai Energy Co.,
Executive Director December 18, 2017 No
Xianshui Ltd.
Fang Ningbo Hengyi Trading Co.,
President May 24, 2011 No
Xianshui Ltd.
Fang Ningbo Hengyi Engineering GM & Executive
November 27, 2014 No
Xianshui Management Co., Ltd. Director
Fang Zhejiang Hengyi Energy Co., Executive Director
September 24, 2022 No
Xianshui Ltd. & GM
Zhejiang Xiaoyi Supply Chain
Fang Management Co., Ltd. (Zhejiang Executive Director
April 19, 2022 No
Xianshui Xiaoyi Supply Chain & GM
Management Co., Ltd.)
Fang Zhejiang Hengyi Petrochemical Executive Director
July 26, 2004 No
Xianshui Co., Ltd. & GM
Fang Zhejiang Hengyi High-Tech
President & manager October 15, 2007 No
Xianshui Materials Co., Ltd.
Fang Zhejiang Hengyi Polymer Co.,
Xianshui Ltd. President September 5, 2000 No
Fang Zhejiang Yisheng Petrochemical
President May 12, 2015 No
Xianshui Co., Ltd.
Fang Zhejiang Hengyi Petrochemical Manager &
July 24, 2017 No
Xianshui Sales Co., Ltd. Executive Director
Fang Hainan Yisheng Petrochemical
President June 23, 2014 No
Xianshui Co., Ltd.
Fang Shanghai Hengyi Polyester Fiber
Executive Director May 14, 2015 No
Xianshui Co., Ltd.
Fang Fujian Yijin Chemical Fiber Co.,
Director January 26, 2018 No
Xianshui Ltd.
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Name of Is remuneration
Posts held in other
incumbe Name of other entities Start date of term paid by other
entities
nt entities?
Fang Yisheng Dahua Petrochemical
Director April 29, 2006 No
Xianshui Co., Ltd.
Fang Zhejiang Hengyi Polyamide Co.,
Xianshui Ltd. Director August 12, 2013 No
Fang Dalian Yisheng Investment Co.,
Director September 29, 2007 No
Xianshui Ltd.
Fang Zhejiang Baling Hengyi
Director January 10, 2008 No
Xianshui Caprolactam Co., Ltd.
Fang Zhejiang Yisheng New Materials
Director November 27, 2017 No
Xianshui Co., Ltd.
Fang Haining Hengyi New Materials
Director October 5, 2019 No
Xianshui Co., Ltd.
Fang Hong Kong Tianyi International
Director September 17, 2009 No
Xianshui Holding Co., Ltd.
Fang Good Park International
Director September 17, 2009 No
Xianshui Investment Co., Ltd.
Fang
Hong Kong Yisheng Co., Ltd. Director June 27, 2014 No
Xianshui
Ni Hangzhou Jinyi Industrial Co.,
President & GM September 30, 2019 No
Defeng Ltd.
Ni Hangzhou Jinglin Asset Executive Director
Defeng Management Co., Ltd. & GM March 12, 2018 No
Ni Zhejiang Hengyi Polyamide Co.,
Director January 27, 2015 No
Defeng Ltd.
Ni Lanping County Qingdian Bay
Director January 16, 2006 No
Defeng Zinc Co., Ltd.
Hainan Hengshengyuan
Ni
International Tourism Director February 26, 2018 No
Defeng
Development Co., Ltd.
Ni Dalian Yishengyuan Real Estate
Defeng Co., Ltd. Director March 29, 2018 No
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Name of Is remuneration
Posts held in other
incumbe Name of other entities Start date of term paid by other
entities
nt entities?
Ni Zhejiang Xianfeng Data
Director June 7, 2016 No
Defeng Technology Co., Ltd.
Lou
Fujian Yijin Chemical Fiber Co.,
Jianchan Ltd. Director October 22, 2021 No
g
Lou
Zhejiang Baling Hengyi
Jianchan Director June 9, 2022 No
Caprolactam Co., Ltd.
g
Wu Hainan Hengjing Trading Co., Executive Director
August 21, 2021 No
Zhong Ltd. & manager
Wu Zhejiang Hengyi International Executive Director
July 1, 2022 No
Zhong Trade Co., Ltd. & GM
Wu Fujian Yijin Chemical Fiber Co.,
Zhong Ltd. Director October 22, 2021 No
Jin Hainan Hengjing Trading Co.,
Supervisor August 21, 2021 No
Danwen Ltd.
Jin Hangzhou Jinyi Industrial Co.,
Director February 28, 2021 No
Danwen Ltd.
Jin Zhejiang Hengyi High-Tech
Director February 28, 2021 No
Danwen Materials Co., Ltd.
Jin Zhejiang Hengyi Engineering
Danwen Management Co., Ltd. Supervisor January 29, 2018 No
Zhejiang Hengyi Hanlin
Jin
Enterprise Management Co., Supervisor August 20, 2021 No
Danwen
Ltd.
Jin Haining Hengyi New Materials
Supervisor October 27, 2021 No
Danwen Co., Ltd.
Wang Zhejiang Hengyi Petrochemical Executive Director
Songlin Research Institute Co., Ltd. & GM August 4, 2021 No
Jiangsu New Horizon Advanced
Wang
Functional Fiber Innovation Director July 19, 2018 No
Songlin
Center Co., Ltd.
143
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Name of Is remuneration
Posts held in other
incumbe Name of other entities Start date of term paid by other
entities
nt entities?
Wang Haining Hengyi New Materials
President June 29, 2018 No
Songlin Co., Ltd.
Ni Hangzhou Yijing Chemical Executive Director
Jinmei Fiber Co., Ltd. & GM May 29, 2019 No
Posts held in other entities None
Punishments of the Company’s current and outgoing directors, supervisors and senior
management by securities regulators during the reporting period in the previous three years
On September 9, 2022, the Company received the Administrative Supervision Measures Decision
Letter ([2022] No. 25) issued by the Guangxi Regulatory Bureau, i.e., Decision on Measures to Issue
Warning Letter to Wuzhong. In accordance with Article 170 (2) of the Securities Law of the People's
Republic of China, the Guangxi Regulatory Bureau decided to adopt the regulatory measures to issue
a warning letter to Wuzhong. For details, please refer to the Announcement on the Receipt of Warning
Letter from Guangxi Regulatory Bureau by Company Directors (Announcement No. 2022-097)
disclosed on September 17, 2022 in the STCN, China Securities Journal, Shanghai Securities News,
Securities Daily, and CNINFO (www.cninfo. com. cn).
3. Remuneration of directors, supervisors and senior management
Decision-making procedures, basis for determination, and actual payment of remuneration of
directors, supervisors, and senior management
The Company passed the Salary and Performance Appraisal Management System for Senior
Management Staff (reviewed and approved at the third meeting of the eighth session of the BOD) to
conduct performance appraisal and pay remuneration to the Company's directors, supervisors and
senior management. The annual remuneration of directors, supervisors and senior managers who
receive remuneration from the Company in 2022 (including total remuneration of basic salary,
bonuses, allowances, subsidies, employee benefits and various insurance premiums, public reserve
funds and other forms of pre-tax payment from the Company) is released in accordance with the
Company’s relevant regulations, and based on the Company’s operating conditions and the duties
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
and work performance evaluation of relevant personnel by BOD. During the reporting period, the
remunerations of the Company's directors, supervisors and senior management have been paid on a
monthly basis.
Upon agreement reached at the first meeting of the eleventh BOD of the Company on September 15,
2020 and the fifth extraordinary general meeting of shareholders of the Company on October 12,
2020, the allowance standard of the independent director was adjusted to RMB 150,000 per person
per year (including Tax), allowances are paid on an average monthly basis.
Remuneration of directors, supervisors and senior management during the reporting period of
the Company
Currency unit: RMB 10,000
Whether to get
Total pre-tax
remuneration
Employment remuneration
Name Title Gender Age from related
status received from
the Company parties of the
Company
President and
Qiu Yibo Male 36 Current 142.13 No
CEO
Vice President
Fang Xianshui and Financial Male 59 Current 142.13 No
Director
Ni Defeng Director Male 45 Current -- Yes
Director, Vice
Lou Jianchang President Male 61 Current 128.13 No
Director, Vice
Mao Ying President and Female 42 Then 101.60 No
Financial
Director
Director, Vice
Wu Zhong Male 34 Current 106.13 No
President
Luo Dan Director Female 40 Current 2.43 No
Independent
Chen Sanlian Director Male 59 Current 15.00 No
Yang Bozhang Independent Male 66 Current 15.00 No
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Whether to get
Total pre-tax
remuneration
Employment remuneration
Name Title Gender Age from related
status received from
the Company parties of the
Company
Director
Independent
Yang Liuyong Male 59 Current 15.00 No
Director
Executive Vice
Wang Songlin Male 53 Current 117.93 No
President
Chen Liancai Vice President Male 56 Current 118.08 No
Zhao Donghua Vice President Male 38 Current 106.13 No
Secretary of
Zheng Xingang the BOD Male 44 Current 60.00 No
Chairman of
Li Yugang Male 46 Current 53.13 No
the BOS
Jin Danwen Supervisor Female 37 Current 47.53 No
Ni Jinmei Supervisor Female 47 Current 63.48 No
Total -- -- -- -- 1,233.83 --
Note: On December 23, 2022, the Company issued the Announcement on the Resolution of the Fifth
Extraordinary General Meeting of Shareholders in 2022 (Announcement No.: 2022-140). According
to the announcement, Ms. Luo Dan was appointed as a director of the Company, and thus only the
salary for December was disclosed.
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
VI. Performance of Duties by the Directors during the reporting period
1. Performance of the BOD during the reporting period
Session of meeting Date of meeting Disclosure date Resolutions
1. Reviewed and approved the Proposal on the Estimated Amount of Daily Related-party
Transactions in 2022;
2. Reviewed and approved the Proposal on Determining the Company's Guarantee to its Controlled
Subsidiaries and Mutual Insurance Amount between Controlled Subsidiaries in 2022;
3. Reviewed and approved the Proposal on Carrying out Foreign Exchange Hedging Business in
2022;
4. Reviewed and approved the Proposal on Carrying out Commodity Hedging Business for the Year
2022;
The Sixteenth Meeting of 5. Reviewed and approved the Proposal on the Provision of Financial Support to the Company by
the Eleventh Session of the January 20, 2022 January 21, 2022 the Controlling Shareholder and Related-party Transactions;
BOD 6. Reviewed and approved the Proposal on External Donation for Poverty Alleviation;
7. Reviewed and approved the Proposal on Purchasing Liability Insurance for the Company's
Directors, Supervisors and Senior Executives;
8. Reviewed and approved the Proposal on the Subsidiary’s Investment and Construction of the 1.2
mtpa Caprolactam-Polyamide Industry Integration and Supporting Project;
9. Reviewed and approved the Proposal on Guarantee Provision to Hainan Yisheng Petrochemical
Co., Ltd. and related-party transactions;
10. Reviewed and approved the Proposal on Convening the Second Extraordinary General Meeting
of Shareholders for 2022;
1. Reviewed and approved the Proposal on the " nnual Report 2021"and Its Summary;
The Seventeenth Meeting April 25, 2022 April 26, 2022
of the Eleventh Session of 2. Reviewed and approved the First Quarterly Report 2022 (Full Text & Body);
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Session of meeting Date of meeting Disclosure date Resolutions
the BOD 3. Reviewed and approved the Work Report of the BOD for the Year 2021;
4. Reviewed and approved the Report on the Financial Accounts for the Year 2021;
5. Reviewed and approved the Proposal on Profit Distribution of the Company for the Year 2021;
6. Reviewed and approved the Report on Social Responsibilities 2021;
7. Reviewed and approved the Self-Evaluation of Internal Control for the Year 2021;
8. Reviewed and approved the Proposal on Deposit and Use of Raised Funds for the Year 2021;
9. Reviewed and approved the Proposal on Renewal of the Appointment of the Accounting Firm;
10. Reviewed and approved the Proposal on Closing Investment Projects with Raised Funds and
Permanently Replenishing Working Capital with Surplus Raised Funds;
11. Reviewed and approved the Proposal on Addition of Daily Related-party Transactions for the
Year 2022;
12. Reviewed and approved the Proposal on Capital Increase and related-party transactions of
Hangzhou Jingxin Supply Chain Management Co., Ltd.;
13. Reviewed and approved the Proposal on Changes of Accounting Policies;
14. Reviewed and approved the Proposal on Retrospective Adjustment of Previous Financial
Statements due to Changes in Accounting Policies;
15. Reviewed and approved the Proposal on Convening 2021 Annual General Meeting of
Shareholders;
1. Reviewed and approved the Proposal on Extending the Validity Period of the Resolution of the
Shareholders' Meeting on the Public Issuance of Convertible Corporate Bonds;
The Eighteenth Meeting of 2. Reviewed and approved the Proposal on Submission to the General Meeting of Shareholders to
the Eleventh Session of the May 6, 2022 May 7, 2022 Extend the Validity Period of Authorizing the BOD to Handle Specific Matters Regarding the
BOD Company’s Public Offering of Convertible Corporate Bonds;
3. Reviewed and approved the Proposal on Adding Temporary Proposals and Supplementary Notices
to the 2021 Annual General Meeting of Shareholders.
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Session of meeting Date of meeting Disclosure date Resolutions
1. Reviewed and approved the Proposal on Further Clarifying the Specific Plan for the Public
Issuance of Convertible Corporate Bonds by the Company;
The Nineteenth Meeting of 2. Reviewed and approved the Proposal on the Public Issuance of Convertible Corporate Bonds by
the Eleventh Session of the July 18, 2022 July 19, 2022 the Company for Listing;
BOD
3. Reviewed and approved the Proposal on Establishing a Special Account for Raising Funds through
Public Issuance of Convertible Corporate Bonds and Signing a Supervision Agreement for Raising
Funds by the Company.
1. Reviewed and approved the Proposal on Using Raised Funds to Replace Self-raised Funds and
Paid Issuance Fees for Pre-invested Raised Investment Projects;
The Twentieth Meeting of 2. Reviewed and approved the Proposal on Proposal on Using Part of the Idle Raised Funds to
the Eleventh Session of the July 28, 2022 July 29, 2022 Temporarily Supplement Working Capital;
BOD 3. Reviewed and approved the Proposal on Changing the Registered Address and Amending the
Articles of Association of the Company;
4. Reviewed and approved the Proposal on Convening the Third EGM for FY2022.
The Twenty-first Meeting 1. Reviewed and approved the Proposal on ‘Semi-annual Report 2022’ and the Summary;
of the Eleventh Session of August 21, 2022 August 22, 2022 2. Reviewed and approved the Proposal on Semi-annual Special Report on Deposit and Use of Raised
the BOD Funds for FY2022.
The Twenty-second
1. Reviewed and approved the Proposal on Not Revising the Conversion Price of " engyi Convertible
Meeting of the Eleventh August 24, 2022 August 25, 2022
Bonds"
Session of the BOD
The Twenty-third Meeting
1. Reviewed and approved the Proposal on Not Revising the Conversion Price of " engyi Convertible
of the Eleventh Session of October 14, 2022 October 15, 2022 Bond 2"
the BOD
The Twenty-fourth October 27, 2022 October 28, 2022 1. Reviewed and approved the Proposal on the Third Quarterly Report 2022;
Meeting of the Eleventh
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Session of meeting Date of meeting Disclosure date Resolutions
Session of the BOD 2. Reviewed and approved the Proposal on Increase in Estimated Amount of Daily Related-party
Transactions for the Year 2022;
3. Reviewed and approved the Proposal on Provision of Entrusted Loan to the Invested Company,
Yisheng New Materials;
4. Reviewed and approved the Proposal on Share Repurchase by Way of Centralized Bidding (Phase
III)”;
5. Reviewed and approved the Proposal on Convening the Fourth EGM for the Year 2022;
1. Reviewed and approved the Proposal on the Estimated Amount of Daily Related-party
Transactions for the Year 2023;
2. Reviewed and approved the Proposal on Determining the Company's Guarantee to its Controlled
Subsidiaries and Mutual Insurance Amount between Controlled Subsidiaries for the Year 2023;
3. Reviewed and approved the Proposal on Carrying out Foreign Exchange Hedging Business for
the Year 2023;
4. Reviewed and approved the Proposal on Carrying out Commodity Hedging Business for the Year
2023;
The Twenty-fifth Meeting 5. Reviewed and approved the Proposal on the Provision of Financial Support to the Company by
December 6, December 7, the Controlling Shareholder and Related-party Transactions;
of the Eleventh Session of 2022 2022
the BOD 6. Reviewed and approved the Proposal on Guarantee Provision to Hainan Yisheng Petrochemical
Co., Ltd. and related-party transactions;
7. Reviewed and approved the Proposal on Purchasing Liability Insurance for the Company's
Directors, Supervisors and Senior Executives;
8. Reviewed and approved the Proposal on Electing Company Directors;
9. Reviewed and approved the Proposal on Appointing the Vice President of the Company to
concurrently serve as the Financial Director;
10. Reviewed and approved the Proposal on Adjusting the Members of the Audit Committee of the
Eleventh Session of the BOD of the Company;
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Session of meeting Date of meeting Disclosure date Resolutions
11. Reviewed and approved the Proposal on Increasing the Expected Amount of Daily Related-party
Transactions for 2022 and Adjusting the Implementation Entities of related-party transactions;
12. Reviewed and approved the Proposal on Convening the Fifth EGM for the Year 2022;
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
2. Attendance of Directors in the Board Meeting and the General Meeting of Shareholders
Attendance of Directors in the Board Meeting and the General Meeting of Shareholders
Number of
Number of Number of attendance of Number of Whether absent Number of
board meetings on-site board attendance of Number of from board attendance
Name of
to attend during attendance of meetings by board absence at meetings in of General
director
the reporting board means of meetings by board meetings person for two Shareholder
period meetings telecommunic entrustees consecutive times s Meetings
ations
Qiu Yibo 10 2 8 0 0 No 6
Fang
10 2 8 0 0 No 6
Xianshui
Ni Defeng 10 2 8 0 0 No 6
Lou
10 2 8 0 0 No 6
Jianchang
Mao Ying 9 2 7 0 0 No 5
Wu Zhong 10 2 8 0 0 No 6
Chen
10 2 8 0 0 No 6
Sanlian
Yang
10 2 8 0 0 No 6
Bozhang
Yang
10 2 8 0 0 No 6
Liuyong
Luo Dan 0 0 0 0 0 No 1
Description of the failure to physically attend board meetings for two consecutive times
3. Objections of directors to related issues of the Company
Whether the directors raise objections to relevant matters of the Company
During the reporting period, the directors did not raise objections to the Company’s related matters.
4. Other information on directors' performance of duties
Whether directors’ suggestions to the Company are accepted
Yes □ No
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Description of the directors' recommendations that were adopted or refused
During the reporting period, all directors of the Company strictly followed the Company Law,
Securities Law, Code of Corporate Governance for Listed Companies in China, Shenzhen Stock
Exchange Self-Regulatory Guidelines for Listed Companies No. 1 - Standardized Operation of Listed
Companies on the Main Board and the Articles of Association and Rules of Procedure for the BOD
to diligently carry out their work and perform their duties. They took the initiative to pay attention to
the Company's operation and management information, financial position, important matters, etc.,
put forward opinions on the Company’s important decisions regarding its governance and operation,
deeply discussed the proposals submitted to the BOD for review, expressed their own views and
reached unanimous options after full communication and discussion. They fully considered the
interests and demands of minority shareholders when making decisions, and resolutely supervised
and promoted the implementation of the resolutions adopted at the BOD in order to make the
decisions scientific, timely and efficient and protect the legitimate rights and interests of the Company
and all shareholders.
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
VII. Performance of duties by the specialized committees unde r the BOD during the reporting period
Number Other
Details of
of Date of perform
Committee Members Contents Important opinions and recommendations made objections
meetings meeting ance of
(if any)
held duties
1. Reviewed the Proposal on Carrying out
Foreign Exchange Hedging Business for the
January Year 2022;
20, 2022 2. Reviewed the Proposal on Carrying out
Strategy Qiu Yibo, Commodity Hedging Business for the Year The Committee strictly followed the Company
2022; Law, the Regulatory Rules of the CSRC, the
and Fang
Articles of Association and the Rules of Procedure Not
Investment Xianshui, Ni Not
2 for the BOD to diligently perform its duties. It put applica
Decision- Defeng and 1. Reviewed the Proposal on Further forward opinions on and unanimously approved ble applicable
making Yang Clarifying the Specific Plan for the Public all proposals after full communication and
Committee Liuyong Issuance of Convertible Corporate Bonds by discussion.
July 15, the Company;
2022
2. Reviewed the Proposal on the Public
Issuance of Convertible Corporate Bonds by
the Company for Listing
1. Reviewed the Annual Report on
Implementation of Internal Audit 2021;
Yang
Bozhang, 2. Reviewed the First Quarterly Report on The Committee strictly followed the Company
Internal Audit 2022; Law, the Regulatory Rules of the CSRC, the
Chen
Articles of Association, the Rules of Procedure for Not
Audit Sanlian, Yang April 20, Not
Committee Liuyong, Lou 3 2022 3. Reviewed the Annual Report on Financial the BOD and other relevant laws and regulations applica applicable
Final Accounts for the Year 2021; to diligently perform its duties. It put forward ble
Jianchang
opinions on and unanimously approved all
and Fang 4. Reviewed the Annual Audit Report 2021; proposals after full communication and discussion
Xianshui
5. Reviewed the Annual Report 2021 (The
first draft);
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Number Other
Details of
of Date of perform
Committee Members Contents Important opinions and recommendations made objections
meetings meeting ance of
(if any)
held duties
6. Reviewed the First Quarterly Report 2022
(The first draft);
7. Reviewed the Self-Evaluation of Internal
Control for the Year 2021;
8. Reviewed the Proposal on Deposit and Use
of Raised Funds for the Year 2021;
9. Reviewed the Proposal on Summary of
Funds Appropriation and Other Related Fund
Transactions for Non-operating Purpose for
the Year 2021;
10. Reviewed the Proposal on Renewal of the
Appointment of the Accounting Firm;
1. Reviewed the Semi-annual Report 2022
(The first draft);
2. Reviewed the Proposal on Semi-annual
August
19, 2022 Special Report on Deposit and Use of Raised
Funds for the Year 2022;
3. Reviewed the Semi-annual Report on
Internal Audit 2022;
1. Reviewed the Third Quarterly Report 2022
October (The first draft);
13, 2022 2. Reviewed the Third Quarterly Report on
Internal Audit 2022;
Risk Chen January 1. Reviewed the Proposal on Carrying out The Committee strictly followed the Company Not Not
155
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Number Other
Details of
of Date of perform
Committee Members Contents Important opinions and recommendations made objections
meetings meeting ance of
(if any)
held duties
Control Sanlian, Yang 20, 2022 Foreign Exchange Hedging Business for the Law, the Regulatory Rules of the CSRC, the applica applicable
Committee Bozhang and Year 2022; Articles of Association and the Rules of Procedure ble
Lou for the BOD to diligently perform its duties. It put
Jianchang 2. Reviewed the Proposal on Carrying out forward opinions on and unanimously approved
Commodity Hedging Business for the Year all proposals after full communication and
2022; discussion
2
1. Reviewed the Proposal on Renewal of the
April 20, Appointment of the Accounting Firm;
2022 2. Reviewed the Annual Report on Financial
Final Accounts 2021;
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
VIII. Performance of Duties by the BOS
Whether there are any risks found by the BOS in its supervisory activities during the
reporting period
The BOS had no objections to the matters under supervision during the reporting period
IX. Employees of the Company
1. Number, composition and education level
Number of employees in the parent company at the end of the reporting
10
period (person)
Number of employees of service in major subsidiaries at the end of the
15,637
reporting period (person)
Total number of employees in service at the end of the reporting period
15,637
(person)
Total number of employees receiving salaries in current period (person) 15,637
Number of retired employees whose expense is borne by the parent
235
company and major subsidiaries (person)
Composition
Number of professional
Professional composition category
composition (person)
Production personnel 13,014
Sales staff 315
Technical staff 1,732
Finance staff 156
Administrative staff 420
Total 15,637
Education level
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Education level category Quantity (person)
Master degree or above 221
Bachelor degree 1,826
College degree or below 13,590
Total 15,637
2. Compensation policies
The Company implements a labor contract system, sign labor contracts with every employee in
accordance with the Labor Law of the PRC, the Labor Contract Law of the PRC and relevant labor
laws and regulations. The Company strictly implements the national employment system, labor
protection system, and social security system, pays social insurance for employees in accordance with
national regulations, sets up corresponding safety protection measures, and creates a good and safe
production environment for employees. Through innovative management mechanisms, the Company
guides the functional system to continuously improve quality and efficiency, and to create a
streamlined and efficient functional team of headquarters. The Company develops an effective salary
incentive system for the Company's financial personnel, administrative personnel, technical personnel,
production personnel and sales personnel, and gives corresponding performance rewards based on
the performance evaluation of the Company, department and individual.
3. Training plans
The Company established Hengyi Enterprise University according to the needs of production and
operation and talent training, aiming to build a competitive enterprise university and support Hengyi's
global development. It serves as the power center and load bearing platform for Hengyi's
organizational development, talent training, technology accumulation, and corporate transformation.
The "Blue" series of talent projects are implemented in Hengyi University, to establish talent echelons
at different levels; meanwhile, it attaches importance to continuous improvement, job skill assessment,
and on-the-job education promotion to enhance professional skills and effectiveness. The Company
develops training plans for different types of employees, organizes internal and outbound trainings
158
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
according to the plan, pays special attention to job skills training, and provides certification for special
positions and hazardous chemical operators to ensure safe production and normal operation. The
Company also trains technical and business backbones through targeted training to improve their
business capabilities.
4. The situation of labor outsourcing
Total number of working hours of labor outsourced (hours) 10,946,124
Total remuneration paid for labor outsourced (RMB) 263,430,852
X. The Company’s common stock profit distribution and capitalization of capital reserves
During the reporting period, the common stock profit distribution policy, especially the
formulation, implementation or adjustment of the cash dividend policy
According to the China Securities Regulatory Commission's Notice on Further Implementing Issues
Related to Cash Dividends of Listed Companies (ZJF [2012] No. 37), Guangxi Securities Regulatory
Bureau Notice on Strengthening the Awareness of Returning Shareholders and Improving Dividend
Mechanism (GZJF [2012] 23) and Guidelines for the Supervision of Listed Companies No. 3 - Cash
Dividends of Listed Companies Securities Regulatory Commission Announcement [2022] No. 3 and
other documents, combined with the actual situation of the Company, specific provisions has been
made for the profit distribution decision-making procedures and profit distribution policy in the
Articles of Association. In addition, it has formulated the Shareholder Dividend Return Plan for the
Next Three Years (2023-2025) to better guarantee the reasonable return of all shareholders, further
refine the provisions of the profit distribution policy in the Articles of Association, and increase the
transparency and operability in dividend distribution decision, establish a continuous, stable and
scientific return plan and mechanism for investors to ensure the continuity and stabil ity of the profit
distribution policy. During the reporting period, the Company shall strictly implement the above
profit distribution policy.
According to the 2021 Profit Distribution Plan approved by the Company’s 2021 Annual General
Meeting of Shareholders held on May 17, 2022: Based on the total number of 3,666,280,554 shares
159
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
of the Company's existing share capital, after the deduction of 79,888,281 shares that have been
repurchased in the Company's repurchase account, 3,586,392,273 shares will be distributed as a cash
dividend of RMB 2 (including tax) for every 10 shares. No bonus shares will be given and no public
reserve funds will be converted into share capital. The Company published the Announcement of
Dividend Distribution of Hengyi Petrochemical Co., Ltd. for the Year 2021, and completed the
distribution on July 7, 2022.
Special description of cash dividend policy
Whether it meets the requirements of the Company's Articles of Association or the
Yes
resolutions of the General Meeting of Shareholders:
Whether the dividend standard and proportion are clear and definite: Yes
Were the relevant decision-making procedures and mechanisms are complete: Yes
Whether independent directors have performed their due diligence and played their due
Yes
role:
Whether small and medium shareholders have sufficient opportunities to express their
Yes
opinions and demands, and whether their legitimate equities are fully protected:
Not
If the cash dividend policy is adjusted or changed, whether the conditions and procedures
applica
are compliant and transparent:
ble
The Company was profitable during the reporting period and the parent company’s profit
available for distribution to ordinary shareholders was positive, but no distribution plan for
cash dividend for ordinary shares was proposed
□ Applicable Not applicable
Profit distribution and capitalization of capital reserve during the reporting period
According to the plan of the Company, no cash dividends or bonus shares will be distributed this year,
and no public reserve funds will be converted into share capital.
XI. Implementation of the Company's SIPs, ESOPs or other employee incentives
There are no equity incentive plans, employee stock ownership plans, or other employee incentive
measures and their implementation during the reporting period of the Company.
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
XII. Establishment and implementation of internal control system during the reporting period
1. Establishment and implementation
During the reporting period, the Company continuously updated and optimized its internal control
system in accordance with the Basic Standard for Enterprise Internal Control and other relevant
regulations to adapt to the changing external environment and internal management requirements.
The Company's internal control system is sound and reasonable and covers the main aspects of its
operation and management. It works well and there is no significant omission.
(1) Internal environment. The Company has an organizational structure that is suitable for its
business, which has a clear division of labor and sound and complete functional departments, and the
Company implements the principle of separation of incompatible duties to make these departments
restrain with each other.
(2) Risk assessment. The Company collects relevant information in a comprehensive and systematic
manner according to its strategic objectives, development thoughts and the industry characteristics to
conduct risk assessment timely and weigh risks and benefits, then determines risk response strategies
to keep the risks under control.
(3) Control activities. The Company continuously sorts out and improves the system according to
the current state of its management and development needs, without comprising the legality, normality,
feasibility and operability.
(4) Information and communication. The Company has established an information and
communication system to define the procedures for the collection, processing and transmission of
information related to internal control, in order to build a smooth communication line and promote
effective conduct of internal control.
(5) Supervision. The Company has established a corporate governance mechanism, so that the
independent directors and the BOS are able to independently perform their supervisory duties and
independently conduct evaluation and provide recommendations on the Company's management. A
special internal audit body is set up under the Audit Committee of the BOD to carry out internal audit
work independently according to law in order to realize the effective supervision of the management
and effective operation of the internal control system.
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
2. Details of significant internal control deficiency identified during the reporting period
□ Yes √ No
XIII. The Company’s management and control over subsidiaries during the reporting period
As of the end of the reporting period, the Company has 48 subsidiaries. During the reporting period,
in order to strengthen the management, regulate the internal operation and promote the healthy
development of subsidiaries, the Company developed and improved the Comprehensive Management
System of Subsidiaries in accordance with the requirements for the standardized operation of listed
companies, to provide for the establishment of a sound governance structure and its operation,
operational business decision-making, financial management, information management, investment
decision-making management, inspection and assessment, etc. Also, the Company requires
subsidiaries to implement the Internal Reporting System for Important Information, etc., which
clearly stipulates the procedures for reporting and reviewing important matters, to timely track the
governance, financial position, production and operation, project construction, safety and
environmental protection and other significant matters of the subsidiaries, in order to timely fulfill
the information disclosure obligations. To improve the standardized operation of its subsidiaries, the
Audit Department and Legal Department of the Company provides guidance on, supervision and
evaluation of the establishment and implementation of the internal control system of each subsidiary,
and supervises the continuous improvement and effective operation of each internal control system
of the Company.
XIV. Internal control self-evaluation report or internal control audit report
1. Internal control self-evaluation report
Disclosure date of full text of
April 20, 2023
Internal Control Evaluation Report
Disclosure index of full text of
http://www.cninfo.com.cn
Internal Control Evaluation Report
Proportion of total assets included
in the evaluation scope to that of 100.00%
the Company’s consolidated
162
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
financial statements
Proportion of operating income
included in the evaluation to that of
100.00%
the Company’s consolidated
financial statements
Defect Identification Standard
Financial reports Non-financial
Category Financial reports
reports
⑴ Identification standard of major
defects: ① lack of democratic ⑴Major defects: The negative news
decision-making process; ② huge about the safety, eco-friendliness,
errors caused by decision-making social responsibility, practice ethics
process; ③ violation of national and operation of the enterprise has
laws and regulations and punishment; been spread all over the country, has
④ serious loss of middle or senior been specially investigated by the
management members and senior government or regulatory agencies,
technicians; ⑤ frequent negative and has caused continuous special
news in the media, involving a wide reports by the public media. As a
range; ⑥ lack of system or system result, the enterprise has adverse
failures in major business;⑦ failure events such as capital loan and
recovery, suspension or revocation of
to rectify major or significant internal
administrative license, pledge of
control defects. ⑵ Identification
assets, and a large number of claims
standard of significant defects: ① (occurrence of level-I mass
Imperfect democratic decision- disturbance). ⑵ Significant defects:
making procedures; ② decision- The negative news about the safety,
making procedures leading to general eco-friendliness, social responsibility,
errors; ③ violation of internal practice ethics and operation of the
Qualitative criteria
regulations of the Company, resulting enterprise has been reported by the
in losses;④ outflow of many business public media for three times in a row,
personnel in key positions; ⑤ and has been concerned and
negative news appeared on the media, investigated by the industry or
involving local region;⑥ defects in regulatory agencies, and has caused
important business systems or adverse effects within the industry
systems; ⑦ failure to rectify (occurrence of level-II mass
material or general deficiencies in disturbance). ⑶General defects: The
internal control. ⑶ Identification negative news about the safety, eco-
standard of general defects: ① low friendliness, social responsibility,
practice ethics and operation of the
efficiency of decision-making enterprise has been reported by the
process; ② violation of internal rules public media for three times in a row,
and regulations without losses; ③ and has been concerned and
serious loss of business personnel in investigated by the industry or
general positions; ④ negative news regulatory agencies, and has caused
in the media, with little impact; ⑤ adverse effects within the industry
defects in general business systems; (occurrence of level-III or level-IV
⑥ failure to rectify general defects; mass disturbance)
⑦ other defects.
Quantitative standard ⑴Major defects: The overall impact ⑴Major defects: direct financial loss:
163
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
level is higher than the importance RMB 50 million or above; personnel
level (1% of the audited net assets of health and safety impact: death of
the previous year). ⑵Significant more than 10 people, or serious injury
defects: 0.2% of the audited net assets of more than 50 people. ⑵
of the previous year < overall Significant defects: direct financial
importance level < 1% of the audited loss: RMB 10 million (included) to
net assets of the previous year. ⑶ RMB 50 million; personnel health
General defects: The overall and safety impact: death of more than
importance level is less than 0.2% of 3 (included) but less than 10 people,
the audited net assets of the previous or serious injury of more than 10
year. (included) but less than 50 people. ⑶
General defects: direct financial loss:
less than RMB 10 million; personnel
health and safety impact: death of less
than 3 people, or serious injury of less
than 10 people.
Number of major defects in
0
financial report (piece)
Number of major defects in non-
financial report (piece) 0
Number of significant defects in
0
financial report (piece)
Number of significant defects in
0
non-financial report (piece)
2. Internal control audit report
Reviewed parts in the internal control audit report
In our opinion, Hengyi Petrochemical Co., Ltd. maintained effective internal control, in all material
respects, in accordance with the Basic Norms for Enterprise Internal Control and relevant
regulations at December 31, 2022.
Disclosure of internal control audit
Disclosure
report
Date of full-text disclosure for
April 20, 2023
Internal Control Audit Report
Full-text disclosure index for the
CNINFO (http://www.cninfo.com.cn)
Internal Control Audit Report
Category of opinions Opinion type in the Internal Control Audit Report
Whether there are major defects in No
164
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
the non-financial report
Whether the accounting firm has issued an internal control audit report with modified and
qualified opinions
□Yes No
Whether the opinions in the internal control assurance report issued by the accounting firm are
consistent with those in the self-evaluation report issued by the BOD
Yes □ No
XV. Self-examination and rectifications through the special campaign on corporate governance
of listed companies
In strict accordance with the Company Law, the Securities Law and other relevant laws and
administrative regulations, and the Articles of Association, Rules of Procedure for the BOD, Rules of
Procedure for the BOS and rules of procedure for special committees and other internal rules and
regulations, the Company, adhering the principle of seeking truth from facts, conducted self-
examination against the CSRC’s self-examination checklists for the special campaign on corporate
governance of listed companies, which covered a total of seven aspects, involving a total of 119
questions and answers. The Company carefully sorted out and filled in the self-examination system,
and completed self-examination on April 25, 2022.
This self-examination revealed that the Company’s governance follows the Company Law, Securities
Law, Guidelines for Standardized Operation, Guidelines for Articles of Association of Listed
Companies, and other laws and regulations. The Company is under relatively sound corporate
governance and standardized operation and there is no major mistake.
165
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Section V Environmental and Social Responsibilities
I. Major environmental issues
Whether the listed company and its subsidiaries are the key pollutant discharge units
announced by the environmental protection departments?
Yes □ No
Environmental protection related policies and industry standards
The Company and its subsidiaries strictly abided by national and local environmental protection laws
and relevant rules and regulations, including Environmental Protection Law, Air Pollution Prevention
and Control Law, Water Pollution Prevention and Control Law, Law of the PRC on the Prevention
and Control of Environment Pollution Caused by Solid Wastes, Noise Pollution Prevention and
Control Law, Environmental Protection Tax Law, Soil Pollution Prevention and Control Law,
Regulations on the Administration of Construction Project Environmental Protection, and Pollutant
Discharge Permit Management Regulations. All pollutants are strictly discharged in accordance with
relevant standards, including: Emission Standards of Pollutants for Synthetic Resin Industry
(GB31752-2015), Emission Standard of Air Pollutants for Boilers (GB13271-2014), Emission
Standards for Odor Pollutants (GB14554-93), Standard for Pollution Control on Hazardous Waste
Storage (GB18597-2001), Emission Standard for Industrial Enterprises Noise at Boundary
(GB12348-2008), and Standard for Pollution Control of General Industrial Solid Waste Storage and
Disposal Sites (GB18599-2020).
Environmental protection administrative permits
Validity
SN Holder Certificate name Certificate No. Issuer
period
Hangzhou
Hengyi Municipal August 27,
1 Emission Permit 91330000765215943G001Y Ecology and
Limited 2023
Environment
Bureau
166
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Hangzhou
Municipal
Hengyi November
2 Emission Permit 913301006680033406001Q Ecology and
High-Tech 25, 2026
Environment
Bureau
Hangzhou
Municipal
Hengyi November
3 Emission Permit 913301097245283880001P Ecology and
Polymer 2, 2026
Environment
Bureau
Department of
Ecology and
Hengyi Radiation Safety September
4 ZHFZ No. A2255 Environment of
Polymer Permit 19, 2024
Zhejiang
Province
Jiaxing Ecology
Jiaxing 91330411MA28BLMY3000 December
5 Yipeng Emission Permit 1V and Environment 1, 2023
Bureau
Suzhou
Taicang 91320585MA1P1GPBXM00 Municipal December
6 Emission Permit Ecology and
Yifeng 1V 30, 2027
Environment
Bureau
Hangzhou
Shuangtu Municipal
November
7 New Emission Permit 91330100566050736P001Y Ecology and
26, 2026
Materials Environment
Bureau
Department of
Shuangtu Ecology and
Radiation Safety December
8 New ZHFZ No. A3048 Environment of
Permit 26, 2023
Materials Zhejiang
Province
Quanzhou
91350582MA31G07Q8C001 Municipal April 7,
9 Fujian Yijin Emission Permit Ecology and
V 2026
Environment
Bureau
Suqian
Municipal
91321311MA1UXUC8XJ00 July 18,
10 Suqian Yida Emission Permit 1R Ecology and 2026
Environment
Bureau
167
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Suqian
Municipal
Radiation Safety January
11 Suqian Yida SHFZ No. 0199 Ecology and
Permit 12, 2027
Environment
Bureau
Haining Jiaxing Ecology
91330481MA29HXML3400 July 22,
12 Thermal Emission Permit and Environment
1R 2025
Power Bureau
Haining Jiaxing Ecology
91330481MA29HRX724001 July 27,
13 New Emission Permit and Environment
V 2023
Materials Bureau
Hangzhou
Hangzhou 91330109MA28M4DD8Y00 Municipal November
14 Emission Permit Ecology and
Yijing 1P 4, 2026
Environment
Bureau
Department of
Hangzhou Radiation Safety Ecology and May 22,
15 ZHFZ No. A2259 Environment of
Yijing Permit 2027
Zhejiang
Province
Hangzhou
Hengyi Municipal
June 22,
16 Caprolacta Emission Permit 913301006706049462 Ecology and
2025
m Environment
Bureau
Department of
Hengyi Ecology and
Radiation Safety January
17 Caprolacta ZHFZ No. A3044 Environment of
Permit 16, 2027
m Zhejiang
Province
Beilun Branch of
Ningbo
Zhejiang 91330200744973411W001 Municipal December
18 Emission Permit
Yisheng W Ecology and 15, 2026
Environment
Bureau
Department of
Ecology and
Zhejiang Radiation Safety November
19 Yisheng Permit ZHFZ No. B2005 Environment of 17, 2024
Zhejiang
Province
168
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Dalian
Municipal
Yisheng October
20 Emission Permit 912102137873094570001R Ecology and
Dahua 13, 2023
Environment
Bureau
Dalian
Municipal
Yisheng Radiation Safety November
21 ZHFZ No. B0001 Ecology and
Dahua Permit 25, 2026
Environment
Bureau
169
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Industry emission standards and specific situations of pollutant emissions involved in production and business activities
Name of
Main
main Number
Name of pollutants Distribution Total
pollutants Way to of Pollutant discharge Total Excessive
Company or and of discharge Emission concentration approved emissions
and discharge discharge standards implemented emissions
subsidiary characteristic ports emissions
characteristic ports
pollutants
pollutants
Discharge
Sewage Up to
COD after 1 50.38mg/L GB31571-2015 477.9 t 1039.84 t
station standard
treatment
Process
wastewater
Discharge
Ammonia Sewage Up to
after 1 0.21 mg/L GB31571-2015 1.98 t 17.35 t
nitrogen station standard
treatment
Discharge
Zhejiang Up to
SO2 after 2 Boiler Island 4.82 mg/m DB33/2147-2018 24.27 t 197.45 t
Yisheng standard
treatment
Discharge
Up to
Waste gas NOX after 2 Boiler Island 17.7 mg/m DB33/2147-2018 76.57 t 859.17 t
standard
treatment
Discharge
Particulate Up to
after 2 Boiler Island 1.8 mg/m DB33/2147-2018 9.19 t 426.11 t
matter standard
treatment
Discharge GB13223-2011 、
Boiler/thermal Up to
SO2 after 2 furnace 53.83/98.31mg/m 301.85 t 679 t standard
treatment GB13271-2014
Hainan
Waste gas
Yisheng
Discharge Boiler/thermal Up to
NOx 2
furnace
69.71/261.22mg/m GB13223-2011 、 723.64 t 989.9t standard
after
170
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Name of
Main
main Number
Name of pollutants Distribution Total
pollutants Way to of Pollutant discharge Total Excessive
Company or and of discharge Emission concentration approved
and discharge discharge standards implemented emissions emissions
subsidiary characteristic ports emissions
characteristic ports
pollutants
pollutants
treatment GB13271-2014
Discharge
Smoke and Boiler/thermal GB13223-2011 、 Up to
ashes after 2 furnace 9.34/6.51mg/m 28.97 t 232 t standard
treatment GB13271-2014
Discharge
Sewage GB31571-2015 、 Up to
COD after 1 30.68mg/L 126.83 t 236.15 t
station GB31572-2015 standard
treatment
Process
wastewater
Discharge
Ammonia Sewage GB31571-2015 、 Up to
after 1 0.19mg/L 0.74 t 17.7 t
nitrogen station GB31572-2015 standard
treatment
Discharge Sewage
Up to
PH after 1 treatment 8.33 GB31571-2015 / /
standard
treatment station
Discharge Sewage
Up to
COD after 1 treatment 136mg/L GB31571-2015 95.17 t 127.51 t
standard
Hengyi Process treatment station
Caprolactam wastewater
Discharge Sewage
Ammonia Up to
after 1 treatment 0.3mg/L GB31571-2015 4.76 t 6.37t
nitrogen standard
treatment station
Total Discharge Sewage Up to
1 0.8mg/L DB33-887-2013 / /
phosphorus after treatment standard
171
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Name of
Main
main Number
Name of pollutants Distribution Total
pollutants Way to of Pollutant discharge Total Excessive
Company or and of discharge Emission concentration approved
and discharge discharge standards implemented emissions emissions
subsidiary characteristic ports emissions
characteristic ports
pollutants
pollutants
treatment station
Discharge
Smoke and Up to
ashes after 1 Power station 1.56 mg/m3 DB33/2147-2018 9t 48.2 t standard
treatment
Discharge DB33/2147-2018
Up to
SO2 after 1 Power station 3.73mg/m3 22.48 t 368.87 t
standard
treatment
Discharge DB33/2147-2018
Up to
Waste gas NOx after 1 Power station 41.6mg/m3 290.48 t 482.08 t
standard
treatment
Mercury and Discharge DB33/2147-2018
Up to
its after 1 Power station 0.000023mg/m3 / /
standard
compounds treatment
Discharge DB33/2147-2018
Ringerman Up to
after 1 Power station 1 year
At the end of the term, there is no important advance payment with aging >1 year in the
Company.
(3) Advance payment with top five ending balance collected by object of prepayment
The top five ending amounts (totals by prepayment objects) of the Company’s advance
payments amounted to RMB 943,319,263.86, accounting for 52.62% in the total balance of
prepayments at the year-end balance.
8. Other receivables
Ending balance of
Item Ending balance
previous year
Interests receivable 0.00 0.00
Dividends receivable 0.00 344,500,000.00
Other receivables 133,782,632.86 139,715,755.18
Total 133,782,632.86 484,215,755.18
(1) Dividends receivable
Ending balance of
Investee Ending balance
previous year
Hainan Yisheng Petrochemical Co., Ltd. 0.00 265,000,000.00
Dalian Yisheng Investment Co., Ltd. 0.00 79,500,000.00
Subtotal 0.00 344,500,000.00
Minus: Bad debt provision 0.00 0.00
Total 0.00 344,500,000.00
(2) Other receivables
① Disclosure by aging
335
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Ending balance of previous
Aging Ending balance
year
Within 1 year 85,330,016.44 62,871,587.51
1-2 years 2,625,100.78 45,350,003.33
2-3 years 18,718,506.81 9,240,923.00
Over three years 59,126,527.96 53,364,478.08
Subtotal 165,800,151.99 170,826,991.92
Minus: Bad debt provision 32,017,519.13 31,111,236.74
Total 133,782,632.86 139,715,755.18
② Classification based on nature of fund
Ending balance of previous
Nature of account Ending balance
year
Receivables and payables such as advances from
27,054,550.51 35,211,893.21
entities beyond the scope of consolidation
Combination of tax refunds receivable and other
18,364,333.51 37,132,620.00
government subsidies
Portfolio of deposits and security 62,664,839.19 39,807,477.55
Employee loan and petty cash 6,311,098.39 5,670,232.02
Other groups 51,405,330.39 53,004,769.14
Subtotal 165,800,151.99 170,826,991.92
Minus: Bad debt provision 32,017,519.13 31,111,236.74
Total 133,782,632.86 139,715,755.18
③ Accrual of bad debt reserves
Stage 1 Stage 2 Stage 3
Expected credit
Expected credit
Bad debt provision loss over the Total
Expected credit loss over the
lifetime (credit
loss of the future lifetime (no credit
impairment
twelve months impairment has
occurred has
occurred)
occurred)
Ending balance of previous 4,523,491.65 341,700.00 26,246,045.09 31,111,236.74
336
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Stage 1 Stage 2 Stage 3
Expected credit
Expected credit
Bad debt provision loss over the Total
Expected credit loss over the
lifetime (credit
loss of the future lifetime (no credit
impairment
twelve months impairment has
occurred has
occurred)
occurred)
year
Book balance of other
receivables at the end of the
previous year:
- Transferred to Stage 2 0.00 -- -- 0.00
- Transferred to Stage 3 0.00 0.00 -- 0.00
- Transferred back to Stage
-- -- 0.00 0.00
2
- Transferred back to Stage
-- 0.00 0.00 0.00
1
Provision in current period 1,490,069.79 79,625.60 0.00 1,569,695.39
Roll-back in current period 663,413.00 0.00 0.00 663,413.00
Write-off in current period 0.00 0.00 0.00 0.00
Cancellation after
verification in current 0.00 0.00 0.00 0.00
period
Other changes 0.00 0.00 0.00 0.00
Ending balance 5,350,148.44 421,325.60 26,246,045.09 32,017,519.13
④ Situation of bad debt reserves
Amount of changes in current period
Ending balance Write-off or
Category Amount
of previous year Cancellation Ending balance
recovered or
Provision after
written back
Verification
and Others
Receivables and payables
such as advances from
1,056,356.78 21,720.49 266,440.77 0.00 811,636.50
entities beyond the scope of
consolidation
337
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Portfolio of deposits and
2,321,248.93 1,429,728.50 296,761.91 0.00 3,454,215.52
security
Employee loan and petty cash 169,640.81 86,272.40 66,584.92 0.00 189,328.29
Other groups 27,563,990.22 31,974.00 33,625.40 0.00 27,562,338.82
Total 31,111,236.74 1,569,695.39 663,413.00 0.00 32,017,519.13
⑤ Other receivables with top five ending balance collected by debtor
Proportions in
the total other Bad debt
Nature of Ending accounts provision
Name of organization Aging
account balance receivable at Ending
the year ended balance
(%)
Baiduri Bank Berhad Margin 54,567,641.00 Within 1 year 32.91 2,728,382.05
Claim for
Wang XX 26,243,545.09 Over three years 15.83 26,243,545.09
indemnity
Fulida Group and Xinghui
Compensat
Chemical Fiber Group Co., 23,586,685.13 Over three years 14.23 1,179,334.26
ion
Ltd.
Tax Bureau of Xiaoshan
Tax returns 15,405,733.51 Within 1 year 9.29 0.00
District
Receivable ≤2 years
Sinotrans (B) Sdn. Bhd. s and 4,331,307.12 2.61 129,939.21
payables Over three years
124,134,911.8
Total — — 74.87 30,281,200.61
5
Note: The relevant description on balance formation of the Company’s "other receivables -
Wang" and full provision for bad debts at the end of current period can be found in Note XII.
1 (1).
⑥ Accounts receivable involving government grants
Time, amount
Aging at the
Name of government and basis of
Name of organization Ending balance end of the
grants estimated
period
collection
Value-added tax Within 1 February 15,
Tax Bureau of Xiaoshan District 15,405,733.51
refund year 2023
Xiaoshan District Bureau of 2,958,600.00 May 1, 2023
Headquarters regress Within 1
Economic and Information
338
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Time, amount
Aging at the
Name of government and basis of
Name of organization Ending balance end of the
grants estimated
period
collection
Value-added tax Within 1 February 15,
Tax Bureau of Xiaoshan District 15,405,733.51
refund year 2023
Technology subsidies year
Total — 18,364,333.51 — —
Note: “The balance RMB 15,405,733.51 of value-added tax refund was totally received before
February 15, 2023.
9. Inventory
(1) Classification of inventory
Ending balance
Item Inventory depreciation
reserves/Impairment
Book balance Book value
reserves for contract
performance cost
Materials in transit 2,167,614,674.66 0.00 2,167,614,674.66
Raw materials 4,761,057,332.22 50,978,954.18 4,710,078,378.04
Goods in process 1,289,739,172.39 89,318,021.98 1,200,421,150.41
Commodity stocks 6,222,986,720.67 227,434,527.33 5,995,552,193.34
Project construction 9,818,174.73 0.00 9,818,174.73
Total 14,451,216,074.67 367,731,503.49 14,083,484,571.18
(Continued)
Ending balance of previous year
Item Inventory depreciation
reserves/Impairment
Book balance Book value
reserves for contract
performance cost
Materials in transit 1,731,750,808.56 4,065,527.08 1,727,685,281.48
Raw materials 4,375,371,606.99 11,834,022.08 4,363,537,584.91
Goods in process 1,117,706,067.47 5,826,212.07 1,111,879,855.40
339
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Ending balance of previous year
Item Inventory depreciation
reserves/Impairment
Book balance Book value
reserves for contract
performance cost
Commodity stocks 5,057,408,304.21 116,161,441.71 4,941,246,862.50
Project construction 1,605,950.48 0.00 1,605,950.48
Total 12,283,842,737.71 137,887,202.94 12,145,955,534.77
(2) Inventory depreciation reserves
Increase in current period Decrease in current period
Ending balance
Item Ending balance
of previous year Write-back or
Provision Others Others
write-off
Materials in transit 4,065,527.08 0.00 0.00 4,065,527.08 0.00 0.00
Raw materials 11,834,022.08 50,230,584.53 748,369.65 11,834,022.08 0.00 50,978,954.18
Goods in process 5,826,212.07 86,393,812.27 3,228,894.26 6,130,896.62 0.00 89,318,021.98
Commodity stocks 116,161,441.71 225,057,017.21 2,558,122.39 116,342,053.98 0.00 227,434,527.33
Total 137,887,202.94 361,681,414.01 6,535,386.30 138,372,499.76 0.00 367,731,503.49
Note: The reason for the Company’s re-sell inventory depreciation reserves in current period
is the external sales of the inventory for which the inventory depreciation provision has been
made.
10. Non-current assets due within one year
Ending balance of
Item Ending balance Remarks
previous year
Long-term receivables mature Please refer to Note
0.00 115,233,477.61
within one year VI. 12. for details.
11. Other current assets
Item Ending balance Ending balance of previous year
Unamortized expense 180,672,280.12 170,334,722.91
Input tax retained 217,586,355.91 293,635,460.12
Excess tax paid 9,688,362.57 50,171,578.66
340
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Item Ending balance Ending balance of previous year
Input tax to be certified 313,718,497.07 859,364.43
Principal and interest of entrusted
989,433,904.99 1,079,576,125.83
loan
Others 133,431.20 200,146.79
Total 1,711,232,831.86 1,594,777,398.74
12. Long-term receivables
Long-term accounts receivable
Ending balance Ending balance of previous year
Item Impairm Impair
Book balance ent Book value Book balance ment Book value
Reserve Reserve
Financing lease 172,869,347.67 0.00 172,869,347.67 115,233,477.61 0.00 115,233,477.61
Wherein: Unrealized
-66,418,901.96 0.00 -66,418,901.96 -52,145,883.55 0.00 -52,145,883.55
financing income
Long-term deposits 3,613,154.11 0.00 3,613,154.11 3,307,639.58 0.00 3,307,639.58
Minus: Portion due within
one year 0.00 0.00 0.00 115,233,477.61 0.00 115,233,477.61
(Notes VI. 10)
Total 176,482,501.78 0.00 176,482,501.78 3,307,639.58 0.00 3,307,639.58
13. Long-term equity investments
Ending balance Ending balance of previous year
Impair
Item Impair
ment
Book balance Book value Book balance ment Book value
Reserv
Reserve
e
Investments in joint
ventures 12,831,505,320.53 0.00 12,831,505,320.53 12,085,626,559.38 0.00 12,085,626,559.38
and associates
Investments in joint ventures and associates
341
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Changes of increase or decrease in current period
Investment profits
Ending balance and losses Other
Investee Changes in
of previous year Additional Negative recognized under comprehensive
other equity
investment investment the equity method income
Investment profits adjustment
and losses
I. Joint ventures
Zhejiang Baling
Hengyi Caprolactam 1,319,719,520.62 0.00 0.00 -175,859,390.73 0.00 0.00
Co., Ltd.
Hainan Yisheng
Petrochemical Co., 2,748,764,205.65 0.00 0.00 521,043,246.22 34,297,818.99 0.00
Ltd.
Haining Hengqi
Environmental
Protection 0.00 3,000,000.00 2,986,703.89 -13,296.11 0.00 0.00
Technology Co.,
Ltd.
Subtotal 4,068,483,726.27 3,000,000.00 2,986,703.89 345,170,559.38 34,297,818.99 0.00
II. Associated
companies
Dalian Yisheng
1,876,736,059.44 0.00 0.00 127,094,005.96 22,278,108.11 0.00
Investment Co., Ltd.
Hangzhou Jingxin
Supply Chain
134,119,750.25 0.00 134,774,809.93 655,059.68 0.00 0.00
Management Co.,
Ltd.
China Zheshang
4,349,899,221.89 0.00 0.00 435,222,754.92 57,516,800.00 9,539,200.00
Bank Co., Ltd.
Ningbo Jinhou
Industry Investment 14,291,804.11 0.00 0.00 -37,178.87 0.00 0.00
Co., Ltd.
Zhejiang Yisheng
New Materials Co., 1,494,961,748.42 0.00 0.00 -93,353,326.07 -195,347.78 0.00
Ltd.
Dongzhan Shipping
147,134,249.00 0.00 0.00 9,784,806.02 -33,143.94 0.00
Co., Ltd.
Subtotal 8,017,142,833.11 0.00 134,774,809.93 479,366,121.64 79,566,416.39 9,539,200.00
12,085,626,559.3
Total 3,000,000.00 137,761,513.82 824,536,681.02 113,864,235.38 9,539,200.00
8
(Continued)
342
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Changes of increase or decrease in current period
Impairment
Announcement of reserves
Investee release Provisions for Ending balance
impairment Others Ending
Cash dividend or reserves balance
profit
I. Joint ventures
Zhejiang Baling Hengyi Caprolactam Co., Ltd. 67,299,841.43 0.00 0.00 1,076,560,288.46 0.00
Hainan Yisheng Petrochemical Co.,
0.00 0.00 0.00 3,304,105,270.86 0.00
Ltd.
Haining Hengqi Environmenta l
0.00 0.00 0.00 0.00 0.00
Protection Technology Co., Ltd.
Subtotal 67,299,841.43 0.00 0.00 4,380,665,559.32 0.00
II. Associated companies
Dalian Yisheng Investment Co., Ltd. 0.00 0.00 0.00 2,026,108,173.51 0.00
Hangzhou Jingxin Supply Chain
0.00 0.00 0.00 0.00 0.00
Management Co., Ltd.
China Zheshang Bank Co., Ltd. 0.00 0.00 0.00 4,852,177,976.81 0.00
Ningbo Jinhou Industry Investment
0.00 0.00 0.00 14,254,625.24 0.00
Co., Ltd.
Zhejiang Yisheng New Materials Co.,
0.00 0.00 0.00 1,401,413,074.57 0.00
Ltd.
Dongzhan Shipping Co., Ltd. 0.00 0.00 0.00 156,885,911.08 0.00
Subtotal 0.00 0.00 0.00 8,450,839,761.21 0.00
Total 67,299,841.43 0.00 0.00 12,831,505,320.53 0.00
14. Other equity instrument investments
(1) Investment in other equity instruments
Ending
balance of
Item Ending balance
previous
year
Zhejiang Hengchuang Advanced Functional Fiber Innovation Center Co.,
600,000.00 600,000.00
Ltd.
Jiangsu New Horizon Advanced Functional Fiber Innovation Center Co., 5,000,000.0
5,000,000.00
Ltd. 0
343
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Ending
balance of
Item Ending balance
previous
year
5,600,000.0
Total 5,600,000.00
0
15. Fixed assets
Ending balance of previous
Item Ending balance
year
Fixed assets 47,462,032,827.08 46,072,017,947.83
Liquidation of fixed assets 4,428,849.55 30,711,590.88
Total 47,466,461,676.63 46,102,729,538.71
(1) Fixed assets
① Information of fixed assets
Office
Houses and Machinery Transportation
Item Structures facilities and Total
buildings equipment equipment
others
I. Original book
value
1. Ending balance 11,746,241,517.2 1,359,891,066.3 47,818,422,523.0 253,589,965.5
310,074,288.75 61,488,219,360.96
(previous year) 2 8 6 5
2. Increase in 1,076,085,965.7
39,841,765.24 3,437,845,726.37 46,437,940.33 77,410,161.34 4,677,621,559.00
current period 2
(1) Acquisition 55,933,568.79 149,372.99 46,200,482.05 36,699,481.70 16,999,710.54 155,982,616.07
(2) In-progress construction roll-in 422,110,451.27 39,682,373.26 1,744,974,410.40 2,071,615.56 54,766,359.89 2,263,605,210.38
(3) Conversio n of foreig n currency state ments 598,041,945.66 10,018.99 1,646,670,833.92 7,666,843.07 5,644,090.91 2,258,033,732.55
(4) Others 0.00 0.00 0.00 0.00 0.00 0.00
3. Decrease in
9,059,229.71 278,529.56 82,863,298.07 8,416,242.83 364,420.98 100,981,721.15
current period
(1) Disposal or
9,059,229.71 278,529.56 48,871,515.80 8,416,242.83 173,151.02 66,798,668.92
retirement
(2) Roll into in-progress construction 0.00 0.00 26,333,459.58 0.00 0.00 26,333,459.58
(3) Conversio n of foreig n currency sta t ments 0.00 0.00 0.00 0.00 191,269.96 191,269.96
(4) Others 0.00 0.00 7,658,322.69 0.00 0.00 7,658,322.69
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Office
Houses and Machinery Transportation
Item Structures facilities and Total
buildings equipment equipment
others
4. Balance at the 12,813,268,253. 1,399,454,302.0 51,173,404,951.3 330,635,705.9
348,095,986.25 66,064,859,198.81
end of current year 23 6 6 1
II. Accumulated
depreciation
1. Ending balance 1,203,549,293.6 13,328,518,331.8 145,356,578.3
624,378,786.50 114,398,422.73 15,416,201,413.13
(previous year) 6 7 7
2. Increase in
358,670,877.52 77,638,021.06 2,687,673,630.57 55,556,071.82 45,071,923.23 3,224,610,524.20
current period
(1) Provision 328,584,300.19 77,634,069.23 2,563,190,312.47 52,188,749.75 42,054,676.41 3,063,652,108.05
(2) Conversio n of foreig n currency sta t ments 30,086,577.33 3,951.83 124,483,318.10 3,367,322.07 3,017,246.82 160,958,416.15
(3) Others 0.00 0.00 0.00 0.00 0.00 0.00
3. Decrease in
3,139,541.98 112,456.30 31,242,351.23 6,850,681.75 277,526.01 41,622,557.27
current period
(1) Disposal or
3,139,541.98 112,456.30 24,130,445.80 6,850,681.75 122,618.53 34,355,744.36
retirement
(2) Roll into in-progress const uctio n 0.00 0.00 6,105,399.91 0.00 0.00 6,105,399.91
(3) Conversio n of foreig n currency state ments 0.00 0.00 0.00 0.00 154,907.48 154,907.48
(4) Others 0.00 0.00 1,006,505.52 0.00 0.00 1,006,505.52
4. Balance at the 1,559,080,629.2 15,984,949,611.2 190,150,975.5
701,904,351.26 163,103,812.80 18,599,189,380.06
end of current year 0 1 9
III. Impairment
reserves
1. Ending balance
0.00 0.00 0.00 0.00 0.00 0.00
(previous year)
2. Increase in
0.00 0.00 3,636,991.67 0.00 0.00 3,636,991.67
current period
(1) Provision 0.00 0.00 3,636,991.67 0.00 0.00 3,636,991.67
3. Decrease in
0.00 0.00 0.00 0.00 0.00 0.00
current period
(1) Disposal or
0.00 0.00 0.00 0.00 0.00 0.00
retirement
4. Balance at the
0.00 0.00 3,636,991.67 0.00 0.00 3,636,991.67
end of current year
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Office
Houses and Machinery Transportation
Item Structures facilities and Total
buildings equipment equipment
others
IV. Book value
1. Book value at 11,254,187,624.0 35,184,818,348.4 140,484,730.3
697,549,950.80 184,992,173.45 47,462,032,827.08
the end of this year 3 8 2
2. Book value at
10,542,692,223. 34,489,904,191.1 108,233,387.1
the end of the 735,512,279.88 195,675,866.02 46,072,017,947.83
56 9 8
previous year
② Temporarily idle fixed assets
Original Book Accumulated Impairment
Item Book value
Value depreciation reserves
Houses and buildings 8,670,425.29 503,644.34 0.00 8,166,780.95
Structures 0.00 0.00 0.00 0.00
Machinery equipment 45,143,510.44 24,062,433.73 3,636,991.67 17,444,085.04
Transportation facilities 0.00 0.00 0.00 0.00
Office facilities and others 0.00 0.00 0.00 0.00
Total 53,813,935.73 24,566,078.07 3,636,991.67 25,610,865.99
③ Situation of fixed assets with uncompleted certificate of title
Reasons for failure to
Item Book value complete relevant affairs of
property right certificate
Real estate of Haining Hengyi New Materials
1,459,490,961.20 In process
Co., Ltd.
Real estate of Fujian Yijin Chemical Fiber Co.,
187,642,422.69 In process
Ltd.
Real estate of Haining Hengyi Thermal Power
183,606,691.10 In process
Co., Ltd.
Real estate of Jiaxing Yipeng Chemical Fiber Co.,
436,497,520.35 In process
Ltd.
Real estate of Taicang Yifeng Chemical Fiber Property obtained by auction,
16,208,937.48
Co., Ltd. under transaction
Real estate of Zhejiang Shuangtu New Materials
7,794,158.73 Makeshift house
Co., Ltd.
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Real estate of Suqian Yida New Materials Co.,
2,112,597.89 In process
Ltd.
(2) Liquidation of fixed assets
Ending balance of previous
Item Ending balance
year
Machinery equipment 4,428,849.55 30,711,590.88
16. Construction in progress
Ending balance of previous
Item Ending balance
year
Construction in progress 3,608,062,223.99 3,769,242,612.01
Engineering materials 143,827,176.95 106,345,395.78
Total 3,751,889,400.94 3,875,588,007.79
(1) In-process construction
① Situation of in-process construction
Ending balance Ending balance of previous year
Item Impairmen
t Impairment
Book balance Book value Book balance Book value
reserves
Reserve
Phase II of the refining-
1,548,872,381.3
petrochemical project in 2,217,273,317.70 0.00 2,217,273,317.70 1,548,872,381.35 0.00
5
Brunei
Haining New Materials 1,755,641,933.0
49,503,959.30 0.00 49,503,959.30 1,755,641,933.05 0.00
Construction Project 5
Suqian Yida Expansion
521,514,887.05 0.00 521,514,887.05 129,640,869.78 0.00 129,640,869.78
Project (Phase II)
The project of centralized
heating for Suqian Yida 365,207,528.09 0.00 365,207,528.09 135,725,175.25 0.00 135,725,175.25
Project
Guangxi Jijin Project
143,465,895.02 0.00 143,465,895.02 21,345,635.27 0.00 21,345,635.27
(Phase I)
The boiler project of
Zhejiang Shuangtu New 77,784,628.37 0.00 77,784,628.37 0.00 0.00 0.00
Materials Co., Ltd.
Heat transfer oil boiler
renovation project of
60,407,803.61 0.00 60,407,803.61 453,921.84 0.00 453,921.84
Zhejiang Hengyi High-
Tech Materials Co., Ltd.
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Ending balance Ending balance of previous year
Item Impairmen
t Impairment
Book balance Book value Book balance Book value
reserves
Reserve
3,000tpa caprolactam gas
phase rearrangement and
0.00 0.00 0.00 31,419,297.29 0.00 31,419,297.29
crystallization pilot-scale
project
Other projects 172,904,204.85 0.00 172,904,204.85 146,143,398.18 0.00 146,143,398.18
3,769,242,612.0
Total 3,608,062,223.99 0.00 3,608,062,223.99 3,769,242,612.01 0.00
1
② Changes of major construction projects in progress in current period
Budget Increase in Amount of
Other decrease
(RMB Ending balance current period transferred into
Project name in current Ending balance
10,000) of previous year fixed assets in
Amount period
current period
Phase II of the refining-
$1,365,389.0
petrochemical project in 1,548,872,381.35 508,247,308.49 0.00 -160,153,627.86 2,217,273,317.70
0
Brunei
Haining New Materials
892,500.00 1,755,641,933.05 138,530,140.90 1,844,668,114.65 0.00 49,503,959.30
Construction Project
Suqian Yida Expansion
385,000.00 129,640,869.78 391,874,017.27 0.00 0.00 521,514,887.05
Project (Phase II)
The project of centralized
heating for Suqian Yida 65,000.00 135,725,175.25 411,300,565.70 181,818,212.86 0.00 365,207,528.09
Project
Guangxi Jijin Project
1,054,737.57 21,345,635.27 122,120,259.75 0.00 0.00 143,465,895.02
(Phase I)
The boiler project of
Zhejiang Shuangtu New 8,850.00 0.00 77,784,628.37 0.00 0.00 77,784,628.37
Materials Co., Ltd.
Heat transfer oil boiler
renovation project of
7,100.00 453,921.84 59,953,881.77 0.00 0.00 60,407,803.61
Zhejiang Hengyi High-Tec h
Materials Co., Ltd.
3,000tpa caprolactam gas
phase rearrangement and
4,100.00 31,419,297.29 9,432,550.06 40,851,847.35 0.00 0.00
crystallization pilot-scale
project
Other projects -- 146,143,398.18 222,882,559.27 196,267,035.52 -145,282.92 172,904,204.85
2,263,605,210.3
Total -- 3,769,242,612.01 1,942,125,911.58 -160,298,910.78 3,608,062,223.99
8
348
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
(Continued)
Proportion of Interest Capitalization
Progress of Wherein: Interest
project capitalization rate of
Works (%) for the current
Project name accumulated accumulative interest in Sources of funds
period
investment in Project amount current period
budget (%) progress Capitalized amount (%)
Phase II of the refining-
petrochemical project in 2.35 2.35% 0.00 0.00 -- Self-raised funds
Brunei
Self-raised funds
Haining New Materials and loans
102.76 99.42% 344,624,923.13 355,674.61 5.33
Construction Project
Raised fund
Self-raised funds
Suqian Yida Expansion and loans
13.71 30.00% 18,409,929.39 10,814,601.58 4.90
Project (Phase II)
Raised fund
The project of centralized
heating for Suqian Yida 84.16 95.00% 0.00 0.00 -- Self-raised funds
Project
Guangxi Jijin Project (Phase
1.36 1.36% 0.00 0.00 -- Self-raised funds
I)
The boiler project of
Zhejiang Shuangtu New 87.89 90.00% 0.00 0.00 -- Self-raised funds
Materials Co., Ltd.
Heat transfer oil boiler
renovation project of
83.80 85.00% 0.00 0.00 -- Self-raised funds
Zhejiang Hengyi High-Tec h
Materials Co., Ltd.
3,000tpa caprolactam gas
phase rearrangement and
99.64 100.00% 0.00 0.00 -- Self-raised funds
crystallization pilot-scale
project
Other projects -- -- 0.00 0.00 -- Self-raised funds
Total -- -- 363,034,852.52 11,170,276.19 -- --
(2) Engineering materials
Ending balance Ending balance of previous year
Item
Impairmen Impairmen
Book balance Book value Book balance Book value
t reserves t reserves
Special
137,253,622.03 0.00 137,253,622.03 99,653,889.72 0.00 99,653,889.72
materials
Special
6,573,554.92 0.00 6,573,554.92 6,691,506.06 0.00 6,691,506.06
equipment
349
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Ending balance Ending balance of previous year
Item
Impairmen Impairmen
Book balance Book value Book balance Book value
t reserves t reserves
Total 143,827,176.95 0.00 143,827,176.95 106,345,395.78 0.00 106,345,395.78
17. Right-of-use assets
Houses and Machinery
Item Land use right Total
buildings equipment
I. Original book value
1. Ending balance (previous
66,732,473.78 0.00 379,883,382.51 446,615,856.29
year)
2. Increase in current period 25,060,750.66 0.00 35,088,433.27 60,149,183.93
(1) Increase in rental income 21,948,079.26 0.00 0.00 21,948,079.26
(2) Conversion of foreign
3,112,671.40 0.00 35,088,433.27 38,201,104.67
currency statements
3. Decrease in current period 24,365,543.92 0.00 0.00 24,365,543.92
(1) Decrease due to contract
24,365,543.92 0.00 0.00 24,365,543.92
expiration
(2) Conversion of foreign
0.00 0.00 0.00 0.00
currency statements
4. Balance at the end of current
67,427,680.52 0.00 414,971,815.78 482,399,496.30
year
II. Accumulated depreciation
1. Ending balance (previous
21,624,466.03 0.00 13,958,740.93 35,583,206.96
year)
2. Increase in current period 24,662,219.84 0.00 16,516,950.18 41,179,170.02
(1) Provision 23,036,845.03 0.00 14,710,103.79 37,746,948.82
(2) Conversion of foreign
1,625,374.81 0.00 1,806,846.39 3,432,221.20
currency statements
3. Decrease in current period 24,365,543.92 0.00 0.00 24,365,543.92
(1) Decrease due to contract
24,365,543.92 0.00 0.00 24,365,543.92
expiration
350
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Houses and Machinery
Item Land use right Total
buildings equipment
(2) Conversion of foreign
0.00 0.00 0.00 0.00
currency statements
4. Balance at the end of current
21,921,141.95 0.00 30,475,691.11 52,396,833.06
year
III. Impairment reserves
1. Ending balance (previous
0.00 0.00 0.00 0.00
year)
2. Increase in current period 0.00 0.00 0.00 0.00
(1) Provision 0.00 0.00 0.00 0.00
3. Decrease in current period 0.00 0.00 0.00 0.00
(1) Disposal 0.00 0.00 0.00 0.00
4. Balance at the end of current
0.00 0.00 0.00 0.00
year
IV. Book value
1. Book value at the end of this
45,506,538.57 0.00 384,496,124.67 430,002,663.24
year
2. Book value at the end of the
45,108,007.75 0.00 365,924,641.58 411,032,649.33
previous year
18. Intangible assets
(1) Situation of intangible assets
Software and
Item Land use right Patent Trademark Total
others
I. Original book value
1. Ending balance 2,601,159,472.7
1,838,686,027.98 617,565,886.45 19,740.00 144,887,818.28
(previous year) 1
2. Increase in current 1,127,083,679.1
1,059,925,171.73 41,456,215.57 0.00 25,702,291.89
period 9
1,084,192,079.7
(1) Acquisition 1,059,925,171.73 2,986,096.00 0.00 21,280,812.05
8
(2) Internal R&D 0.00 9,445,222.43 0.00 0.00 9,445,222.43
351
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Software and
Item Land use right Patent Trademark Total
others
(3) Conversion of foreign
0.00 29,024,897.14 0.00 4,421,479.84 33,446,376.98
currency statements
3. Decrease in current
0.00 0.00 0.00 0.00 0.00
period
(1) Disposal 0.00 0.00 0.00 0.00 0.00
(2) Others 0.00 0.00 0.00 0.00 0.00
4. Balance at the end of 3,728,243,151.9
2,898,611,199.71 659,022,102.02 19,740.00 170,590,110.17
current year 0
II. Accumulated
amortization
1. Ending balance
226,718,599.05 370,133,209.21 16,920.00 69,408,014.49 666,276,742.75
(previous year)
2. Increase in current
67,236,026.41 41,249,595.19 2,820.00 15,784,916.83 124,273,358.43
period
(1) Provision 67,236,026.41 34,040,970.67 2,820.00 14,548,912.21 115,828,729.29
(2) Others 0.00 7,208,624.52 0.00 1,236,004.62 8,444,629.14
3. Decrease in current
0.00 837,655.24 0.00 0.00 837,655.24
period
(1) Disposal 0.00 837,655.24 0.00 0.00 837,655.24
(2) Conversion of foreign
0.00 0.00 0.00 0.00 0.00
currency statements
4. Balance at the end of
293,954,625.46 410,545,149.16 19,740.00 85,192,931.32 789,712,445.94
current year
III. Impairment reserves
1. Ending balance
0.00 0.00 0.00 0.00 0.00
(previous year)
2. Increase in current
0.00 0.00 0.00 0.00 0.00
period
(1) Provision 0.00 0.00 0.00 0.00 0.00
352
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Software and
Item Land use right Patent Trademark Total
others
3. Decrease in current
0.00 0.00 0.00 0.00 0.00
period
(1) Disposal 0.00 0.00 0.00 0.00 0.00
4. Balance at the end of
0.00 0.00 0.00 0.00 0.00
current year
IV. Book value
1. Book value at the end of 2,938,530,705.9
2,604,656,574.25 248,476,952.86 0.00 85,397,178.85
this year 6
2. Book value at the end of 1,934,882,729.9
1,611,967,428.93 247,432,677.24 2,820.00 75,479,803.79
the previous year 6
(2) Situation of important individual intangible assets
Book value at the end of Remaining
Item
the period amortization period
Land use right of Zhejiang Hengyi Hanlin Enterprise
1,035,570,510.84 469.00
Management Co., Ltd.
Land use right of Zhejiang Shuangtu New Materials
181,956,040.34 464.00
Co., Ltd.
Land use right of Guangxi Hengyi New Materials
160,143,196.34 572.00
Co., Ltd.
Land use right of Guangxi Hengyi New Materials
39,823,814.10 575.00
Co., Ltd.
Land use right of Jiaxing Yipeng Chemical Fiber
139,821,788.81 374.00
Co., Ltd.
Land use right of Hangzhou Yitong New Materials
137,802,754.65 583.00
Co., Ltd.
Land use right of Hangzhou Yitong New Materials
128,937,700.33 571.00
Co., Ltd.
Land use right of Haining Hengyi New Materials
76,389,934.50 586.00
Co., Ltd.
Land use right of Haining Hengyi New Materials
63,508,134.36 542.00
Co., Ltd.
353
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Land use right of Haining Hengyi New Materials
21,475,500.00 556.00
Co., Ltd.
Land use right of Fujian Yijin Chemical Fiber Co.,
64,297,261.76 422.00
Ltd.
Patent license of Hengyi Industries Bdn. 144,224,536.99 83.00
Patent license of Hengyi Industries Bdn. 54,077,554.15 83.00
(3) Situation of intangible assets with limited ownership or use right
Book value at the end of Amortization amount in Reason for
Item
the period current period restriction
Land use right 781,320,192.43 10,789,190.44 Mortgage loan
Finance lease
Software 15,360.38 3,169.81
guarantees
Total 781,335,552.81 10,792,360.25 --
19. Development expenditure
Increase in current period Decrease in current period
Ending
balance of Recognized Transferred Ending
Item Internal as to current
previous balance
year development Others
expenditures Intangible profit and
assets loss
Henglan Technology’s PTT
9,445,222.4
Industrialization Research & 0.00 0.00 9,445,222.43 0.00 0.00
3
Development Project
Research and application development of
1,819,730.3
bio-based PTT elastic shape memory 1,182,773.62 0.00 0.00 0.00 3,002,503.92
0
fiber series
3,000t/a caprolactam gas phase
0.00 18,340,465.12 0.00 0.00 0.00 18,340,465.12
rearrangement and crystallization project
Development of differentiated new
38,579.16 0.00 0.00 0.00 0.00 38,579.16
flame-retardant products
11,303,531.
Total 19,523,238.74 0.00 9,445,222.43 0.00 21,381,548.20
89
20. Business reputation
(1) Original book value of goodwill
Ending balance Increase in current Decrease in
Name or formation of investee Ending balance
of previous year period current period
354
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
goodwill matters
Business
combination Disposal
Zhejiang Shuangtu New Materials
221,865,586.69 0.00 0.00 221,865,586.69
Co., Ltd.
(2) Impairment test process of goodwill
In November 2018, with an amount of RMB 2,105 million, the Company purchased all stocks
of Zhejiang Shuangtu New Materials Co., Ltd., and amortized the merger prices in accordance
with relevant accounting standards. On the combination date, the fair value is RMB
1,883,134,400 for the acquiree’s net identifiable assets. As a result, an amount of RMB
221,865,600 goodwill is formed in the consolidated accounting statement.
This year, the Company assessed the recoverable amount of goodwill and conducted
impairment tests on various asset groups related to goodwill. In the process of goodwill
impairment test, the Company determined the composition of the assets of the asset groups
related to the goodwill reflected in the Company’s consolidated financial statements and their
book value of RMB 1,956,231,800 based on the consolidated financial statement as on
December 31, 2022 and the assets and operating conditions of the merged party Shuangtu. It
is found after impairment test that the present value of the expected future cash flow of this
goodwill and related asset group on December 31, 2021 was RMB 2,031,000,000, and no
impairment occurred. Details are as follows:
Currency unit: RMB 10,000
Item Book amount of consolidated statements
Fixed assets 145,671.91
Construction in progress 7,805.38
Intangible assets 19,897.90
Long-term unamortized expenses 61.43
Goodwill recognized in consolidated statements 22,186.56
Subtotal of book value of asset groups containing goodwill 195,623.18
Vale of goodwill not recognized as attributable to minority
0.00
shareholders’ equity
Total adjusted book value of asset groups containing
195,623.18
goodwill
355
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Item Book amount of consolidated statements
Present value (recoverable amount) of the estimated future
203,100.00
cash flow of the asset group
Note: For the present value (recoverable amount) of the expected future cash flow of the asset
groups above, the results of assessment set out in the HYZXPBZ [2023] No. A01-0016 Asset
Appraisal Report issued by Beijing Huaya Zhengxin Assets Appraisal Co., Ltd. on April 12,
2023 was used.
The recoverable amount of the asset groups above is determined according to the present value
of the expected future cash flow. Based on its current operating conditions, business
characteristics and market supply & demand and upon an overall analysis and consideration of
various factors such as residual service life of main assets included in the asset group, the
acquirer is estimated to enter a stable period in 2027. Therefore, the predictive period is
determined from January 2023 to December 2027 (five years in total), and the discount rate of
11.29% is adopted.
Important assumptions for goodwill impairment test:
① Assumption of orderly transaction: Orderly transaction refers to the transaction that related
assets or liabilities have usual marketing activities within a period of time prior to the
measurement date.
② Assumption of open market: It means that assets can be traded freely in the fully
competitive market, and that its price depends on independent buyer’s and seller’s value
judgment under certain market supply and demand conditions. It is an assumption about the
conditions of the target assets market and about the influence of assets under relatively
complete market conditions.
③ Going concern assumption: Assume no unforeseeable factor leading to a failure to continue
operations, when the entrusted asset group is continuously operated in accordance with the
current situation, purpose, usage mode and management level on the base date;
④ No significant change in the existing editions of applicable national laws & regulations and
macro-economic situation; No unforeseeable significant change in external economic
environment (e.g. interest rate, exchange rate, tax base & rate and policy collection expenses);
⑤ Assume that the Company’s current business model can be continuously maintained in the
future, and predict the future cash flow of assets based on current asset conditions, excluding
the prediction of the future cash flow related to restructuring or modification that will probably
occur in the future and that has not been promised yet;
⑥ Assume that cash inflow and outflow of the asset group occur in the middle of the year
356
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
after the assessment base date.
⑦ Assume that the management of the acquired party after the assessment base date is
responsible, stable, and capable of assuming their positions.
21. Long-term deferred expenses
Ending Amortization
Increase in Other decreases
Item balance of amount in Ending balance
current period in amount
previous year current period
Renovation costs 768,433.23 980,000.00 466,164.72 -18,188.41 1,300,456.92
Exterior wall coating 817,023.44 0.00 817,023.44 0.00 0.00
Workshop
275,405.41 0.00 275,405.41 0.00 0.00
reinforcement
Storage tank use right
761,752.46 0.00 147,435.96 0.00 614,316.50
transfer fees
445,620,377.3
Catalyst 57,188,192.15 105,970,589.71 -38,020,080.78 434,858,060.60
8
Others 18,753,438.56 5,343,775.02 16,396,005.07 742,224.86 6,958,983.65
466,996,430.4
Total 63,511,967.17 124,072,624.31 -37,296,044.33 443,731,817.67
8
22. Deferred income tax assets/deferred income tax liabilities
(1) Details of deferred income tax assets
Ending balance Ending balance of previous year
Item Deductible temporary Deductible temporary
difference Deferred income difference Deferred income
tax assets tax assets
Impairment loss on
36,951,677.06 5,636,084.44 37,453,702.79 5,761,347.25
credit assets
Asset impairment
73,251,230.47 15,843,906.01 141,881,525.64 29,940,480.75
reserves
Changes in fair value
of held-for-trading 28,824,109.33 7,206,027.34 2,752,654.17 688,163.54
financial assets
Unrealized profits
arising from intra- 0.00 0.00 29,235,837.12 7,308,959.28
group trading
357
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Ending balance Ending balance of previous year
Item Deductible temporary Deductible temporary
difference Deferred income difference Deferred income
tax assets tax assets
Accrued expenses 159,529.55 23,929.43 213,630.54 32,044.58
Deferred income 91,704,353.43 15,346,671.75 102,310,974.76 16,486,593.90
Deductible losses 1,467,199,781.25 306,067,338.31 256,991,133.33 64,247,783.33
Cash-flow hedging 6,047,943.46 1,511,985.87 297,696.00 74,424.00
Differences in right-of-
51,720.35 12,930.09 0.00 0.00
use assets
Total 1,704,190,344.90 351,648,873.24 571,137,154.35 124,539,796.63
(2) Details of deferred income tax liabilities
Ending balance Ending balance of previous year
Item
Taxable temporaryDeferred income tax Taxable temporary Deferred income tax
differences liabilities differences liabilities
Appreciation of assets
appraisal for business
296,207,939.40 44,431,190.91 326,354,000.73 48,953,100.11
merger not under the
same control
Changes in fair value of
held-for-trading financial 25,596,501.91 4,572,763.08 12,825,770.08 3,206,442.52
assets
Deduction differences of
fixed assets before one- 131,540,806.43 30,811,846.42 146,811,742.93 34,358,354.01
off income tax
Unrealized profits arising
9,344,733.79 2,336,183.45 0.00 0.00
from intra-group trading
Total 462,689,981.53 82,151,983.86 485,991,513.74 86,517,896.64
(3) Details of unconfirmed deferred income tax assets
Item Ending balance Ending balance of previous year
Deductible temporary
166,691,372.86 15,553,769.45
difference
358
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Item Ending balance Ending balance of previous year
Deductible losses 2,404,898,394.41 1,015,129,215.36
Total 2,571,589,767.27 1,030,682,984.81
(4) Deductible losses of unconfirmed deferred income tax assets will be mature in the
following years:
Year Ending balance Ending balance of previous year
2022 -- 9,878,721.42
2023 76,870,143.05 127,251,885.07
2024 145,795,018.28 162,170,932.41
2025 161,153,678.35 194,792,129.27
2026 506,572,258.86 521,035,547.19
2027 1,514,507,295.87 --
Total 2,404,898,394.41 1,015,129,215.36
23. Other non-current assets
Item Ending balance Ending balance of previous year
Payment for long-term
756,296,579.88 1,669,998,308.04
assets
Prepayment of dumping
0.00 2,152,324.64
right transfer fees
Taxes for right-of-use
2,268,330.25 2,335,045.86
assets
Others 512,002.80 304,950.00
Total 759,076,912.93 1,674,790,628.54
24. Short-term borrowings
(1) Classification of short-term loans
Item Ending balance Ending balance of previous year
Pledge loan 13,158,605,565.69 13,328,541,060.00
Mortgage loan 1,464,969,222.65 2,355,437,939.49
359
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Item Ending balance Ending balance of previous year
Guarantee loan 20,146,414,778.93 16,660,351,966.72
Fiduciary loan 3,018,789,487.46 1,383,344,685.85
Loan interest 87,054,283.36 51,019,025.18
Total 37,875,833,338.09 33,778,694,677.24
Note: For asset classes and amounts of mortgaged loans, please refer to Note VI. 67.
For detail category and amount of assets pledged for loan, please refer to Notes VI (67).
25. Held-for-trading financial liabilities
Ending balance Increase in Decrease in
Item Ending balance
of previous year current period current period
Held-for-trading financial liabilities 1,670,361.85 41,547,937.87 21,864,747.39 21,353,552.33
Wherein: Issued bonds held for trading 0.00 0.00 0.00 0.00
Derivative financial liabilities 1,670,361.85 41,547,937.87 21,864,747.39 21,353,552.33
Others 0.00 0.00 0.00 0.00
Specified as financial liabilities
measured by fair value and whose
0.00 0.00 0.00 0.00
changes included in current profits and
losses
Total 1,670,361.85 41,547,937.87 21,864,747.39 21,353,552.33
26. Derivative financial liabilities
Item Ending balance Ending balance of previous year
Foreign exchange derivatives 8,555,804.28 297,696.00
Commodity derivatives 33,056,054.03 23,407,744.98
Total 41,611,858.31 23,705,440.98
27. Notes payable
Category Ending balance Ending balance of previous year
Commercial acceptance bills 0.00 0.00
Bank acceptance bills 117,879,321.16 440,900,000.00
360
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Category Ending balance Ending balance of previous year
Domestic letter of credit 697,290,000.00 0.00
Total 815,169,321.16 440,900,000.00
28. Accounts payable
(1) Presentation of accounts payable
Item Ending balance Ending balance of previous year
Within 1 year 8,480,378,889.22 8,777,122,209.14
1-2 years 651,432,866.93 360,995,063.03
2-3 years 142,063,217.20 853,087,925.13
Over three years 494,603,002.86 19,802,520.14
Total 9,768,477,976.21 10,011,007,717.44
(2) Important accounts payable with >1 year aging
Reasons for outstanding or
Item Ending balance
carry over
China Sinogy Electric Engineering Co., Ltd. 162,533,025.24 Warranty has not expired.
China Chemical Engineering Second Construction
106,481,911.32 Warranty has not expired.
Corporation (Brunei Branch)
CSCPE(B）SDN BHD 58,805,206.60 Warranty has not expired.
China National Chemical Engineering Third
92,247,237.94 Warranty has not expired.
Construction Co., Ltd. (Brunei Branch)
Nanjing Chemical Construction Co., Ltd. (Brunei
91,198,059.19 Warranty has not expired.
Branch)
Total 511,265,440.29 —
29. Contract liabilities
(1) Situation of contract liabilities
Ending balance of previous
Item Ending balance
year
Precollection of unperformed contract price 1,080,383,448.03 1,904,820,796.20
361
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Ending balance of previous
Item Ending balance
year
Minus: Those included in other current liabilities
90,760,675.06 180,919,015.28
(Note VI. 34.)
Total 989,622,772.97 1,723,901,780.92
(2) There were no significant changes in the book value in current period.
30. Payroll payable
(1) Presentation of payroll payable
Ending balance
Increase in Decrease in current
Item of previous Ending balance
current period period
year
I. Short-term remuneration 308,151,517.88 2,518,901,848.57 2,664,760,562.55 162,292,803.90
II. Post-employment benefits -
3,311,351.64 126,966,443.32 101,283,563.79 28,994,231.17
defined contribution plans
III. Termination benefits 0.00 608,792.75 608,792.75 0.00
IV. Other benefits due within one
0.00 0.00 0.00 0.00
year
Total 311,462,869.52 2,646,477,084.64 2,766,652,919.09 191,287,035.07
(2) Presentation of short-term salaries
Ending balance Increase in Decrease in current
Item Ending balance
of previous year current period period
1. Wage, bonus, allowances and
298,619,004.75 2,297,281,609.50 2,437,406,048.44 158,494,565.81
subsidies
2. Employee welfare expenses 1,558,783.82 88,575,689.42 90,014,841.60 119,631.64
3. Social insurance charges 1,292,603.87 78,211,633.97 77,390,156.14 2,114,081.70
Wherein: Medical insurance 1,262,032.56 73,216,895.84 73,687,754.57 791,173.83
Industrial injury insurance
30,571.31 4,311,100.68 3,018,764.12 1,322,907.87
premiums
Birth insurance premiums 0.00 683,637.45 683,637.45 0.00
4. Housing fund 283,376.68 40,563,223.68 40,816,564.22 30,036.14
5. Labor union dues and personnel
6,397,748.76 14,269,692.00 19,132,952.15 1,534,488.61
education fund
362
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Ending balance Increase in Decrease in current
Item Ending balance
of previous year current period period
6. Short-term compensated
0.00 0.00 0.00 0.00
absences
7. Short-term profit sharing plan 0.00 0.00 0.00 0.00
8. Others 0.00 0.00 0.00 0.00
Total 308,151,517.88 2,518,901,848.57 2,664,760,562.55 162,292,803.90
(3) Presentation of defined contribution plans
Ending balance
Increase in Decrease in current
Item of previous Ending balance
current period period
year
1. Basic endowment insurance 3,236,899.23 122,999,549.36 98,178,953.73 28,057,494.86
2. Unemployment insurance
74,452.41 3,966,893.96 3,104,610.06 936,736.31
expenses
3. Enterprise annuities 0.00 0.00 0.00 0.00
Total 3,311,351.64 126,966,443.32 101,283,563.79 28,994,231.17
31. Tax payable
Item Ending balance Ending balance of previous year
Value-added tax 254,514,471.42 705,004,834.17
Enterprise income tax 36,531,077.86 108,956,677.95
Urban maintenance and
7,138,301.48 43,186,920.36
construction tax
Education surcharge 3,098,068.34 18,535,812.25
Land use tax 12,211,062.04 10,069,167.57
Property tax 38,615,251.06 30,075,843.64
Special funds for water
0.00 402,705.79
conservancy construction
Individual income tax 1,559,102.94 1,775,884.69
Stamp tax 33,277,197.35 6,938,813.73
363
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Item Ending balance Ending balance of previous year
Local education surcharge 2,065,378.90 12,356,058.55
Disabled security fund 104,544.00 53,136.00
Others 196,274.22 1,008,926.96
Total 389,310,729.61 938,364,781.66
32. Other payables
Item Ending balance Ending balance of previous year
Interests payable 0.00 0.00
Dividends payable 0.00 169,500,759.38
Other payables 235,619,327.94 258,670,038.54
Total 235,619,327.94 428,170,797.92
(1) Dividends payable
Item Ending balance Ending balance of previous year
Common stock dividends 0.00 759.38
Dividends paid by subsidiary to
0.00 169,500,000.00
minority shareholders
Total 0.00 169,500,759.38
(2) Other payables
① Listed by nature of amount
Item Ending balance Ending balance of previous year
Receivables and payables 11,926,223.68 7,096,248.66
Deposit and security fund 169,136,880.99 138,103,829.71
Unliquidated expense funds 30,272,834.48 91,205,577.81
Agency fund 15,407,171.39 20,451,297.80
Others 8,876,217.40 1,813,084.56
Total 235,619,327.94 258,670,038.54
② Listed by aging
364
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Ending balance of previous
Item Ending balance
year
Within 1 year 175,682,069.17 210,669,131.56
1-2 years 31,986,148.62 27,219,847.22
2-3 years 10,759,047.41 9,183,180.26
Over three years 17,192,062.74 11,597,879.50
Total 235,619,327.94 258,670,038.54
③ Significant accounts payable with aging exceeding 1year
Reasons for outstanding or
Item Ending balance
carry over
Hangzhou Huifeng Chemical Fiber Co., Ltd. 11,468,665.84 Margin
Employee stock ownership 2,792,780.33 Incomplete settlement
Yousheng Village, Yaqian Town, Xiaoshan City 2,136,825.00 Incomplete settlement
Zhejiang Dongxing Fire Engineering Co., Ltd. 1,400,000.00 Incomplete settlement
Total 17,798,271.17 ---
33. Non-current liabilities due within one year
Ending balance of previous
Item Ending balance
year
Long-term loans and interests mature within one
5,278,621,966.80 3,818,951,287.70
year (Notes VI. 35)
Bonds payable and interests mature within one
6,828,015.61 51,033,160.10
year (Notes VI. 36)
Lease liabilities mature within one year (Notes VI.
12,747,561.17 10,209,931.72
37)
Long-term payables and interests mature within
1,235,137,137.26 654,324,945.69
one year (Notes VI. 38)
Total 6,533,334,680.84 4,534,519,325.21
34. Other current liabilities
Ending balance of previous
Item Ending balance
year
365
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Taxes of items for write-off 90,760,675.06 180,919,015.28
35. Long-term borrowings
Ending balance of previous
Item Ending balance
year
Pledge loan 128,357,577.99 83,489,791.50
Mortgage loan 12,774,621,309.20 12,275,719,140.06
Guarantee loan 8,343,813,035.68 7,426,177,456.63
Fiduciary loan 75,000,000.00 0.00
Interests payable 63,970,080.28 29,794,585.82
Minus: Long-term loans and interests due within
one year 5,278,621,966.80 3,818,951,287.70
(Notes VI, 33)
Total 16,107,140,036.35 15,996,229,686.31
Note: For asset classes and amounts of mortgaged loans, please refer to Note VI. 67.
For detail category and amount of assets pledged for loan, please refer to Notes VI (67).
36. Bonds payable
(1) Bonds payable
Ending balance of previous
Item Ending balance
year
Corporate bonds 4,061,538,995.85 2,612,404,203.28
(2) Increase/decrease in bonds payable (excluding other financial instruments divided into
financial liabilities, such as preferred stock and perpetual bond)
Bond Ending balance of
Bond name Nominal Value Date of issue Issue Amount
Deadline previous year
1,000,000,000.0
Corporate bonds (20Hengyi01) 2020-03-13 3年 995,500,000.00 1,047,489,284.54
0
2,000,000,000.0
Hengyi Convertible Bond 127022 2020-10-16 6年 1,508,831,199.68 1,615,948,078.84
0
3,000,000,000.0
Hengyi Convertible Bond 127067 2022-07-21 6年 2,303,101,412.70 0.00
0
6,000,000,000.0
Subtotal -- -- 4,807,432,612.38 2,663,437,363.38
0
366
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Bond Ending balance of
Bond name Nominal Value Date of issue Issue Amount
Deadline previous year
Minus: Partial year-end balance due
-- -- -- -- 51,033,160.10
within one year (Note VI. 33)
6,000,000,000.0
Total -- -- 4,807,432,612.38 2,612,404,203.28
0
(Continued)
Repayment or Interest paid
Accrued in current
Issuance in current Discounted stock
Bond name interest at face period Ending balance
period amortization conversion in
value
current period
Corporate bonds 58,900,000.0
0.00 9,853,837.48 -1,594,048.72 999,189,000.00 848,170.74
(20Hengyi01) 0
Hengyi Convertible Bond 1,705,891,393.
0.00 9,029,330.83 -88,920,607.02 7,310.05 7,999,312.80
127022 84
Hengyi Convertible Bond 2,361,627,446.
2,303,101,412.70 3,000,000.00 -55,526,034.18 0.00 0.00
127067 88
- 66,899,312.8 4,068,367,011.
Subtotal 2,303,101,412.70 21,883,168.31 999,196,310.05
146,040,689.92 0 46
Minus: Partial year-end
balance due within one -- -- -- -- -- 6,828,015.61
year (Note VI. 33)
- 66,899,312.8 4,061,538,995.
Total 2,303,101,412.70 21,883,168.31 999,196,310.05
146,040,689.92 0 85
37. Lease liabilities
Increase in current period
Ending balance Decrease in
Item Interest for Ending balance
of previous year current period
New Lease the current Others
period
Land use right 362,979,372.62 9,163,663.00 0.00 47,229,045.37 -7,385,295.89 426,757,376.88
Buildings 27,376,082.39 12,784,416.33 107,673.47 -10,886,564.28 12,106,045.33 17,275,562.58
Minus: Lease liabilities due
within one year (Note VI. 10,209,931.72 -- -- -- -- 12,747,561.17
33.)
Total 380,145,523.29 21,948,079.33 107,673.47 36,342,481.09 4,720,749.44 431,285,378.29
38. Long-term payables
367
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Ending balance of previous
Item Ending balance
year
Long-term payables 1,433,381,038.10 952,254,861.09
Special payables 0.00 0.00
Total 1,433,381,038.10 952,254,861.09
(1) Long-term payables
Ending balance of
Item Ending balance
previous year
Financing lease payable 2,668,518,175.36 1,606,579,806.78
Minus: Partial balance due within one year (Note VI. 33.) 1,235,137,137.26 654,324,945.69
Total 1,433,381,038.10 952,254,861.09
39. Estimated liabilities
Ending balance of previous
Item Ending balance Reason
year
See Notes XII, 1 for
Pending action 213,630.54 360,508.08
detail.
40. Deferred income
Ending
Increase in Decrease in
Item balance of Ending balance Reason
current period current period
previous year
203,804,991.7 231,197,027.4
Government grants 44,774,409.45 17,382,373.75 Assets-related
2 2
Government grants 3,842,635.23 5,356,350.00 1,982,904.60 7,216,080.63 Income-related
207,647,626.9 238,413,108.0
Total 50,130,759.45 19,365,278.35
5 5
Items involving governmental subsidies:
368
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Amount
included Amount
Amount of Othe Assets-
in non- included in
Ending balance new subsidies r Ending related/
Subsidized Items operating other income
of previous year for the current chan balance Income-
income in in current
period ges related
current period
period
Development, modification
Income-
and corresponding 3,842,635.23 5,356,350.00 0.00 1,982,904.60 0.00 7,216,080.63
related
industrialization projects
Special rewards for Assets-
32,786,092.49 6,130,500.00 0.00 2,129,799.42 0.00 36,786,793.07
significant industry projects related
Subsidies for boiler cleaner Assets-
10,143,915.56 0.00 0.00 1,560,602.39 0.00 8,583,313.17
transformation related
Subsidies for automation Assets-
3,895,375.77 1,658,600.00 0.00 710,096.32 0.00 4,843,879.45
projects related
Functional fiber
Assets-
technological transformation 34,838,770.82 10,000,000.00 0.00 4,600,138.91 0.00 40,238,631.91
related
projects
Assets-
Fixed assets refund 223,183.70 0.00 0.00 223,183.70 0.00 0.00
related
Technological transformation
Assets-
projects in manufacturing 19,456,716.58 26,771,976.12 0.00 5,296,988.92 0.00 40,931,703.78
related
enterprises
Assets-
Special equipment subsidies 6,322,580.65 0.00 0.00 677,419.36 0.00 5,645,161.29
related
Assets-
Industrial robot projects 1,159,889.50 0.00 0.00 124,194.72 0.00 1,035,694.78
related
Internet digital factory Assets-
287,341.68 0.00 0.00 28,033.34 0.00 259,308.34
projects related
Assets-
Land compensation 94,500,000.00 0.00 0.00 2,000,000.00 0.00 92,500,000.00
related
Assets-
Others 191,124.97 213,333.33 0.00 31,916.67 0.00 372,541.63
related
238,413,108.0
Total 207,647,626.95 50,130,759.45 0.00 19,365,278.35 0.00 --
5
41. Share capital
369
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Increase/decrease in current period (+, -)
Ending balance
Item Capital reserve Ending balance
of previous year Issue of new Bonus
converted into Others Subtotal
shares shares
share capital
Sum of 3,666,280,014.0
0.00 0.00 0.00 792.00 792.00 3,666,280,806.00
shares 0
Note: The share conversion period of “Hengyi Convertible Bonds” (bond code: 127022) is
from April 22, 2021 to October 15, 2026. In 2022, totally 89 “Hengyi Convertible Bonds” were
transferred, converted into 792 shares of “Hengyi Petrochemical”. An amount of RMB 792.00
share capital is increased in the Company. At the same time, an amount of RMB 8,065.36
capital reserve – capital premium is increased.
42. Other equity instruments
Ending balance of previous Decrease in
Outstanding Increase in current period Ending balance
year current period
Financial
Instruments Quanti Book
Quantity Book value Quantity Book value Quantity Book value
ty value
Equity part of
30,000,00 680,577,832.5 49,998,27 1,159,082,382.3
convertible 19,998,361 478,506,692.86 89 2,143.06
0 8 2 8
corporate bonds
Note: For the equity part of convertible corporate bonds decreased in current period, please
refer to Note VI. 41.
43. Capital reserve
Ending balance of Increase in current Decrease in
Item Ending balance
previous year period current period
Capital premiums 11,351,646,479.39 8,065.36 147,916.45 11,351,506,628.30
Other capital reserves 139,543,291.32 8,934,905.23 45,985.84 148,432,210.71
Capital reserves generated by
simulation of shareholding
structure and quantity -2,329,301,104.61 0.00 0.00 -2,329,301,104.61
Total 9,161,888,666.10 8,942,970.59 193,902.29 9,170,637,734.40
Note 1: An amount of RMB 8,065.36 is increased for capital reserves - capital premiums.
Please refer to Note VI. 41 for details.
Note 2: In current period, capital reserves - capital premiums are decreased by an amount of
RMB 147,916.45, due to the reduction in commission charges resulted from stock repurchase.
370
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Note 3: In current period, capital reserve - others are increased by RMB 8,934,905.23, due to
the increase in other capital reserves of the associated enterprise China Zheshang Bank Co.,
Ltd. The capital reserves of the Company are increased by RMB8,934,905.23 according to the
equity method.
Note 4: In current period, capital reserves - others are decreased by an amount of RMB
45,985.84, due to the compromise between Zhejiang Shuangtu and the litigation-related client
before being purchased by the Company. The compromise reduced the losses of Shuangtu
Company, and such losses shall be confirmed as capital reserve in the consolidated statement.
44. Treasury stock
Ending balance Increase in current Decrease in
Item Ending balance
of previous year period current period
Stock repurchase via centralized bidding 718,150,457.23 765,416,280.75 0.00 1,483,566,737.98
Note: In this reporting period, the Company has increased an amount of RMB 765,416,280.75
treasury stock by means of centralized bidding.
45. Other comprehensive income
Amount incurred in current period
Minus:
At end of the Recorded into
Amount other Ending
Item previous year Assigned to Assigned to
incurred before comprehensive Minus:
Parent minority Balance
Balance income tax for income in the Income tax
Company after shareholders
the current earlier stage expenses
tax after tax
period and rolled into
current profits
and losses
I. Other
comprehensive
income that
0.00 0.00 0.00 0.00 0.00 0.00 0.00
cannot be re-
classified into
profit and loss
Wherein: Re-
measurement
profits or losses 0.00 0.00 0.00 0.00 0.00 0.00 0.00
of a defined
benefit plan
Other
comprehensive
income cannot
be recognized 0.00 0.00 0.00 0.00 0.00 0.00 0.00
in profit and
loss by equity
law
371
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Amount incurred in current period
Minus:
At end of the Recorded into
Amount other Ending
Item previous year Assigned to Assigned to
incurred before comprehensive Minus:
Parent minority Balance
Balance income tax for income in the Income tax
Company after shareholders
the current earlier stage expenses
tax after tax
period and rolled into
current profits
and losses
II. Other
comprehensive
- 1,448,198,495.2 - 1,451,779,958.8
income to be re- -24,165,232.05 22,095,754.39 380,920,744.19
1,070,859,214.62 8 1,511,985.87 1
classified into
profit and loss
Wherein: Other
comprehensive
income can be
recognized in 23,310,920.81 113,864,235.38 0.00 0.00 99,931,282.10 13,932,953.28 123,242,202.91
profit and loss
under equity
method
Effective part
of cash-flow -
-16,915,662.44 -32,287,505.91 -24,165,232.05 -4,627,201.60 -1,983,086.39 -21,542,864.04
hedge profits 1,511,985.87
and losses
Exchange
differences
from - 1,366,621,765.8 1,356,475,878.3
0.00 0.00 10,145,887.50 279,221,405.32
translation of 1,077,254,472.99 1 1
financial
statements
Total (other
- 1,448,198,495.2 - 1,451,779,958.8
comprehensive -24,165,232.05 22,095,754.39 380,920,744.19
1,070,859,214.62 8 1,511,985.87 1
income)
46. Appropriative reserve
Ending balance of Increase in current Decrease in current
Item Ending balance
previous year period period
Production safety
0.00 66,593,026.55 66,593,026.55 0.00
expenses
Note: Both increase and decrease in special reserves in this reporting period are calculated and
utilized production safety expenses.
47. Earned surplus
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Ending balance of Increase in current Decrease in current
Item Ending balance
previous year period period
Legal surplus 751,895,667.87 29,805,951.31 0.00 781,701,619.18
Note: In accordance with the Company Law and the Articles of Association of the Company,
the Company shall withdraw legal surplus by 10% of its net profits. Legal surplus will not be
withdrawn any more, when its accumulated amount reaches over 50% of the Company’s
registered capital.
48. Undistributed profit
Item Current Period Prior Period
Undistributed profits at the end of previous year
13,623,601,273.27 11,403,002,797.32
before adjustment
Total amount of undistributed profits at the end of the
-29,714,854.19 0.00
previous year after adjustment (+/-)
Undistributed profits at the end of the previous year
13,593,886,419.08 11,403,002,797.32
after adjustment
Plus: Net profits assigned to the parent company’s
-1,079,547,699.72 3,378,328,289.28
shareholders in current period
Minus: Legal surplus withdrawal 29,805,951.31 91,243,496.70
Withdrawal of any legal surplus 0.00 0.00
Withdrawal of common risk reserves 0.00 0.00
Common stock dividends payable 714,984,128.60 1,089,964,300.35
Dividends transferred to capital 0.00 0.00
Plus: Others 2,088,871.47 -6,236,870.47
Undistributed profits at the end of the period 11,771,637,510.92 13,593,886,419.08
49. Operating income and operating cost
Amount incurred in current period Amount incurred in previous period
Item
Revenue Cost Revenue Cost
147,658,124,585.5 128,869,822,896.6 121,736,466,612.6
Main business 151,033,877,489.07
2 7 6
Other businesses 1,016,397,455.57 857,385,936.86 797,108,898.59 590,710,613.97
373
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Amount incurred in current period Amount incurred in previous period
Item
Revenue Cost Revenue Cost
148,515,510,522.3 129,666,931,795.2 122,327,177,226.6
Total 152,050,274,944.64
8 6 3
50. Tax and associate charge
Amount incurred in current Amount incurred in previous
Item
period period
Consumption tax 2,281,758.47 2,787,152.86
Urban maintenance and construction tax 34,209,769.24 65,590,454.61
Education surcharge 14,778,808.23 28,203,251.69
Property tax 45,934,982.23 31,798,198.04
Land use tax 20,656,922.96 14,992,349.39
Vehicle and vessel use tax 132,337.88 94,474.69
Stamp tax 96,476,768.46 57,703,181.07
Local education surcharge 9,852,512.83 18,900,490.23
Water conservancy construction funds 107,209.29 3,473,198.38
Others 2,062,042.91 2,605,294.11
Total 226,493,112.50 226,148,045.07
Note: For detail payment standard for various taxes and surcharges, please refer to Note V.
“Taxes”.
51. Selling expenses
Item Amount incurred in current period Amount incurred in previous period
Import & export charges 80,703,510.03 77,772,150.15
Staff Salaries 105,863,328.67 102,828,797.93
Insurance 18,242,399.53 1,099,472.73
Storage charges 6,890,273.57 17,059,401.49
Business entertainment 1,386,492.92 1,619,634.71
374
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Item Amount incurred in current period Amount incurred in previous period
Travel expenses 3,588,383.56 3,350,338.43
Vehicle expenses 1,704,177.86 1,559,735.76
Rental expenses 1,024,141.89 800.00
Office expenses 1,098,049.00 1,096,892.62
Handling charges 3,629,779.27 3,338,845.67
Agency fees 1,073,079.70 2,113,272.34
Others 22,240,133.81 16,242,042.21
Total 247,443,749.81 228,081,384.04
52. Administration expenses
Amount incurred in previous
Item Amount incurred in current period
period
Staff Salaries 380,611,106.77 383,637,195.81
Intangible assets amortization cost 44,717,399.78 42,033,555.98
Fixed assets depreciation expenses 264,912,054.87 233,237,775.08
Business entertainment 7,534,601.57 8,440,639.17
Vehicle expenses 14,199,552.08 13,840,430.78
Environmental expenditure 14,099,876.20 14,482,753.74
Office expenses 12,719,117.63 12,242,075.43
Agency fees 23,525,506.07 26,294,122.66
Travel expenses 9,618,696.43 12,128,511.44
Rental expenses 31,059,048.43 66,463,358.90
Repair charges 104,455,800.29 117,276,476.32
Premiums for property insurance 30,266,565.27 31,318,221.28
Transportation and storage fees 64,342,751.65 50,588,101.98
Others 82,924,906.66 75,284,439.96
375
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Amount incurred in previous
Item Amount incurred in current period
period
Total 1,084,986,983.70 1,087,267,658.53
53. R&D expenses
Item Amount incurred in current period Amount incurred in previous period
Direct investment cost 422,987,682.39 533,064,525.62
Staff Salaries 138,713,533.15 88,592,180.79
Depreciation expenses 45,568,357.41 22,475,912.22
Technical development cost 20,972,568.77 6,552,285.65
Other expenses 40,463,886.85 36,295,313.70
Total 668,706,028.57 686,980,217.98
54. Financial expenses
Item Amount incurred in current period Amount incurred in previous period
Interest expense 2,682,684,624.12 2,098,777,291.01
Minus: Interest income 193,688,404.54 166,560,838.30
Profit or loss on exchange -66,292,681.05 -26,965,852.84
Bank charges 364,993,956.67 228,325,949.07
Total 2,787,697,495.20 2,133,576,548.94
55. Other incomes
Amount included in
Amount incurred non-recurring
Amount incurred in
Item in previous profits and losses
current period
period for the current
period
Governm ental subsidies related to daily enterprise activities 234,911,502.58 330,605,860.76 179,160,942.58
Return of withhold individual income tax
1,330,974.63 1,658,393.07 0.00
commission charges
Total 236,242,477.21 332,264,253.83 179,160,942.58
Governmental subsidies related to daily enterprise activities are described in detail as follows:
376
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Amount included
Amount incurred in non-recurring
Amount incurred Assets-related/
Item in previous profits and losses
in current period Income-related
period for the current
period
Assets-related subsidies 17,382,373.75 15,136,473.43 17,382,373.75 Assets-related
Income-related deferred income 1,982,904.60 35,564.77 1,982,904.60 Income-related
“Head Goose” policy support
7,657,500.00 40,558,800.00 7,657,500.00 Income-related
rewards
Rewards for high-tech enterprise 300,000.00 630,000.00 300,000.00 Income-related
Environmental protection
121,900.00 17,771,700.00 121,900.00 Income-related
subsidies
Rewards for infrastructure 181,422.20 18,053,400.00 181,422.20 Income-related
Subsidies for merger and
0.00 5,000,000.00 0.00 Income-related
reorganization of enterprises
Subsidies for scientific and
66,800,000.00 93,325,163.22 66,800,000.00 Income-related
technological innovation
Rewards for trade companies 11,386,675.00 18,527,895.20 11,386,675.00 Income-related
Subsidies for high-quality
0.00 900,000.00 0.00 Income-related
enterprise management
Rewards for issuance of
0.00 2,000,000.00 0.00 Income-related
enterprise bonds
Tax refund 58,170,985.10 53,583,569.78 2,420,425.10 Income-related
Employment-related subsidies 14,697,824.54 5,775,947.22 14,697,824.54 Income-related
Policy support funds -7,673,592.73 38,965,364.85 -7,673,592.73 Income-related
Intelligent manufacturing funds 1,100,000.00 90,000.00 1,100,000.00 Income-related
Headquarters regress subsidies 2,958,600.00 13,665,500.00 2,958,600.00 Income-related
Special funds for promotion of
34,050,000.00 0.00 34,050,000.00 Income-related
industrial structure adjustment
Rewards for manufacturing
1,470,000.00 0.00 1,470,000.00 Income-related
enterprises
Working capital subsidy 15,575,600.00 0.00 15,575,600.00 Income-related
377
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Amount included
Amount incurred in non-recurring
Amount incurred Assets-related/
Item in previous profits and losses
in current period Income-related
period for the current
period
Investment promotion 1,500,000.00 0.00 1,500,000.00 Income-related
Others 7,249,310.12 6,586,482.29 7,249,310.12 Income-related
Total 234,911,502.58 330,605,860.76 179,160,942.58 --
Note: For government subsidies related to assets and deferred income related to income, please
refer to Note VI. 40. Deferred Income for details.
56. Investment income
Amount incurred in Amount incurred in
Item
current period previous period
Income from long-term equity investment checked with
823,499,882.13 625,843,764.66
equity method
Investment income generated by disposal of long-term equity
159,238,486.18 5,800,392.52
investment
Investment income generated by disposal of held-for-trading
-237,478,291.99 437,755,991.43
financial assets
Total 745,260,076.32 1,069,400,148.61
57. Income from fair value changes
Amount incurred in Amount incurred in
Source of income from fair value changes
current period previous period
Financial assets measured at fair value through profit and
-165,711,256.97 45,191,254.26
loss
Wherein: Income from fair value change generated by
-165,711,256.97 45,191,254.26
derivative financial instruments
Financial liabilities measured by fair value and whose
-41,547,937.87 -1,039,942.85
changes included in current profits and losses
Hedging business -4,177,289.52 -1,179,643.73
Total -211,436,484.36 42,971,667.68
58. Credit impairment losses
378
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Amount incurred in Amount incurred in
Item
current period previous period
Bad debt loss on receivables -454,388.44 553,207.17
Bad debt loss on other receivables -647,397.13 -470,449.11
Total -1,101,785.57 82,758.06
59. Assets impairment loss
Amount incurred in Amount incurred in
Item
current period previous period
Loss on inventory depreciation -361,681,414.01 -137,994,128.08
Loss on impairment of fixed assets -6,996,027.02 -13,112,874.03
Total -368,677,441.03 -151,107,002.11
60. Income from assets disposal
Amount included in
non-recurring profits
Amount incurred in Amount incurred in and losses for the
Item
current period previous period current period
Profits or losses from disposal of
-23,661,125.27 -16,639,589.77 -23,661,125.27
fixed assets
Gains or losses from disposal of
0.00 17,953.45 0.00
intangible assets
Total -23,661,125.27 -16,621,636.32 -23,661,125.27
61. Non-operating income
Amount included in
non-recurring profits
Amount incurred in Amount incurred in and losses for the
Item
current period previous period current period
Gains from damage and scrapping of
0.00 6,027.52 0.00
non-current assets
Wherein: Fixed assets 0.00 6,027.52 0.00
Intangible assets 0.00 0.00 0.00
379
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Amount included in
non-recurring profits
Amount incurred in Amount incurred in and losses for the
Item
current period previous period current period
Governmental subsidies irrelevant to
710,041.57 668,904.68 710,041.57
daily enterprise activities
Income from indemnities and fines 6,654,298.45 8,419,939.76 6,654,298.45
Non-payable current accounts 1,331,685.07 18,342,279.33 1,331,685.07
Others 6,247,228.14 4,590,072.98 6,247,228.14
Total 14,943,253.23 32,027,224.27 14,943,253.23
Governmental subsidies are described in detail as follows:
Amount incurred in Amount incurred in Assets-related
Subsidized Items
current period previous period /Income-related
IRAS Jobs Support Scheme -
601,143.99 568,096.34 Income-related
COVID19
Others 108,897.58 100,808.34 Income-related
Total 710,041.57 668,904.68 --
62. Non-operating expenses
Amount included in
non-recurring profits
Amount incurred in Amount incurred in and losses for the
Item
current period previous period current period
Loss on damage and scrapping of
6,640,525.86 1,719,238.76 6,640,525.86
non-current assets
Wherein: Fixed assets 6,640,525.86 1,719,238.76 6,640,525.86
Intangible assets 0.00 0.00 0.00
Expenditure of donation 6,922,110.90 16,325,574.78 6,922,110.90
Overdue fine and fine 3,654,114.74 911,181.49 3,654,114.74
Abnormal loss 0.00 244,316.31 0.00
380
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Amount included in
non-recurring profits
Amount incurred in Amount incurred in and losses for the
Item
current period previous period current period
Others 3,044,839.29 511,786.27 3,044,839.29
Total 20,261,590.79 19,712,097.61 20,261,590.79
63. Income tax expenses
(1) Table of income tax expenses
Amount incurred in previous
Item Amount incurred in current period
period
Income tax expenses in current period 45,178,553.83 367,901,689.65
Deferred income tax expenses -230,035,312.37 -24,343,671.69
Total -184,856,758.54 343,558,017.96
(2) Accounting profit and income tax expense adjustment process
Amount incurred in current
Item
period
Total profits -1,109,255,567.78
Income tax expenses calculated by legal/applicable tax rate -277,313,891.95
Influence of subsidiary applicable to different tax rates -96,762,965.05
Influence of adjustment to income tax in previous periods -7,627,257.76
Influence of nontaxable income -104,052,702.36
Influence of non-deductible cost, expense and loss -6,415,962.35
Influence of deductible loss on the use of previously unconfirmed deferred
-26,137,235.23
income tax assets
Influence of deductible temporary difference or deductible loss on
374,785,149.58
unconfirmed deferred income tax assets in current period
Change in the balance of deferred income tax assets/ liabilities due to tax rate
0.00
adjustment
Influence of weighted deduction cost, expense and other items allowed to
-49,898,280.36
deduct by tax law
381
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Amount incurred in current
Item
period
Others 8,566,386.94
Income tax expenses -184,856,758.54
64. Other comprehensive income
See Notes VI. 45 for detail.
65. Items in cash flow statement
(1) Reception of other cash related to business activities
Amount incurred in Amount incurred in
Item
current period previous period
Receivables and payables 1,739,551.19 32,860,194.35
Margin and deposit 144,266,262.60 15,225,395.26
Government grants 249,608,718.75 328,935,252.74
Interest income 130,714,288.20 150,359,760.74
Indemnities and fines 6,333,085.21 8,419,939.76
Judicial freezing 10,503,440.47 7,336,220.00
Bank bill margin 5,572,609.84 0.00
L/G deposit 32,068,223.09 0.00
Others 6,302,301.71 11,441,776.27
Total 587,108,481.06 554,578,539.12
(2) Payment of other cash related to business activities
Amount incurred in Amount incurred in
Item
current period previous period
Receivables and payables 24,310,168.76 50,990,396.24
Office expenses 11,770,134.03 13,338,968.05
Import & export charges 97,966,065.18 77,410,944.06
Bank charges 265,497,302.14 224,690,871.29
Business entertainment 6,936,808.59 10,060,273.88
382
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Amount incurred in Amount incurred in
Item
current period previous period
Vehicle expenses 18,316,260.47 15,400,166.54
Environmental expenditure 11,778,965.14 14,482,753.74
Margin and deposit 86,429,498.96 95,747,559.13
Operating license fee 10,376,076.19 11,025,525.45
Agency fee 29,280,458.44 24,425,724.39
Travel expenses 13,168,292.46 15,478,849.87
Rental expenses 26,120,029.25 66,464,158.90
Frozen fund 25,169,796.00 9,596,271.15
Repair charges 105,146,816.30 117,276,476.32
Insurance 43,564,927.95 31,318,221.28
Transportation, storage and handling charges 54,051,957.63 72,085,821.87
Expenditure of donation 6,813,000.00 16,325,574.78
Others 85,815,740.71 81,900,679.08
Total 922,512,298.20 948,019,236.02
(3) Reception of other cash related to investment activities
Amount incurred in Amount incurred in
Item
current period previous period
Income from consigned loan and interest on capital
51,574,324.99 52,406,117.49
lending by related parties
Futures margin recovery 47,083,441.68 0.00
L/G margin recovery 276,000,000.00 0.00
Total 374,657,766.67 52,406,117.49
(4) Payment of other cash related to investment activities
Amount incurred in Amount incurred in
Item
current period previous period
L/G deposit 0.00 276,000,000.00
383
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Amount incurred in Amount incurred in
Item
current period previous period
Net cash received by disposal of subsidiary (negative) 100,000.00 14,354,735.85
Futures margin recovery 31,048,462.70 0.00
Others 424.19 0.00
Total 31,148,886.89 290,354,735.85
(5) Reception of other cash related to financing activities
Amount incurred in Amount incurred in
Item
current period previous period
Withdrawal of monetary funds pledged for financing 1,019,866,989.49 977,985,563.01
Collection of financing leaseback 2,075,000,000.00 1,300,000,000.00
Interbank borrowing from Hengyi Group 4,133,189,471.00 3,369,661,700.09
Others 16,000,000.00 14,314,978.66
Total 7,244,056,460.49 5,661,962,241.76
(6) Payment of other cash related to financing activities
Amount incurred Amount incurred
Item
in current period in previous period
Monetary funds pledged for financing 1,593,104,467.79 1,322,103,655.96
Repayment of loan principal and interest of Hengyi Group 4,126,142,959.89 3,369,661,700.09
Stock repurchase 765,564,197.20 368,331,313.73
Rental expenses and commission charges paid for financing leaseback 1,126,017,003.66 854,479,952.84
Lease margin for financing leaseback 116,500,000.00 3,347,897.56
Loan commission 101,642,305.39 10,290,077.78
Rental expenses paid for lease liabilities 29,061,128.46 35,555,412.10
Others 1,426,000.00 1,930,000.00
Total 7,859,458,062.39 5,965,700,010.06
66. Further information about cash flow statements
(1) Further information about cash flow statement
384
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Amount incurred in Amount incurred in
Further Information
current period previous period
1. Adjust net profit to operating cash flow:
Net profit -924,398,809.24 3,923,448,012.52
Plus: Asset impairment reserves 368,677,441.03 151,107,002.11
Impairment loss on credit assets 1,101,785.57 -82,758.06
Depreciation of fixed assets 3,057,365,476.37 2,751,016,476.25
Depreciation of right-of-use assets 37,746,948.82 35,985,260.79
Amortization of intangible assets 80,585,704.09 75,354,585.36
Amortization of long-term deferred expenses 109,624,239.00 91,023,892.22
Loss on disposal of fixed assets, intangible assets and
23,661,125.27 16,621,636.32
other long-term assets (income listed with “-”)
Loss on scrapping of fixed assets (income listed with “-”) 6,640,525.86 1,713,211.24
Loss on fair value change (income listed with “-”) 211,436,484.36 -42,971,667.68
Financial cost (income listed with “-”) 2,623,127,122.84 1,688,684,989.15
Investment losses (income listed with “-”) -745,260,076.32 -1,069,400,148.61
Decrease in deferred income tax assets (increase listed
-225,671,514.74 -1,489,805.99
with “+”)
Increase in deferred income tax liabilities (decrease
-4,365,912.78 -22,853,865.70
listed with “-”)
Decrease in inventory (increase listed with “-”) -1,704,647,587.22 -2,563,833,223.07
Decrease in operating receivables (increase listed with
993,927,177.80 -3,700,168,580.54
“-”)
Increase in operating payables (decrease listed with “-”) -1,263,321,017.94 6,392,922,234.48
Others 59,304,370.59 -6,556,111.39
Net cash flow from operating activities 2,705,533,483.36 7,720,521,139.40
2. Significant investment and financing activities
involving no cash receipt and payment:
Conversion of debt into capital 0.00 0.00
385
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Amount incurred in Amount incurred in
Further Information
current period previous period
Convertible corporate bonds mature within one year 0.00 0.00
Fixed assets under financing lease 0.00 0.00
3. Net changes in cash and cash equivalents:
Ending balance of cash 12,934,069,613.03 10,244,736,951.84
Minus: Cash balance at the end of previous year 10,244,736,951.84 7,186,325,948.17
Plus: Ending balance of cash equivalents 0.00 0.00
Minus: Cash equivalent balance at the end of previous
0.00 0.00
year
Net increase in cash and cash equivalents 2,689,332,661.19 3,058,411,003.67
(2) Net cash on subsidiary disposal received in current period
Item Amount
Cash or cash equivalents on subsidiary disposal received in current period 0.00
Wherein: Haining Hengqi Environmental Protection Technology Co., Ltd. 0.00
Minus: Cash and cash equivalents held by subsidiary on the date of losing control
100,000.00
right
Wherein: Haining Hengqi Environmental Protection Technology Co., Ltd. 100,000.00
Net cash received by subsidiary disposal -100,000.00
Note: The above amount has been reclassified as “other cash payments relating to investment
activities”.
(3) Composition of cash and cash equivalents
Ending balance of
Item Ending balance
previous year
I. Cash 12,934,069,613.03 10,244,736,951.84
Wherein: Cash on hand 1,118,679.20 1,296,711.32
Bank deposit payable at any time 11,714,153,408.04 9,525,027,347.46
Other monetary fund payable at any time 1,218,797,525.79 718,412,893.06
386
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Ending balance of
Item Ending balance
previous year
Payable due from Central Bank 0.00 0.00
Deposits in other banks 0.00 0.00
Due from banks 0.00 0.00
II. Cash Equivalents 0.00 0.00
Wherein: Bond investments mature within three months 0.00 0.00
III. Ending balance of cash and cash equivalents 12,934,069,613.03 10,244,736,951.84
Wherein: Cash and cash equivalents used by the parent
0.00 0.00
company or group subsidiaries under certain limitation
67. Assets with limited ownership or use right
Book value at the end of
Item Reason for restriction
the period
Monetary funds 4,399,233,129.47 Margin
Monetary funds 25,172,796.00 Judicial freezing
Pledge to open
Notes receivable 53,822,104.39
acceptance bills
Long-term equity investments 5,928,738,265.27 Mortgage loan
Leaseback financing
Fixed assets 3,804,170,108.15
lease
Fixed assets 18,130,631,539.37 Mortgage loan
Intangible assets 781,320,192.43 Mortgage loan
Intangible assets 15,360.38 Finance lease guarantees
Inventory 2,550,641,487.83 Mortgage loan
Total 35,673,744,983.29 --
68. Monetary items in foreign currency
(1) Monetary items in foreign currency
387
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Ending balance in Exchange rate for Ending balance
Item
foreign currency conversion (converted into RMB)
Monetary funds
Wherein: HKD 71,184.17 0.8933 63,588.75
USD 581,686,909.13 6.9646 4,051,216,647.33
EUR 14,106.93 7.4229 104,714.33
BND 8,184,622.74 5.1831 42,421,718.12
SGD 1,079,043.74 5.1831 5,592,791.61
Accounts receivable
Wherein: USD 817,630,221.72 6.9646 5,694,467,455.57
BND 54,599,853.33 5.1831 282,996,499.79
Other receivables
Wherein: USD 8,028,333.81 6.9646 55,914,133.65
BND 3,631,010.18 5.1831 18,819,888.86
SGD 262,311.75 5.1831 1,359,588.03
Long-term receivables
Wherein: USD 518,788.46 6.9646 3,613,154.11
Short-term loans
Wherein: USD 1,493,172,376.69 6.9646 10,399,348,334.67
BND 177,944,666.40 5.1831 922,305,000.42
Accounts payable
388
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Ending balance in Exchange rate for Ending balance
Item
foreign currency conversion (converted into RMB)
Wherein: USD 1,116,259,414.13 6.9646 7,774,300,315.96
EUR 4,269,988.96 7.4229 31,695,701.04
BND 4,823,807.10 5.1831 25,002,274.58
Other payables
Wherein: USD 4,323,553.62 6.9646 30,111,821.54
BND 1,935,823.58 5.1831 10,033,567.20
Non-current liabilities due
within one year
Wherein: USD 251,125,031.52 6.9646 1,748,985,394.53
EUR 14,017,262.00 7.4229 104,048,734.10
BND 1,334,939.91 5.1831 6,919,127.05
SGD 932,206.71 5.1831 4,831,720.60
Lease liabilities
Wherein: BND 81,899,040.00 5.1831 424,490,914.22
SGD 473,138.35 5.1831 2,452,323.38
Long-term payables
Wherein: USD 1,897,602.19 6.9646 13,216,040.21
Long-term loans
Wherein: USD 1,326,310,000.00 6.9646 9,237,218,626.00
389
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Ending balance in Exchange rate for Ending balance
Item
foreign currency conversion (converted into RMB)
EUR 85,770,545.00 7.4229 636,666,178.48
69. Hedging
Please refer to Notes VI (3. Notes to derivative financial assets).
70. Government grants
(1) Basic information about governmental subsidies
Amount recorded into
Category Amount Reported Item current profits and
losses
215,546,224.23 Other incomes 215,546,224.23
Income-related subsidies used to
compensate for related costs or losses
Non-operating
incurred 710,041.57 710,041.57
income
Income-related subsidies used to
Deferred
compensate for related costs or losses in 9,198,985.23 1,982,904.60
income
subsequent periods
Deferred
Assets-related subsidies 248,579,401.17 17,382,373.75
income
Total 474,034,652.20 235,621,544.15
(2) Return of government subsidies
Category Amount Reported Item
Financial support by Meishan Bonded Refund calculated according to the paid value-
10,210,000.00
Port Area to Ningbo Hengyi Trading added tax and income tax in 2021
VII. Consolidation scope changes
1. Business merger under the same control
In current period, there is no business merger under the same control in the Company.
2. Combination of enterprises not under the same control
In current period, there is no combination of enterprises not under the same control in the
Company.
3. Disposal of Subsidiary
(1) Control right lost by single disposal of subsidiary investment
390
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Balance between
disposal price and
Equity Equity Basis for the subsidiary’s net
Equity Control right
disposal price disposal determination of asset shares at the
Name of subsidiary disposal losing time-
proportion control right level of consolidated
mode point
(%) losing time-point statements
corresponding to
disposal investment
Haining Hengqi Completion of
Environmental Protection 0.00 50.00 Transfer May 5, 2022 shareholding 0.00
Technology Co., Ltd. rights transfer
(Continued)
Book value of Fair value of Amount of other
residual residual Determination
Proportion Gains or comprehensive
equities on the equities on the Losses on method and main
of residual income (related to
assumption of fair
equities on control right control right Remeasureme original subsidiary
Name of subsidiary losing date nt of Residual value of residual
the control losing date equity investment)
equities on the
right losing Equities by shifted into
control right
date (%) Fair Value investment profits
losing date
and losses
Haining Hengqi
Environmental Trading price
50.00 0.00 0.00 0.00 0.00
Protection Technology agreed
Co., Ltd.
4. Consolidation Scope Change due to Other Reasons
The Company has invested three (5) subsidiaries this year as follows:
Guangxi Hengyi New Materials Co., Ltd., a subsidiary of the Company, invested and
established Guangxi Free Trade Zone Yihai Port Co., Ltd., holding 66% of the shares.
Zhejiang Hengyi Petrochemical Research Institute Co., Ltd., a subsidiary of the Company,
invested and established Hangzhou Lanxing Chemical Fiber Oil Co., Ltd., holding 80% of the
shares.
Zhejiang Hengyi Logistics Co., Ltd., a subsidiary of the Company, invested and established
Lianyungang Junbo Shengda Logistics Co., Ltd., holding 100% of the shares.
Suqian Yida New Materials Co., Ltd., a subsidiary of the Company, invested and established
Suqian Hengyuan Thermal Energy Co., Ltd., holding 100% of the shares.
Suqian Yida New Materials Co., Ltd., a subsidiary of the Company, invested and established
Suqian Huida Port Co., Ltd., holding 100% of the shares.
In this reporting period, therefore, above three holding subsidiaries recorded into the scope of
consolidation are increased in the Company.
5. Information about original subsidiaries no longer consolidated in current period
391
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Shareholdin Proportion of
g ratio of parent Reason for
Former name of subsidiary Domicile Nature of business parent company’s derecognition of
company voting rights subsidiary
(%) (%)
Haining Hengqi
Wastewater recovery and
Environmental Protection Haining City 100.00 100.00 Losing control right
treatment
Technology Co., Ltd.
Continued
Total Assets at Total Liabilities Owner’s
Total assets Owner’s
the end of the at the end of the equity at the
on the Total equity on the
Former name of subsidiary previous year previous year end of the
disposal date liabilities on disposal date
previous year
the disposal
date
Haining Hengqi
Environmental Protection 100,000.00 100,000.00 0.00 0.00 0.00 0.00
Technology Co., Ltd.
Continued
Income from the end of the Total cost from the end of the
Net profit from the end of the
Former name of subsidiary previous year to the disposal previous year to the disposal
previous year to the disposal date
date date
Haining Hengqi
Environmental Protection 0.00 0.00 0.00
Technology Co., Ltd.
VIII. Equities in other subjects
1. Equities in subsidiaries
(1) Composition of enterprise group
Shareholding
Main Place ratio (%)
Name of subsidiary Domicile Nature of business Gaining method
of Business
Direct Indirect
Manufacturing of
Zhejiang Hengyi Petrochemical Hangzhou Hangzhou Establishment or
chemical fiber 100.00 0.00
Co., Ltd. City City investment
products
Manufacturing of
Zhejiang Hengyi Polymer Co., Hangzhou Hangzhou Business merger under
chemical fiber 0.00 60.00
Ltd. City City the same control
products
Manufacturing of
Zhejiang Yisheng Petrochemical Business merger under
Ningbo City Ningbo City petrochemical 0.00 70.00
Co., Ltd. the same control
products
Zhejiang Yixin Chemical Fiber Hangzhou Hangzhou Commerce and Establishment or
0.00 70.00
Co., Ltd. City City trade investment
392
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Shareholding
Main Place ratio (%)
Name of subsidiary Domicile Nature of business Gaining method
of Business
Direct Indirect
Hong Kong Yisheng
Trade and Establishment or
Petrochemical Investment Co., Hong Kong Hong Kong 0.00 70.00
consulting investment
Ltd.
Manufacturing of
Zhejiang Hengyi High-Tech Hangzhou Hangzhou Establishment or
chemical fiber 0.00 90.67
Materials Co., Ltd. City City investment
products
Commerce and Establishment or
Ningbo Hengyi Trading Co., Ltd. Ningbo City Ningbo City 0.00 70.00
trade investment
Hong Kong Tianyi International Trade and Establishment or
Hong Kong Hong Kong 0.00 100.00
Holding Co., Ltd. investment investment
Good Park International Trade and Establishment or
Hong Kong Hong Kong 0.00 100.00
Investment Co., Ltd. investment investment
Manufacturing of
Business merger under
Hengyi Industries Sdn. Bhd. Brunei Brunei petrochemical 0.00 70.00
the same control
products
Ningbo Hengyi Engineering Engineering Business merger under
Ningbo City Ningbo City 0.00 70.00
Management Co., Ltd. management the same control
Hengyi Industry International Co., Commerce and Establishment or
Singapore Singapore 0.00 70.00
Ltd. trade investment
Hengyi Petrochemical
International Co., Ltd. Commerce and Establishment or
Singapore Singapore 0.00 100.00
trade investment
(Singapore)
Zhejiang Hengyi Petrochemical Hangzhou Hangzhou Commerce and Establishment or
0.00 100.00
Sales Co., Ltd. City City trade investment
Manufacturing of
Haining Hengyi New Materials Establishment or
Haining City Haining City chemical fiber 0.00 100.00
Co., Ltd. investment
products
Electricity & heat
Haining Hengyi Thermal Power Establishment or
Haining City Haining City production and 0.00 90.00
Co., Ltd. investment
supply
Manufacturing of
Suqian Yida New Materials Co., Establishment or
Suqian City Suqian City chemical fiber 0.00 91.00
Ltd. investment
products
Quanzhou Quanzhou Manufacturing of
Fujian Yijin Chemical Fiber Co., Establishment or
City, Fujian City, Fujian chemical fiber 0.00 90.00
Ltd. investment
Province Province products
Shaoxing Shengong Packaging Shaoxing Shaoxing Wrappage Establishment or
0.00 51.00
Co., Ltd. City City production and investment
393
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Shareholding
Main Place ratio (%)
Name of subsidiary Domicile Nature of business Gaining method
of Business
Direct Indirect
processing
Zhejiang Hengyi Logistics Co., Hangzhou Hangzhou Logistics Business merger under
0.00 100.00
Ltd. City City transportation the same control
Zhejiang Hengyi International Hangzhou Hangzhou Commerce and Establishment or
100.00 0.00
Trade Co., Ltd. City City trade investment
Zhejiang Hengkai Energy Co., Hangzhou Hangzhou Commerce and Establishment or
0.00 60.00
Ltd. City City trade investment
Zhejiang Hengyi Engineering Hangzhou Hangzhou Engineering Establishment or
100.00 0.00
Management Co., Ltd. City City management investment
Manufacturing of
Zhejiang Hengyi Petrochemical Hangzhou Hangzhou Establishment or
chemical fiber 100.00 0.00
Research Institute Co., Ltd. City City investment
products
Manufacturing of
Jiaxing Yipeng Chemical Fiber Business merger under
Jiaxing City Jiaxing City chemical fiber 100.00 0.00
Co., Ltd. the same control
products
Manufacturing of
Taicang Yifeng Chemical Fiber Business merger under
Taicang City Taicang City chemical fiber 100.00 0.00
Co., Ltd. the same control
products
Manufacturing of
Zhejiang Shuangtu New Materials Hangzhou Hangzhou Business merger not
chemical fiber 100.00 0.00
Co., Ltd. City City under the same control
products
Manufacturing of
Hangzhou Yijing Chemical Fiber Hangzhou Hangzhou Business merger under
chemical fiber 0.00 100.00
Co., Ltd. City City the same control
products
Hong Kong Hengyi Logistics Co., Logistics Establishment or
Hong Kong Hong Kong 0.00 100.00
Ltd. transportation investment
Hengyi International Logistics Logistics Establishment or
Singapore Singapore 0.00 100.00
Co., Ltd. transportation investment
Zhejiang Yizhi Information Hangzhou Hangzhou Software and IT Establishment or
0.00 100.00
Technology Co., Ltd. City City service industry investment
Haining Junbo Shengming Trading Commerce and Establishment or
Haining City Haining City 0.00 100.00
Co., Ltd. trade investment
Manufacturing of
Hangzhou Yitong New Materials Hangzhou Hangzhou Establishment or
chemical fiber 0.00 60.00
Co., Ltd. City City investment
products
Shaoxing Hengyi Logistics Co., Shaoxing Shaoxing Logistics Establishment or
0.00 100.00
Ltd. City City transportation investment
394
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Shareholding
Main Place ratio (%)
Name of subsidiary Domicile Nature of business Gaining method
of Business
Direct Indirect
Qinzhou Qinzhou
Guangxi Hengyi Environmental Science and Establishment or
City, City, 0.00 100.00
Technology Co., Ltd. technology service investment
Guangxi Guangxi
Hangzhou Hangzhou Commercial Establishment or
Zhejiang Hengyi Hanlin Enterprise Management Co., Ltd . 0.00 75.00
City City service industry investment
Hainan Hainan Commerce and Establishment or
Hainan Hengjing Trading Co., Ltd. 0.00 100.00
Province Province trade investment
Qinzhou Qinzhou
Guangxi Hengyi Shunqi Trading Commerce and Establishment or
City, City, 0.00 100.00
Co., Ltd. trade investment
Guangxi Guangxi
Manufacturing of
Haining Lantai New Materials Co., Establishment or
Haining City Haining City chemical fiber 0.00 74.00
Ltd. investment
products
Commerce and Establishment or
Jiaxing Hengyu Trading Co., Ltd. Jiaxing City Jiaxing City 0.00 100.00
trade investment
Qinzhou Qinzhou Manufacturing of
Guangxi Hengyi New Materials Merger of enterprises
City, City, chemical fiber 0.00 100.00
Co., Ltd. under the same control
Guangxi Guangxi products
Zhejiang Xiaoyi Supply Chain
Management Co., Ltd. (Zhejiang Hangzhou Hangzhou Commercial Establishment or
0.00 100.00
Xiaoyi Supply Chain Management City City service industry investment
Co., Ltd.)
Ningbo Shengmao Trading Co., Commerce and Establishment or
Ningbo City Ningbo City 0.00 70.00
Ltd. trade investment
Electricity & heat
Suqian Hengyuan Thermal Energy Establishment or
Suqian City Suqian City production and 0.00 100.00
Co., Ltd. investment
supply
Water
Establishment or
Suqian Huida Port Co., Ltd. Suqian City Suqian City transportation 0.00 100.00
investment
industry
Water
Guangxi Free Trade Zone Yihai Qinzhou Qinzhou Establishment or
transportation 0.00 66.00
Port Co., Ltd. City City investment
industry
Hangzhou Lanxing Chemical Hangzhou Hangzhou Wholesale Establishment or
0.00 80.00
Fiber Oiling Agent Co., Ltd. City City business investment
Road
Lianyungang Junbo Shengda Lianyungang Lianyungan Establishment or
transportation 0.00 100.00
Logistics Co., Ltd. City g City investment
industry
(2) Important non-wholly owned subsidiaries
395
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Profits and losses Dividends distributed Balance of minority
Minority assigned to minority to minority shareholders’ equities
shareholders’ shareholder in current shareholder in current at the end of current
Name of subsidiary
shareholding ratio period period period
(%)
Ningbo Hengyi Trading Co., Ltd. 30.00 27,814,486.29 0.00 190,821,667.38
Zhejiang Hengyi Polymer Co.,
40.00 -13,726,592.77 10,000,000.00 359,285,374.40
Ltd.
Zhejiang Yisheng Petrochemical
30.00 -51,581,261.64 0.00 2,745,782,373.09
Co., Ltd.
Hengyi Industries Sdn. Bhd. 30.00 199,857,756.26 35,361,222.00 3,004,030,202.46
Zhejiang Hengyi High-Tech
9.33 1,662,426.37 56,486,111.11 413,945,232.64
Materials Co., Ltd.
(3) Main Financial Information about Important Non-wholly Owned Subsidiaries
Unit: RMB 10,000
Ending balance
Name of subsidiary
Current Non-current Current Non-current Total
Total assets
Assets assets liabilities liabilities liabilities
Ningbo Hengyi Trading Co., Ltd. 28,711.46 345,016.16 373,727.61 296,896.09 0.00 296,896.09
Zhejiang Hengyi Polymer Co.,
225,211.27 71,718.48 296,929.74 206,821.00 287.40 207,108.40
Ltd.
Zhejiang Yisheng Petrochemical
1,517,642.10 359,313.47 1,876,955.57 910,110.02 73,350.86 983,460.88
Co., Ltd.
Hengyi Industries Sdn. Bhd. 1,868,714.56 2,807,143.74 4,675,858.29 2,536,416.94 1,138,641.20 3,675,058.14
Zhejiang Hengyi High-Tech
536,774.05 535,109.86 1,071,883.91 569,560.33 58,652.38 628,212.70
Materials Co., Ltd.
(Continued)
Ending balance of previous year
Name of subsidiary
Current Non-current Current Non-current Total
Total assets
assets assets liabilities liabilities liabilities
Ningbo Hengyi Trading Co., Ltd. 55,810.48 289,585.73 345,396.21 281,265.96 0.00 281,265.96
Zhejiang Hengyi Polymer Co.,
221,425.25 71,922.42 293,347.67 197,246.45 348.23 197,594.68
Ltd.
Zhejiang Yisheng Petrochemical 1,392,502.9
401,523.04 1,794,025.97 790,186.03 90,707.08 880,893.11
Co., Ltd. 3
396
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Ending balance of previous year
Name of subsidiary
Current Non-current Current Non-current Total
Total assets
assets assets liabilities liabilities liabilities
1,449,167.7
Hengyi Industries Sdn. Bhd. 2,604,312.88 4,053,480.61 2,272,381.31 931,734.37 3,204,115.68
3
Zhejiang Hengyi High-Tech
740,333.77 518,504.88 1,258,838.65 682,879.60 78,080.15 760,959.75
Materials Co., Ltd.
(Continued)
Amount incurred in current period Balance of previous period
Name of subsidiary Total Total
Operating comprehen Operating Operating comprehe Operating
Net profit Net profit
income sive cash flow income nsive cash flow
income income
Ningbo Hengyi Trading Co., 1,148,454.0 1,332,702.9 - -
9,271.50 12,701.28 30,454.43 87,274.06
Ltd. 8 4 22,957.05 23,059.95
Zhejiang Hengyi Polymer
380,707.73 -3,431.65 -3,431.65 -28,627.14 381,008.64 10,951.88 10,951.88 81,745.69
Co., Ltd.
Zhejiang Yisheng 2,138,615.2 - - 3,030,842.3
-19,638.17 38,267.28 41,610.31 29,567.27
Petrochemical Co., Ltd. 1 17,193.75 106,204.81 2
5,631,775.0 3,594,810.0 124,738.4 115,121.9
Hengyi Industries Sdn. Bhd. 65,336.76 139,648.15 323,556.31 337,126.12
7 2 8 8
Zhejiang Hengyi High-Tech 1,325,913.8
977,880.38 1,781.81 5,687.07 75,702.98 34,108.85 40,493.31 138,091.97
Materials Co., Ltd. 7
2. Transactions that still control subsidiaries despite of change in the shares of owner's
equity in the subsidiary
In 2022, Hengyi Limited, a subsidiary of the Company, contributed a total of RMB 1.07 billion
to its subsidiary Suqian Yida New Materials Co., Ltd. (hereinafter referred to as "Suqian Yida").
Suqian Industrial Development Fund (limited partnership), another shareholder of Suqian Yida,
did not increase the capital in equal proportion. After the capital increase, the paid-in capital
of Suqian Yida was up to RMB 1.85 billion, and the proportion of equity held by Hengyi
Limited in Suqian Yida increased from 88.42% to 91%.
3. Equities in cooperative enterprise or associated enterprise
(1) Important cooperative enterprises or associated enterprises
397
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Shareholding ratio Accountant
(%) arrangement
method for
investment in
Name of cooperative enterprise or Main place
Domicile Nature of business cooperative
associated enterprise of business enterprise or
Direct Indirect associated
enterprise
Chemical raw
materials and
Zhejiang Baling Hengyi Caprolactam
Xiaoshan Xiaoshan chemical products 0.00 50.00 Equity method
Co., Ltd.
manufacturing
industry
Trade and
Dalian Yisheng Investment Co., Ltd. Dalian Dalian 0.00 30.00 Equity method
investment
Chemical raw
materials and
Hainan Yisheng Petrochemical Co., Ltd. Hainan Hainan chemical products 0.00 50.00 Equity method
manufacturing
industry
China Zheshang Bank Co., Ltd. Hangzhou Hangzhou Finance 0.00 3.52 Equity method
Chemical raw
materials and
Zhejiang Yisheng New Materials Co.,
Ningbo Ningbo chemical products 0.00 49.00 Equity method
Ltd.
manufacturing
industry
Note: The Company holds 3.52% stocks of China Zheshang Bank Co., Ltd., and sent a
representative to CZB’s BOD. The Company enjoys substantial right of participation in
decision making. The Company may exert significant impact on CZB by such representative’s
participating into CZB’s financial and business policy formulation.
(2) Main financial information about important cooperative enterprises
Currency unit: RMB 10,000
Ending balance/ amount in current Balance at end of the previous
period year/ amount in previous period
Item
Caprolactam Hainan Yisheng Caprolactam Hainan Yisheng
Current assets 173,189.83 515,284.65 180,585.16 569,269.63
Wherein: Cash and cash
14,264.69 101,655.70 16,799.78 83,224.96
equivalents
Non-current assets 600,320.82 719,282.44 520,779.04 576,141.87
398
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Ending balance/ amount in current Balance at end of the previous
period year/ amount in previous period
Item
Caprolactam Hainan Yisheng Caprolactam Hainan Yisheng
Total assets 773,510.65 1,234,567.09 701,364.20 1,145,411.50
Current liabilities 475,101.61 416,670.21 381,545.90 580,110.26
Non-current liabilities 86,968.64 175,299.13 58,417.43 83,564.34
Total liabilities 562,070.25 591,969.34 439,963.33 663,674.60
Minority stockholders’ equity 148.50 0.00 0.00 0.00
Stockholders’ equity attributable
211,291.90 642,597.75 261,400.87 481,736.89
to parent company
Net assets calculated by
105,645.95 321,298.87 130,700.43 265,868.45
shareholding ratio
Adjusting events 0.00 0.00 0.00 0.00
- Goodwill 0.00 0.00 0.00 0.00
- Unrealized profit of internal
0.00 -622.08 0.00 -725.76
transaction
- Others 2,010.08 9,733.73 2,010.08 9,733.73
Book value of equity investment in cooperative enterprise 107,656.03 330,410.53 132,710.51 274,876.42
Fair value of cooperative
enterprise equity investment with -- -- -- --
public offer
Operating income 753,035.72 2,271,698.29 788,167.12 1,680,459.55
Financial expenses 10,420.14 9,078.70 11,763.95 18,707.82
Income tax expenses -13,253.96 18,135.43 10,721.31 3,215.56
Net profit -35,158.38 104,001.29 32,438.83 34,217.72
Net profits of discontinuing
0.00 0.00 0.00 0.00
operation
Other comprehensive income 0.00 6,859.56 0.00 -205.86
Total comprehensive income -35,158.38 110,860.85 32,438.83 34,011.86
399
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Ending balance/ amount in current Balance at end of the previous
period year/ amount in previous period
Item
Caprolactam Hainan Yisheng Caprolactam Hainan Yisheng
Dividends from cooperative
6,729.98 0.00 5,414.50 5,250.00
enterprise received this year
(3) Main financial information about important associated enterprises
Currency unit: RMB 10,000
Balance at end of the previous year/ amount
Ending balance/ amount in current period
in previous period
Item
China China
Yisheng Yisheng New Yisheng Yisheng New
Zheshang Zheshang
Investment Materials Investment Materials
Bank Bank
Current assets 786,301.63 317,543.60 - 771,555.31 270,105.44 -
Non-current assets 967,092.10 911,354.19 - 890,924.47 887,130.26 -
262,193,000.0 228,672,300.0
Total assets 1,753,393.73 1,228,897.79 1,662,479.78 1,157,235.71
0 0
Current liabilities 902,013.51 782,318.59 - 838,736.64 546,549.00 -
Non-current liabilities 87,726.34 160,576.27 - 108,767.35 305,592.48 -
245,600,000.0 211,984,000.0
Total liabilities 989,739.85 942,894.85 947,503.99 852,141.47
0 0
Minority stockholders’ equity 106,599.31 0.00 299,700.00 107,711.92 0.00 271,400.00
Stockholders’ equity attributable to
657,054.57 286,002.94 16,293,300.00 607,263.87 305,094.23 16,416,900.00
parent company
Net assets calculated by
197,116.37 140,141.44 573,524.16 182,179.16 149,496.17 577,874.88
shareholding ratio
Adjusting events 0.00 0.00 0.00 0.00 0.00 0.00
- Goodwill 0.00 0.00 0.00 0.00 0.00 0.00
- Unrealized profit of internal
0.00 0.00 0.00 0.00 0.00 0.00
transaction
- Others 5,494.45 -0.13 -88,306.09 5,494.45 0.00 -142,884.69
400
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Balance at end of the previous year/ amount
Ending balance/ amount in current period
in previous period
Item
China China
Yisheng Yisheng New Yisheng Yisheng New
Zheshang Zheshang
Investment Materials Investment Materials
Bank Bank
Book value of equity investment in
202,610.82 140,141.31 485,217.80 187,673.61 149,496.17 434,989.92
associated enterprise
Fair value of associated enterprise
-- -- 219,932.37 -- -- 261,824.25
equity investment with public offer
Operating income 2,974,782.89 3,370,855.32 6,108,500.00 2,940,215.69 748,476.21 5,447,100.00
-
Net profit 40,524.44 25,199.76 1,398,900.00 -51,297.63 27.46 1,291,600.00
Net profits of discontinuing
0.00 0.00 0.00 0.00 0.00 0.00
operation
Other comprehensive income 8,153.65 -39.87 163,400.00 7.82 - 29,600.00
Total comprehensive income 48,678.09 -25,239.62 1,562,300.00 -51,289.81 27.46 1,321,200.00
Dividends from associated
enterprise received this year 0.00 0.00 0.00 1,575.00 0.00 12,043.92
(4) Summary of financial information about unimportant associated enterprises
Currency unit: RMB 10,000
Ending balance/ amount in Balance at end of the previous
Item
current period year/ amount in previous period
Associated enterprise:
Total book value of investment 17,114.05 29,554.58
Total (calculated by shareholding ratio)
- Net profit 974.76 729.12
- Other comprehensive income -3.31 0.00
- Total comprehensive income 971.45 729.12
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
(5) Excess losses in cooperative enterprise or associated enterprise
By the end of December 31, 2022, no excess loss takes place in the Company’s cooperative
enterprises and associated enterprises.
(6) Unconfirmed commitment related to cooperative enterprise investment
By the end of December 31, 2022, there is no unconfirmed commitment related to cooperative
enterprise investment in the Company.
(7) Contingent liabilities related to cooperative enterprise or associated enterprise investment
By the end of December 31, 2022, there is no contingent liability related to cooperative
enterprise or associated enterprise investment in the Company.
4. Equities in structural subjects excluded in the scope of consolidated financial
statement
In the Company, there is no equity in structural subject excluded in the scope of consolidated
financial statement.
IX. Risks related to financial instruments
The Company’s main financial instruments include monetary capital, financial assets measured
by fair value and whose changes included in current profits and losses, loan, accounts
receivable and accounts payable. For detail description of different financial instruments,
please refer to related items in Note VI. Risks related to these financial instruments and
corresponding risk management policies taken by the Company to mitigate such risks are
described in detail as follows. The Company’s management shall manage and monitor these
risk exposures, so as to control above risks within a limited scope.
Sensitivity analysis techniques are used by the Company to analyze probable influence of
rational and probable changes in risk variables on current profit and loss or stockholders' equity.
Risk variables seldom change separately. Correlation between different variables will have
great effect on the final influence amount of a risk variable. Therefore, the following contents
are stated upon the assumption that change of every variable takes place independently.
(I) Risk management objective and policy
The Company’s risk management objective is to appropriately balance risk and income,
minimize adverse impact of risk on the Company’s business performance, and maximize
benefits of its stockholders and other equity investors. Based on this risk management objective,
the Company’s basic strategy for the risk management is to determine and analyze different
risks, set up an appropriate risk tolerance baseline for risk management, supervise various risks
in time and reliably, and control all risks within a limited scope.
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1. risk
(1) Foreign exchange risk
Foreign exchange risk refers to the risk of loss generated by fluctuations in exchange rate. The
Company’s foreign exchange risk is mainly correlated with USD and BND. Except the
Company’s several subsidiaries that purchase and sell in USD, other main business activities
of the Company shall be settled in RMB. On December 31, 2022, most assets and liabilities of
the Company are of RMB balance (excluding the following assets or liabilities in USD and
BND). Foreign exchange risk generated by assets and liabilities in such foreign currency may
influence the Company’s business performance.
Balance at the end of previous
Ending balance
year
Item
USD BND USD BND
Cash and cash equivalents 581,686,909.13 8,184,622.74 547,247,784.70 27,826,214.79
Accounts receivable 817,630,221.72 54,599,853.33 840,996,762.49 22,453,475.80
Other receivables 8,028,333.81 3,631,010.18 6,236,866.48 4,584,383.96
Long-term receivables 518,788.46 0.00 518,788.46 0.00
1,493,172,376. 1,227,099,050.
Short-term loans 177,944,666.40 51,695,100.00
69 80
1,116,259,414. 1,154,481,981.
Accounts payable 4,823,807.10 10,642,043.33
13 82
Other payables 4,323,553.62 1,935,823.58 201,240.96 593,591.35
Non-current liabilities due
251,125,031.52 1,334,939.91 119,955,234.38 1,212,324.09
within one year
1,326,310,000.
Long-term loans 0.00 943,120,000.00 0.00
00
Long-term payables 1,897,602.19 0.00 4,086,552.93 0.00
Lease liabilities 0.00 81,899,040.00 0.00 80,360,757.05
The Company pays close attention to the influence of exchange rate fluctuations on its foreign
exchange risk. In accordance with relevant provisions, the Company shall not be engaged in
any transaction of foreign exchange derivatives for the purpose of speculation. Based on
normal production and management, all foreign exchange derivatives transactions shall depend
on specific business, so as to avoid and prevent corresponding exchange rate or interest rate
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
risks.
Foreign exchange risk sensitivity analysis:
The Company’s foreign exchange risk is mainly correlated with changes in the exchange rate
between USD & BND and RMB. The following table shows sensitivity analysis upon the
assumption of 1% exchange rate change between foreign currency and RMB related to the
Company. In the process of sensitivity analysis made by the management, 1% increase or
decrease is deemed as rational reflection of probable exchange rate change scope. On the basis
of above assumption, under the circumstance that other variables are maintained unchanged,
the influence of probable rational changes in exchange rate on current profit & loss and
stockholders' equity (before tax) is shown as follows:
Influence on Current Profit & Loss and
Fluctuation in Stockholders' Equity (Before Tax)
Item
Exchange Rate
Current Period Previous Period
Monetary assets (USD) 98,052,113.77 88,941,027.89
Appreciation of RMB
Monetary liabilities (USD) -292,031,805.33 -219,894,326.49
by 1%
Net influence -193,979,691.55 -130,953,298.60
Monetary assets (USD) -98,052,113.77 -88,941,027.89
Depreciation of RMB
Monetary liabilities (USD) 292,031,805.33 219,894,326.49
by 1%
Net influence 193,979,691.55 130,953,298.60
Monetary assets (BND) 3,442,381.07 2,588,432.17
Appreciation of RMB
Monetary liabilities (BND) -13,887,508.83 -6,817,545.53
by 1%
Net influence -10,445,127.77 -4,229,113.35
Monetary assets (BND) -3,442,381.07 -2,588,432.17
Depreciation of RMB
Monetary liabilities (BND) 13,887,508.83 6,817,545.53
by 1%
Net influence 10,445,127.77 4,229,113.35
(2) Interest rate risk – cash-flow change risk
The Company’s risk at fair value change of financial instruments caused by interest rate change
mainly comes from: When the financial market interest rate is at a downward trend, the
Company cannot enjoy cost saving for fixed-rate loans that are brought by interest-rate
reduction. On the contrary, cost will be increased for its loans at floating interest rates due to
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
rate hiking when the financial market interest rate is at an upward trend. The Company’s short-
term loans and mid-and-long-term loans account for approximately 50% of its liabilities with
interest respectively. Moreover, interest is at a fixed rate for most short-term loans, and floating
interest rates for mid-and-long-term loans. According to the Company’s management,
therefore, the Company’s interest rate risk – fair value change risk is insignificant under the
current tendency of interest rate change in macroscopic financial market. At present, there is
no interest rate hedging policy in the Company.
Interest rate risk sensitivity analysis:
Interest rate risk sensitivity shall be analyzed upon the following assumption: influence of
market interest rate changes on interest income or expense of financial instruments at variable
interest rates. For short-term loans, sensitivity analysis shall be based on continuously
circulating borrowing of such loan in an integral accounting year. During sensitivity analysis
by the management, increase/ decrease in 50 base points will be deemed as reasonable
reflection on the feasible range of interest rate change. On the basis of above assumption, under
the circumstance that other variables are maintained unchanged and that the interest rate is
increased/decreased by 50 base points, probably rational interest rate changes may have the
following influence on current profit & loss and stockholders' equity (before tax):
Profit increase in Profit decrease in
Item Interest rate change
current period current period
Short-term loans and mid-and-
long-term liabilities at fixed Increase in every 50 base points at an
interest rate 206,308,392.66 —
upward trend of interest rate
Short-term loans and mid-and-
long-term liabilities at fixed Decrease in every 50 base points at a
interest rate — 206,308,392.66
downward trend of interest rate
Mid-and-long-term liabilities at Increase in every 50 base points at an
— 102,767,945.78
floating interest rates upward trend of interest rate
Mid-and-long-term liabilities at Decrease in every 50 base points at a
102,767,945.78 —
floating interest rates downward trend of interest rate
(3) Other price risks
The Company’s investments classified into held-for-trading financial assets shall be measured
by fair value on the balance sheet. Therefore, the Company undertakes the risk of related assets
price variation The Company has established an investment management department, in which
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
members are assigned to closely monitor the price variation of investment products. In
consideration of the necessity of futures investment and relevant features of leverage risk, the
Company’s BOD authorized the president to set up a futures leading group, and authorized this
group to take charge of the Company’s futures. In addition, the Company also formulated the
train of thought of futures, specified to establish a futures trading group in the Investment
Management Department (responsible for organization and implementation of transaction in
accordance with decisions made by the futures trading group), specified to establish a futures
settlement group in the Financial Management Department (responsible for such works as
funds management, accounting treatment, transaction confirmation and settlement
management), and specified to establish a futures supervision group in the Auditing
Department (responsible for futures trading risk management & control and periodic review
for transaction behaviors). In order to strengthen its internal control over futures and to
effectively prevent and relieve probable risks in the transaction process, the Company also
formulated the Futures Business Management System, requiring all futures business
participants to operate in strict accordance with related provisions and processes. All personnel
participating into futures business in the Company have received special training, and have an
adequate understanding of corresponding features and risks of futures involved. According to
the Company’s directors, therefore, its price risk has been mitigated already.
2. Credit risks
Credit risk refers to the risk of financial loss on the other party as one party of financial
instruments fails to perform its obligations. The Company’s credit risk mainly comes from
bank deposit and receivables. In order to control above risk, the Company took the following
measures.
In order to lower its credit risk, the Company established a group for determination of credit
limit and for credit approval. The policy of payment before delivery is adopted for unapproved
clients. In addition, the Company shall also review on every balance sheet date recovery of
every single receivable, making sure to withdraw adequate bad debt reserves for unrecyclable
funds. According to the Company’s management, therefore, its credit risk has been reduced
substantially.
The Company’s working capital is saved in the bank at high credit rating. Therefore, its
working capital is at relatively low credit risk.
3. Liquidity risks
According to the Company’s management, adequate cash and cash equivalents shall be
prepared to monitor liquidity risk, so as to meet the Company’s operation needs and to lower
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
the influence from cash flow fluctuations. The Company’s management shall monitor the use
of bank loans and make sure to abide by the loan agreement.
The Company takes bank loan as the main source of funding. On December 31, 2022, the
Company’s available credit line is RMB 32.156 billion (RMB 26.901 billion on December 31,
2021).
Based on maturity of undiscounted residual contract obligations, the Company’s financial
assets and financial liabilities are analyzed as follows:
Item Within 6 months 7-12 months 1-3 Years Over three years
Non-derivative financial
assets and liabilities:
Notes receivable 242,510,954.07 4,050,000.00 0.00 0.00
Short-term loans 27,161,545,541.06 10,714,287,797.03 0.00 0.00
Notes payable 458,995,000.00 356,174,321.16 0.00 0.00
Long-term loans mature
2,626,499,359.55 2,652,122,607.25 0.00 0.00
within one year
Long-term loans 0.00 0.00 8,315,260,128.94 7,791,879,907.41
Accounts receivable
114,419,710.85 15,160,000.00 0.00 0.00
financing
Derivative financial assets
and liabilities:
Forward foreign exchange
6,943,975.24 -2,419,304.03 0.00 0.00
contract
Futures contract 183,625,602.03 1,778,285.25 0.00 0.00
Note: For the maturity of the Company’s other undiscounted financial assets and liabilities,
please refer to corresponding items in Note VI to the financial statement for details.
(II) Transfer of financial assets
1. Financial assets transferred but not derecognized integrally
This year, it is unnecessary for the Company to disclose financial assets transferred but no
derecognized integrally.
2. Transferred financial assets derecognized integrally already but still involving the
assignor
In current period, the Company accumulatively discounted an amount of RMB
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
4,632,637,495.03 bank acceptance bills (RMB 6,435,173,167.33 in 2021. Main risks (e.g.
interest rate risk) and remunerations related to these bank acceptance bills have been
transferred to the bank. Therefore, the Company shall derecognize discounted immature bank
acceptance bills. According to the cashing agreement, if the banker’s acceptance failed to be
cashed upon maturity, the bank has the right to ask the Company to pay off the unsettled
balance. Therefore, the Company continued to involve in cashing the banker’s acceptance. On
December 31, 2022, the cashed but not mature banker’s acceptance was RMB
2,384,694,492.22 in total (RMB 3,504,143,937.29 on December 31, 2021).
X. Disclosure of fair value
1. Ending fair value of assets and liabilities measured at fair value
Ending Fair Value
Item The first-tier The second- The third-tier
fair value tier fair value fair value Total
measurement measurement measurement
I. Continuous fair value measurement
(I) Held-for-trading financial assets 251,021,508.33 0.00 0.00 251,021,508.33
1. Financial assets measured by fair value
and whose changes included in current 251,021,508.33 0.00 0.00 251,021,508.33
profits and losses
(1) Debt instrument investment 0.00 0.00 0.00 0.00
(2) Equity instrument investment 0.00 0.00 0.00 0.00
(3) Derivative financial assets 251,021,508.33 0.00 0.00 251,021,508.33
2. Specified as financial assets measured by
fair value and whose changes included in 0.00 0.00 0.00 0.00
current profits and losses
(1) Debt instrument investment 0.00 0.00 0.00 0.00
(2) Equity instrument investment 0.00 0.00 0.00 0.00
(II) Derivative financial assets 1,872,460.80 0.00 0.00 1,872,460.80
(III) Held-for-trading financial liabilities 21,353,552.33 0.00 0.00 21,353,552.33
Wherein: Issued bonds held for trading 0.00 0.00 0.00 0.00
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Ending Fair Value
Item The first-tier The second- The third-tier
fair value tier fair value fair value Total
measurement measurement measurement
Derivative financial liabilities 21,353,552.33 0.00 0.00 21,353,552.33
Others 0.00 0.00 0.00 0.00
(IV) Derivative financial liabilities 41,611,858.31 0.00 0.00 41,611,858.31
2. Determination basis for market price of continuous and non-continuous first-tier fair
value measurement items
The Company’s continuous first-tier fair value measurement items mainly include its
derivative financial instruments with an active market that can obtain unadjusted offer of the
same assets or liabilities in the active market.
XI. Related parties and related-party transaction
1. Information about the Company’s parent company
Shareholding
ratio of the Percentage of
parent the parent
company in company's
Nature of Registered the Company voting rights in
Name of parent company Domicile
business capital (%) the Company
(%)
Zhejiang Hengyi Group Co., Investment and RMB 51.8
Hangzhou 40.61 47.60
Ltd. trade million
Note: The Company’s ultimate controller is Qiu Jianlin.
2. Information about the Company’s subsidiaries
For detail information, please refer to Notes VIII (1. Equities in Subsidiary).
3. Information about the Company’s cooperative and associated enterprises
Shareholding Accountant
ratio (%) Arrangement
Method for
Name of cooperative Main
Nature of Investment in
enterprise or associated place of Domicile
business Cooperative
enterprise business
Direct Indirect Enterprise or
Associated
Enterprise
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Investment
Ningbo Jinhou Industry Equity
Hangzhou Ningbo and 25.00 0.00
Investment Co., Ltd. method
consulting
Water
Dongzhan Shipping Co., Equity
Zhoushan Zhoushan transportation 0.00 30.00
Ltd. method
industry
For important cooperative and associated enterprises of the Company, please refer to Notes
VIII (3. Equities in Cooperative or Associated Enterprise).
4. Information about other related parties
Name of Other Related Party Relationship between Other Related Parties and the Company
Zhejiang Hengyi Polyamide Co., Ltd. A holding subsidiary of the ultimate parent company
Hangzhou Yichen Chemical Fiber Co.,
A holding subsidiary of the ultimate parent company
Ltd.
Shaoxing Keqiao Hengming Chemical
Associated company of ultimate parent company
Fiber Co., Ltd.
Haining Yixin Logistics Co., Ltd. Wholly-owned subsidiary of the associated enterprise
Zhejiang Rongtong Chemical Fiber New
Holding subsidiary of the associated enterprise
Materials Co., Ltd.
Yisheng Dahua Petrochemical Co., Ltd. Holding subsidiary of the associated enterprise
Hong Kong Yisheng Dahua Co., Ltd. Holding subsidiary of the associated enterprise
Hong Kong Yisheng Co., Ltd. Wholly-owned subsidiary of the joint venture
Zhejiang Rongyi Trading Co., Ltd. Wholly-owned subsidiary of the associated enterprise
Hangzhou Bayi Energy Co., Ltd. Holding subsidiary of the joint venture
Haining Hengqi Environmental
Joint venture of ultimate parent company
Protection Technology Co., Ltd.
Zhejiang Hengyi Energy Co., Ltd. A holding subsidiary of the ultimate parent company
Xin Heng Rong (HK) Limited Wholly-owned subsidiary of the joint venture
5. Information about related-party transaction
(1) Related-party transaction of commodity purchase & sale and labor provision & reception
① Information about commodity purchase / labor reception
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Contents of
Amount incurred in Amount incurred in
Related party related-party
current period previous period
transactions
Procurement of
Hainan Yisheng Petrochemical Co., Ltd. 16,318,689.67 162,724,539.89
goods
Procurement of
Yisheng Dahua Petrochemical Co., Ltd. 2,690,904,003.22 3,736,570,569.02
goods
Yisheng Dahua Petrochemical Co., Ltd. Labor reception 504.72 0.00
Zhejiang Baling Hengyi Caprolactam Procurement of
329,558,085.16 395,843,216.27
Co., Ltd. goods
Procurement of
Zhejiang Hengyi Polyamide Co., Ltd. 24,605,115.88 0.00
goods
Hangzhou Yichen Chemical Fiber Co., Procurement of
10,048,586.90 16,168,663.69
Ltd. goods
Zhejiang Yisheng New Materials Co., Procurement of
15,096,435,470.51 2,118,416,389.92
Ltd. goods
Haining Yixin Logistics Co., Ltd. Labor reception 0.00 8,924,840.50
Shaoxing Keqiao Hengming Chemical Procurement of
6,987,350,219.75 4,398,340,883.38
Fiber Co., Ltd. goods
Procurement of
Zhejiang Rongyi Trading Co., Ltd. 671,415,929.18 0.00
goods
Procurement of
Hangzhou Bayi Energy Co., Ltd. 169,237,789.57 0.00
goods
Haining Hengqi Environmental Procurement of
95,751.42 0.00
Protection Technology Co., Ltd. goods
② Information about commodity sale/ labor provision
Contents of
Amount incurred in Amount incurred in
Related party related-party
current period previous period
transactions
Zhejiang Baling Hengyi Caprolactam
Sales of goods
Co., Ltd. 950,423,022.45 1,335,024,533.02
Zhejiang Baling Hengyi Caprolactam
Labor provision 29,951,315.01
Co., Ltd. 41,807,660.81
Hainan Yisheng Petrochemical Co., Ltd. Sales of goods
2,380,871,191.28 1,125,429,557.32
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2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Contents of
Amount incurred in Amount incurred in
Related party related-party
current period previous period
transactions
Hainan Yisheng Petrochemical Co., Ltd. Labor provision 55,779.82
6,389,568.19
Zhejiang Hengyi Polyamide Co., Ltd. Sales of goods
13,117,614.46 4,266,819.10
Zhejiang Hengyi Polyamide Co., Ltd. Labor provision
7,565,474.40 7,442,086.17
Yisheng Dahua Petrochemical Co., Ltd. Labor provision 488,210.40 21,702.83
Yisheng Dahua Petrochemical Co., Ltd. Sales of goods 71,433,479.86 85,171,783.96
Hangzhou Yichen Chemical Fiber Co.,
Labor provision 21,485,237.51 22,936,669.38
Ltd.
Hangzhou Yichen Chemical Fiber Co.,
Sales of goods 4,807,243.81 3,011,757.35
Ltd.
Shaoxing Keqiao Hengming Chemical
Sales of goods 403,795,638.58 242,895,119.50
Fiber Co., Ltd.
Shaoxing Keqiao Hengming Chemical
Labor provision 93,638,375.93 45,497,278.60
Fiber Co., Ltd.
Shaoxing Keqiao Hengming Chemical Trademark use
8,905,990.74 5,728,849.96
Fiber Co., Ltd. license fee
Shaoxing Keqiao Hengming Chemical
Patent royalty 747,910.00 0.00
Fiber Co., Ltd.
Zhejiang Yisheng New Materials Co.,
Sales of goods 2,755,482,514.25 716,350,522.64
Ltd.
Zhejiang Yisheng New Materials Co.,
Labor provision 62,385,809.22 10,810,130.56
Ltd.
Zhejiang Rongtong Chemical Fiber New
Sales of goods -212,389.39 0.00
Materials Co., Ltd.
Hangzhou Bayi Energy Co., Ltd. Sales of goods 897,671,146.13 0.00
Haining Hengqi Environmental
Sales of goods 3,339,460.36 0.00
Protection Technology Co., Ltd.
(2) Information about related trusteeship management/ mandatory management
The Company as trustee
412
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Custody
Starting fee
Type of Date of recogniz
Name of the Client Name of the Trustee Entrusted Assets Entrustm ed in
ent current
period
Shaoxing Keqiao Hengming Zhejiang Hengyi Entrustment of July 25, 1,698,11
Chemical Fiber Co., Ltd. Petrochemical Co., Ltd. operation 2018 3.19
Note: Zhejiang Hengyi Petrochemical Co., Ltd. (a subsidiary of the Company) is entrusted to
provide management advisory services to the production and operating activities of Shaoxing
Keqiao Hengming Chemical Fiber Co., Ltd. However, the former will not undertake any
business risk of the client. The termination date of entrust is the date of completion when the
client is purchased by the Company or the Company’s non-related parties.
(3) Information about related-party lease
① The Company as leasee
Rental expenses Rental expenses
Category of leased
Name of lessor recognized in current confirmed in the
assets
period previous year
Hangzhou Yichen Chemical Fiber Co.,
Warehouse 661,447.12 196,243.04
Ltd.
Zhejiang Baling Hengyi Caprolactam
Property 0.00 69,314.29
Co., Ltd.
Shaoxing Keqiao Hengming Chemical
Property 12,495.41 0.00
Fiber Co., Ltd.
Shaoxing Keqiao Hengming Chemical
Property 1,280,000.00 0.00
Fiber Co., Ltd. (Note)
Note: On January 1, 2021, the Company signed a house-leasing contract with Shaoxing Keqiao
Hengming Chemical Fiber Co., Ltd., with the lease term from January 1, 2021 to December
31, 2023 and annual rentals of RMB 1.28 million.
② The Company as the leaser
Rental expenses Rental expenses
Category of leased
Name of the lessee recognized in confirmed in the
assets
current period previous year
Haining Hengqi Environmental
Premises 596,003.52 0.00
Protection Technology Co., Ltd.
413
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Rental expenses Rental expenses
Category of leased
Name of the lessee recognized in confirmed in the
assets
current period previous year
Zhejiang Hengyi Polyamide Co., Ltd. Property 4,000.00 0.00
Hainan Yisheng Petrochemical Co., Ltd. Property 1,419,145.21 0.00
Zhejiang Yisheng New Materials Co.,
Property 1,015,495.53 0.00
Ltd.
(4) Information about related-party guarantee
① The Company as guarantor
Amount guaranteed Starting date of Maturity date Guarantee
Warrantee
(RMB 10,000) guarantee of guarantee finished or not
Hainan Yisheng April 24,
35,114.17 July 5, 2022 No
Petrochemical Co., Ltd. 2023
② The Company as the warrantee
M ortgage
Guarant
Amount Borrowing Repayment provided ee
Guarantor Warrantee (RM B by the
date date finished
10,000) Company
or not
or not
Haining Hengyi New M aterials Co.,
Zhejiang Hengyi Group Co., Ltd. 90,000.00 2022-5-13 2023-12-20 No No
Ltd.
Hangzhou Yijing Chemical Fiber Co.,
Zhejiang Hengyi Group Co., Ltd. 8,800.00 2022-7-1 2023-6-30 No No
Ltd.
Hangzhou Yijing Chemical Fiber Co.,
Zhejiang Hengyi Group Co., Ltd. 46,000.00 2022-6-29 2023-9-6 No No
Ltd.
Zhejiang Hengyi Group Co., Ltd. Hengyi Petrochemical Co., Ltd. 50,000.00 2022-4-22 2023-12-15 No No
Zhejiang Hengyi Group Co., Ltd. Hengyi Petrochemical Co., Ltd. 9,996.00 2022-12-15 2023-6-15 No No
Zhejiang Hengyi Group Co., Ltd. Hengyi Industries Sdn. Bhd. 105,000.00 2022-3-18 2023-7-15 No No
Zhejiang Hengyi Group Co., Ltd. Hengyi Industries Sdn. Bhd. $30,683.37 2022-8-17 2023-6-7 No No
Zhejiang Hengyi Group Co., Ltd. and Qiu
Hengyi Industries Sdn. Bhd. 334,560.00 2018-8-23 2030-8-22 No No
Jianlin
Zhejiang Hengyi Group Co., Ltd. and Qiu
Hengyi Industries Sdn. Bhd. $87,312.00 2018-8-23 2030-8-22 No No
Jianlin
Hengyi Industry International Co.,
Zhejiang Hengyi Group Co., Ltd. $9,031.20 2022-9-26 2023-5-8 No No
Ltd.
Jiaxing Yipeng Chemical Fiber Co.,
Zhejiang Hengyi Group Co., Ltd. 30,000.00 2022-8-26 2023-9-2 No No
Ltd.
Zhejiang Hengyi Group Co., Ltd. Ningbo Hengyi Trading Co., Ltd. 41,985.00 2022-9-2 2023-11-30 No No
414
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
M ortgage Guarant
Amount provided
Guarantor Warrantee (RM B Borrowing Repayment by the ee
date date finished
10,000) Company
or not
or not
Zhejiang Hengyi Group Co., Ltd. Suqian Yida New M aterials Co., Ltd. 5,000.00 2022-3-10 2023-3-6 No No
Taicang Yifeng Chemical Fiber Co.,
Zhejiang Hengyi Group Co., Ltd. Ltd. 48,810.00 2022-7-18 2023-12-7 No No
Taicang Yifeng Chemical Fiber Co.,
Zhejiang Hengyi Group Co., Ltd. 10,000.00 2022-9-14 2023-9-26 No No
Ltd.
Zhejiang Hengyi Group Co., Ltd. Hong Kong Tianyi International $1,843.00 2022-6-28 2024-6-27 No No
Holding Co., Ltd.
Zhejiang Hengyi High-Tech M aterials
Zhejiang Hengyi Group Co., Ltd. 66,908.00 2021-11-11 2024-11-10 No No
Co., Ltd.
Zhejiang Hengyi High-Tech M aterials
Zhejiang Hengyi Group Co., Ltd. 10,000.00 2022-11-18 2023-11-15 No No
Co., Ltd.
Zhejiang Hengyi Group Co., Ltd. Zhejiang Hengyi Polymer Co., Ltd. 10,000.00 2022-8-24 2023-8-24 No No
Zhejiang Hengyi Group Co., Ltd. Zhejiang Hengyi Petrochemical Co., 40,000.00 2022-6-8 2023-7-26 No No
Ltd.
Zhejiang Hengyi Petrochemical Co.,
Zhejiang Hengyi Group Co., Ltd. 1,000.00 2015-12-30 2023-12-29 No No
Ltd.
Zhejiang Hengyi Petrochemical Co.,
Zhejiang Hengyi Group Co., Ltd. 130,200.00 2022-8-22 2023-10-8 No No
Ltd.
Zhejiang Shuangtu New M aterials
Zhejiang Hengyi Group Co., Ltd. 10,000.00 2022-2-11 2023-11-18 No No
Co., Ltd.
Zhejiang Shuangtu New M aterials
Zhejiang Hengyi Group Co., Ltd. Co., Ltd. 16,975.00 2022-9-6 2023-9-6 No No
Zhejiang Hengyi Group Co., Ltd. Zhejiang Yisheng Petrochemical Co., 347,750.00 2021-2-24 2025-11-9 No No
Ltd.
Zhejiang Yisheng Petrochemical Co.,
Zhejiang Hengyi Group Co., Ltd. 12,579.00 2022-9-27 2023-6-12 No No
Ltd.
Zhejiang Yisheng Petrochemical Co.,
Zhejiang Hengyi Group Co., Ltd. $9,809.01 2022-3-31 2023-4-27 No No
Ltd.
Haining Hengyi New M aterials Co.,
Zhejiang Hengyi Group Co., Ltd. 190,284.69 2020-1-14 2024-12-30 Yes No
Ltd.
Hangzhou Yijing Chemical Fiber Co.,
Zhejiang Hengyi Group Co., Ltd. 24,050.00 2022-4-29 2025-8-10 Yes No
Ltd.
Zhejiang Hengyi Group Co., Ltd. Hengyi Industries Sdn. Bhd. $400.00 2019-6-25 2024-9-25 Yes No
Jiaxing Yipeng Chemical Fiber Co.,
Zhejiang Hengyi Group Co., Ltd. 88,433.33 2022-4-15 2026-11-11 Yes No
Ltd.
Zhejiang Hengyi High-Tech M aterials
Zhejiang Hengyi Group Co., Ltd. 67,225.45 2021-3-8 2025-2-22 Yes No
Co., Ltd.
Zhejiang Shuangtu New M aterials
Zhejiang Hengyi Group Co., Ltd. 35,200.00 2022-1-28 2025-2-20 Yes No
Co., Ltd.
415
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
M ortgage Guarant
Amount provided
Guarantor Warrantee (RM B Borrowing Repayment by the ee
date date finished
10,000) Company
or not
or not
Zhejiang Hengyi Group Co., Ltd. and
Shaoxing Shengong Packaging Co.,
Shaoxing Shengong M achinery 5,800.00 2022-11-9 2023-12-7 Yes No
M anufacturing Co., Ltd. Ltd.
Zhejiang Hengyi Group Co., Ltd. and
Zhejiang Hengyi Petrochemical Co.,
Zhejiang Southeast Space Frame Group 5,000.00 2022-8-23 2023-8-23 No No
Ltd.
Co., Ltd.
Zhejiang Hengyi Group Co., Ltd. and
Zhejiang Hengyi Petrochemical Co., 14,992.50 2022-11-15 2023-5-25 No No
Zhejiang Southeast Space Frame Group
Ltd.
Co., Ltd.
(5) Related-party lending
Maturity
Related party Lending amount Start date Notes
date
Borrowing:
Among temporary working
capital supplemented by Hengyi
Zhejiang Hengyi Group Co.,
4,133,189,471.00 -- -- Group to the Company,
Ltd.
remaining RMB 7,355,322.62
has not been returned.
Lending:
Zhejiang Yisheng New 2022/12/2 Entrusted loan, lending rate:
1,078,000,000.00 2021/1/5
Materials Co., Ltd. 0 4.785%
Zhejiang Yisheng New 2023/12/3 Entrusted loan, lending rate:
988,000,000.00 2022/1/27
Materials Co., Ltd. 0 4.785%
(6) Information about related-party assets transfer and debt restructuring
Contents of related- Amount incurred in Amount incurred in
Related party
party transactions current period previous period
Shaoxing Keqiao Hengming
Transferred assets 0.00 25,530.26
Chemical Fiber Co., Ltd.
Zhejiang Baling Hengyi
Transferred assets 0.00 187,609.38
Caprolactam Co., Ltd.
Zhejiang Hengyi Energy Co., Ltd. Asset transfer 3,000,000.00 0.00
(7) Remunerations for key management personnel
Amount incurred in current Amount incurred in previous
Item
period period
416
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Remunerations for key management
RMB 12.4958 million RMB 12.4958 million
personnel
(8) Other related-party transactions
Through paper transaction with Hong Kong Yisheng Co., Ltd. and Hong Kong Yisheng Dahua
Co., Ltd., the Company realized total losses of USD 9,302,200.00 and USD 9,302,200.00 in
current period.
Through paper transaction with Xin Heng Rong (HK) Limited, the Company realized the total
income of USD 16,438,510.00in current period.
By the end of December 31, 2022, the Company’s and its subsidiaries’ balance of deposits is
RMB 3,679,800 in its related party, namely China Zheshang Bank Co., Ltd. The amount of
commercial draft discounted but immature at the end of the term is RMB 51 million.
6. Related parties’ receivables and payables
(1) Receivables
Ending balance of previous
Ending balance
year
Project name
Bad debt Bad debt
Book balance Book balance
provision provision
Notes receivable:
Zhejiang Baling Hengyi Caprolactam
527,200.00 0.00 2,713,741.00 0.00
Co., Ltd.
Total 527,200.00 0.00 2,713,741.00 0.00
Accounts receivable:
140,711,918.
Hainan Yisheng Petrochemical Co., Ltd. 0.00 226,858,886.34 0.00
33
Zhejiang Baling Hengyi Caprolactam
49,142.00 0.00 6,917,468.74 0.00
Co., Ltd.
Shaoxing Keqiao Hengming Chemical
0.00 0.00 12,828,512.13 0.00
Fiber Co., Ltd.
Zhejiang Yisheng New Materials Co.,
1,106,890.13 0.00 8,759,499.90 0.00
Ltd.
141,867,950.
Total 0.00 255,364,367.11 0.00
46
Advance payment:
417
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Ending balance of previous
Ending balance
year
Project name
Bad debt Bad debt
Book balance Book balance
provision provision
Zhejiang Baling Hengyi Caprolactam
5,525.28 0.00 10,064.34 0.00
Co., Ltd.
Zhejiang Rongtong Chemical Fiber New
0.00 0.00 15,306,150.00 0.00
Materials Co., Ltd.
Zhejiang Yisheng New Materials Co.,
0.00 0.00 141,341,842.00 0.00
Ltd.
Shaoxing Keqiao Hengming Chemical
0.00 0.00 821.27 0.00
Fiber Co., Ltd.
Total 5,525.28 0.00 156,658,877.61 0.00
Dividends receivable:
Dalian Yisheng Investment Co., Ltd. 0.00 0.00 79,500,000.00 0.00
Hainan Yisheng Petrochemical Co., Ltd. 0.00 0.00 265,000,000.00 0.00
Total 0.00 0.00 344,500,000.00 0.00
Other current assets:
Zhejiang Yisheng New Materials Co., 989,433,904.
0.00 1,079,576,125.83 0.00
Ltd. 99
989,433,904.
Total 0.00 1,079,576,125.83 0.00
99
(2) Payables
Ending balance of previous
Project name Ending balance
year
Accounts payable:
Zhejiang Baling Hengyi Caprolactam
9,887,234.54 32,465,816.85
Co., Ltd.
Hangzhou Yichen Chemical Fiber Co.,
0.00 569,077.20
Ltd.
Shaoxing Keqiao Hengming Chemical
3,705,778.85 32,629,365.25
Fiber Co., Ltd.
418
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Ending balance of previous
Project name Ending balance
year
Hong Kong Yisheng Dahua Co., Ltd. 0.00 28,498,358.89
Hong Kong Yisheng Co., Ltd. 0.00 28,498,358.89
Zhejiang Yisheng New Materials Co.,
6,305,312.50 0.00
Ltd.
Hangzhou Bayi Energy Co., Ltd. 1,065,580.38 0.00
Total 20,963,906.27 122,660,977.08
Contractual liabilities and other current
liabilities:
Zhejiang Baling Hengyi Caprolactam
0.00 64,356,669.84
Co., Ltd.
Hangzhou Bayi Energy Co., Ltd. 493,849.41 0.00
Zhejiang Yisheng New Materials Co.,
Ltd. 52,067,253.14 14,170,289.00
Total 52,561,102.55 78,526,958.84
Other payables:
Zhejiang Hengyi Group Co., Ltd. 7,355,322.62 0.00
Total 7,355,322.62 0.00
Non-current liabilities mature within one
year:
Shaoxing Keqiao Hengming Chemical
1,119,181.06 1,174,311.93
Fiber Co., Ltd.
Total 1,119,181.06 1,174,311.93
Lease liabilities:
Shaoxing Keqiao Hengming Chemical
0.00 1,011,507.59
Fiber Co., Ltd.
Total 0.00 1,011,507.59
XII. Commitments and Contingencies
419
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
1. Contingencies
(1) Contingent liabilities formed by pending action arbitration and its financial influence
① Criminal case of Wang XX and related civil action cases in Zhejiang Shuangtu
Since October 21, 2018, Zhejiang Shuangtu has received the notice from more than ten clients
(including Haiyan Yixiao Knitting New Materials Co., Ltd.). After the payment, the clients
never received goods delivered by Zhejiang Shuangtu, and could not get contact with Wang
XX. For the reason of the failure of Zhejiang Shuangtu to deliver after their payment, Haiyan
Yixiao Knitting New Materials Co., Ltd., Tonglu Yueheng Knitting Clothing Co., Ltd. and
Yiwu Zijing Clothing Co., Ltd. submitted a case to the court.
According to its self-inspection, Zhejiang Shuangtu has already received the payment of above
clients for goods, and finished related activities (including delivery and issuance of sales
invoice) as per the sales order. All clients failing to receive the goods were handled by Wang
XX, a salesman in Zhejiang Shuangtu. Then, the clients could not get contact with Wang XX.
On November 11, 2018, Zhejiang Shuangtu reported the case to the criminal investigation
brigade subordinate to Dajiangdong Industry Cluster District Suboffice of Hangzhou Public
Security Bureau. The case has been accepted already. On April 13, 2019, Zhejiang Shuangtu
received a notice from the public security organ: Wang XX was arrested.
Both the three civil cases related to Wang XX and the contract dispute case with Haiyan Yixiao
Knitting New Materials Co., Ltd. were opened to a court session on December 3, 2018. The
court has not made a judgment yet. As Wang XX’s criminal case is involved, Tonglu Yueheng
Knitting Clothing Co., Ltd. positively withdrew the contract dispute case, and would decide
how to solve after the criminal case was handled. For the contract dispute case with Yiwu
Zijing Clothing Co., Ltd., Zhejiang Shuangtu has submitted corresponding answer brief and
evidence materials to the court. The court will open a court session later. For the contract
dispute case with, Haiyan Yixiao Knitting New Materials Co., Ltd., the court froze RMB
300,000 deposits of Zhejiang Shuangtu.
In 2018, based on the information in the client’s letter of notice (including quantity of goods
not received), Zhejiang Shuangtu deducted an amount of RMB 26,201,814.47 from its
revenues, recorded corresponding freight cost (i.e. RMB 24,105,503.18) into “other
receivables – Wang XX”, and withdrew bad debt losses in full amount. Based on the receiving
time and amount, Zhejiang Shuangtu also withdrew an amount of RMB 433,932.50 accrued
liabilities by bank lending rates in corresponding period.
On May 17, 2019, Wang XX was arrested by law. On January 22, 2020, the People's
Procuratorate of Hangzhou Xiaoshan District initiated a public prosecution to the People's
420
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Court of Hangzhou Xiaoshan District on the charge of post occupation and contract swindling.
The case was accepted. Due to epidemic and other reasons, the court has not determined the
date yet. According to the amount involving duty-related crime as found in the indictment by
the People's Procuratorate of Hangzhou Xiaoshan District, Zhejiang Shuangtu deducted an
amount of RMB 2,414,257.32 from its revenues, and recorded corresponding freight cost (i.e.
RMB 2,138,041.91) into “other receivables – Wang XX”, and confirmed anticipated losses in
full amount. Based on the receiving time and amount, Zhejiang Shuangtu also withdrew an
amount of RMB 1,573,136.66 accrued liabilities by bank lending rates in corresponding period.
According to the Agreement on Stock Issuance for Assets Purchase and subsequent agreements
signed by and between the Company and the former shareholders of Zhejiang Shuangtu
(namely Fulida Group and Xinghui Chemical Fiber Group Co., Ltd.), Fulida Group and
Xinghui Chemical Fiber Group Co., Ltd. promise and agree to assume joint and several
liabilities to the Company and Zhejiang Shuangtu with respect to all losses on Zhejiang
Shuangtu and the Company caused by the disputed case prior to December 7, 2018 (included).
Therefore, above event will have no significant influence on the Company and Zhejiang
Shuangtu.
On July 20, 2020, the People’s Court of Hangzhou Xiaoshan District issued a paper of sentence
to judge: (1) The Defendant Wang XX is sentenced to jail for 13 years for duty encroachment
and for eleven (11) years and six (6) months for contract swindling, and also fined for RMB
150,000. Upon a combined punishment, Wang XX is sentenced to 18-year imprisonment, and
fined RMB 150,000. (2) The Defendant Wang XX is ordered to return and compensate for
economic losses to related units and the victim.
After the criminal case of Wang XX was judged, the cases deemed as duty encroachment of
related victims were also heard, judged and/or compromised. By the end of the issue date of
this report, 11 out of 13 victims from duty encroachment affirmed by the court have been
judged, compromised and settled. A total amount of RMB 936,800 is involved in other two
unsettled cases.
For the reason of compromise with some victims in 2021 and 2022, the actual repayment of
Zhejiang Shuangtu is smaller than the amount of money involved in the case as affirmed by
the court. Based on the actual expenditures to the settled case, the Company has reduced RMB
8,555,800 and RMB 54,100 compensation receivable to the two former shareholders of
Zhejiang Shuangtu, namely Fulida Group and Xinghui Chemical Fiber Group Co., Ltd.
respectively.
② Arbitration Case for EPC Contract Dispute with COOEC International Co., Limited
421
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Hengyi Industries Sdn. Bhd. (hereinafter referred to as Hengyi Brunei or Respondent), a
subsidiary of the Company, has received China International Economic and Trade Arbitration
Commission's Notice on Defense of EPC Contract Dispute Case No. P20220470. COOEC
International Co., Limited (hereinafter referred to as CNOOC International or Applicant) has
submitted an arbitration application to China International Economic and Trade Arbitration
Commission for disputes arising from the settlement of Hengyi (Brunei) PMB Petrochemical
Project Single Point Mooring and Submarine Pipeline EPC signed with Hengyi Brunei. The
main arbitration requests of CNOOC International Company involved the total amount of
RMB 116,758,196.47 from twelve claims, including payment or refund of project progress
payment, quality assurance deposit, costs incurred due to contract changes, as well as the losses
and corresponding interest and other expenses caused by the respondent during the
construction. The Company categorized and summarized the above arbitration requests and
provided defense opinions. In addition, the Company proposes arbitration counterclaims, such
as bearing corresponding compensation for delayed construction period losses due to the
serious delay in the manufacturing, delivery and installation progress of key equipment by
CNOOC, resulting in the completion of the project far behind the original contract date. The
case was heard at Zhejiang Branch of China International Economic and Trade Arbitration
Commission on July 18, 2022 and March 23, 2023, respectively. As of the disclosure date of
this report, the arbitration case has not yet been adjudicated.
③Dispute over the sales contract with Hainan Guomao Industrial Co., Ltd.
On December 28, 2022, Zhejiang Hengyi Petrochemical Sales Co., Ltd. (hereinafter referred
to as Hengyi Sales or Defendant), a subsidiary of the Company, received the subpoena of No.
(2022) Zhejiang 0109 MC 19111 from the People’s Court of Hangzhou Xiaoshan District:
Hainan Guomao Industrial Co., Ltd. (hereinafter referred to as Hainan Guomao or plaintiff)
has filed a lawsuit to terminate five contracts with Hengyi Sales, requiring Hengyi Sales to
return the payment of RMB 29,468,547.72 paid by Hainan Guomao, pay the interest calculated
from the plaintiff's payment date to the actual performance date based on the above amount
according to three times of the market interest rate for one-year loans publicized by National
Interbank Funding Center during the same period and bear the litigation costs of the case. In
February 2023, Zhejiang Yilanwen Technology Co., Ltd. was added as the third party to the
case. On March 27, 2023, the People’s Court of Hangzhou Xiaoshan District tried the case. As
of the disclosure date of this report, the case is still in the trial stage.
(2) By the end of December 31, 2022, the Company’s debt guarantee is shown as follows:
Currency unit: RMB 10,000
422
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Guaranty Amount Maturity date
Guarantor Warrantee
Style Guaranteed of guarantee
Hengyi Petrochemical Co., Hainan Yisheng Petrochemical Credit
35,114.17 2023-4-24
Ltd. Co., Ltd. guarantee
XIII. Events after the balance sheet date
By the end of the issue date of this financial report, the Company has no events after the balance
sheet date to be disclosed this year.
XIV. Other important events
1. Correction to prior period errors
There were no prior period error corrections that need to be disclosed by the Company during
this year.
2. Segment information
Segmental management is not implemented in the Company. Therefore, there is no reporting
segment.
3. Other important events
There were no other important events that need to be disclosed by the Company during this
year.
XV. Notes to main items in the company’s financial statements
1. Other receivables
Ending balance of previous
Item Ending balance
year
Interests receivable 0.00 0.00
Dividends receivable 425,000,000.00 1,169,772,962.00
Other receivables 5,601,278,001.08 3,571,633,385.78
Total 6,026,278,001.08 4,741,406,347.78
(1) Dividends receivable
Ending balance of previous
Project (or Invested Unit) Ending balance
year
Zhejiang Hengyi Petrochemical Co., Ltd. 425,000,000.00 1,079,772,962.00
423
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Ending balance of previous
Project (or Invested Unit) Ending balance
year
Jiaxing Yipeng Chemical Fiber Co., Ltd. 0.00 15,000,000.00
Taicang Yifeng Chemical Fiber Co., Ltd. 0.00 35,000,000.00
Zhejiang Shuangtu New Materials Co., Ltd. 0.00 40,000,000.00
Subtotal 425,000,000.00 1,169,772,962.00
Minus: Bad debt provision 0.00 0.00
Total 425,000,000.00 1,169,772,962.00
(2) Other receivables
① Disclosure by aging
Ending balance of
Aging Ending balance
previous year
Within 1 year 2,093,805,561.80 19,585,865.33
1-2 years 200,000.00 1,260,741,815.63
2-3 years 1,255,406,748.63 2,291,315,704.82
Over three years 2,251,878,190.65 2,500.00
Subtotal 5,601,290,501.08 3,571,645,885.78
Minus: Bad debt provision 12,500.00 12,500.00
Total 5,601,278,001.08 3,571,633,385.78
② Classification based on nature of fund
Ending balance of previous
Nature of account Ending balance
year
Related party funds within the scope of
5,601,088,001.08 3,571,443,385.78
consolidation
Portfolio of deposits and security 202,500.00 202,500.00
Subtotal 5,601,290,501.08 3,571,645,885.78
Minus: Bad debt provision 12,500.00 12,500.00
Total 5,601,278,001.08 3,571,633,385.78
424
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
③ Accrual of bad debt reserves
Stage 1 Stage 2 Stage 3
Expected credit loss Expected credit loss
Bad debt provision Expected credit over the lifetime over the lifetime Total
loss of the future (no credit (credit impairment
twelve months impairment has occurred has
occurred) occurred)
Ending balance of previous
10,000.00 0.00 2,500.00 12,500.00
year
Book balance of other
receivables at the end of the
previous year:
- Transferred to Stage 2 0.00 -- -- 0.00
- Transferred to Stage 3 0.00 0.00 -- 0.00
- Transferred back to Stage
-- -- 0.00 0.00
2
- Transferred back to Stage
-- 0.00 0.00 0.00
1
Provision in current period 0.00 0.00 0.00 0.00
Withdrawal or Roll-back in
0.00 0.00 0.00 0.00
current period
Write-off or cancellation
after verification in current 0.00 0.00 0.00 0.00
period
Other changes 0.00 0.00 0.00 0.00
Ending balance 10,000.00 0.00 2,500.00 12,500.00
④ Situation of bad debt reserves
425
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Amount of changes in current period
Ending
Ending
Category balance of Amount balance
previous year Provision recovered or Resell or write off
written back
Related party funds within
0.00 0.00 0.00 0.00 0.00
the scope of consolidation
Receivables and payables
such as advances from
0.00 0.00 0.00 0.00 0.00
entities beyond the scope
of consolidation
Combination of tax
refunds receivable and
0.00 0.00 0.00 0.00 0.00
other government
subsidies
Portfolio of deposits and
12,500.00 0.00 0.00 0.00 12,500.00
security
Employee loan and petty
0.00 0.00 0.00 0.00 0.00
cash
Other groups 0.00 0.00 0.00 0.00 0.00
Total 12,500.00 0.00 0.00 0.00 12,500.00
⑤ Other receivables with top five ending balance collected by debtor
Proportions in the Bad debt
total other provision
Nature of
Name of organization Ending balance Aging accounts
account Ending
receivable at the
year ended (%) balance
Within 1
year
Related
Zhejiang Hengyi
receivables and5,398,210,001.08 2-3 years 96.37 0.00
Petrochemical Co., Ltd.
payables
Over three
years
Related
Jiaxing Yipeng Chemical Over three
receivables and 101,700,000.00 1.82 0.00
Fiber Co., Ltd. years
payables
Related Within 1
Suqian Yida New Materials year
receivables and 101,178,000.00 1.81 0.00
Co., Ltd.
payables 2-3 years
426
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Proportions in the Bad debt
total other provision
Nature of
Name of organization Ending balance Aging accounts
account Ending
receivable at the
year ended (%) balance
Total -- 5,601,088,001.08 -- 100.00 0.00
2. Long-term equity investment
(1) Classification of long-term equity investment
Ending balance Ending balance of previous year
Impair
Item Impairm
ment
Book balance ent Book value Book balance Book value
Reserv
Reserve
e
Investment in 15,931,768,517.9
15,931,768,517.98 0.00 15,917,768,517.98 0.00 15,917,768,517.98
subsidiaries 8
Investments in
joint ventures and 14,254,625.24 0.00 14,254,625.24 14,291,804.11 0.00 14,291,804.11
associates
15,946,023,143.2
Total 15,946,023,143.22 0.00 15,932,060,322.09 0.00 15,932,060,322.09
2
(2) Investment in subsidiaries
Provisi
on for Ending
impair Balance
Decrease in
Ending balance of Increase in ment of
Investee current Ending balance
previous year current period reserves impairm
period
in ent
current reserves
period
Zhejiang Hengyi Petrochemical 10,000,000.0 9,382,870,750.0
9,372,870,750.00 0.00 0.00 0.00
Co., Ltd. 0 0
Zhejiang Hengyi International
300,000,000.00 0.00 0.00 300,000,000.00 0.00 0.00
Trade Co., Ltd.
Zhejiang Hengyi Engineering
196,000,000.00 0.00 200,000,000.00 0.00 0.00
Management Co., Ltd. 4,000,000.00
Zhejiang Hengyi Petrochemical
160,000,000.00 0.00 0.00 160,000,000.00 0.00 0.00
Research Institute Co., Ltd.
Zhejiang Shuangtu New Materials 2,104,999,978.2
2,104,999,978.20 0.00 0.00 0.00 0.00
Co., Ltd. 0
Jiaxing Yipeng Chemical Fiber 2,886,198,482.9
2,886,198,482.98 0.00 0.00 0.00 0.00
Co., Ltd. 8
427
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Provisi
on for Ending
impair Balance
Decrease in
Ending balance of Increase in ment of
Investee current Ending balance
previous year current period reserves impairm
period
in ent
current reserves
period
Taicang Yifeng Chemical Fiber
897,699,306.80 0.00 0.00 897,699,306.80 0.00 0.00
Co., Ltd.
14,000,000.0 15,931,768,517.
Total 15,917,768,517.98 0.00 0.00 0.00
0 98
(3) Investment in associated and cooperative enterprises
Changes of increase or decrease in current period
Ending balance Profits and losses Other
Investee
of previous year Additional Negative on investments comprehensiv Other Equity
investment investment confirmed by e income Changes
equity method adjustment
Associated enterprises
Ningbo Jinhou Industry
14,291,804.11 0.00 0.00 -37,178.87 0.00 0.00
Investment Co., Ltd.
(Continued)
Changes of increase or decrease in current period
Ending balance of
Investee Cash dividends or Provisions for Ending balance impairment
profits declared to impairment Others reserves
distribute reserves
Associated enterprises
Ningbo Jinhou Industry
0.00 0.00 0.00 14,254,625.24 0.00
Investment Co., Ltd.
3. Operating income and operating cost
Amount incurred in current period Amount incurred in previous period
Item
Revenue Cost Revenue Cost
Main business 1,437,239,380.54 1,413,310,442.21 3,707,241,002.32 3,572,734,835.29
Other businesses 0.00 0.00 188,679.25 0.00
Total 1,437,239,380.54 1,413,310,442.21 3,707,429,681.57 3,572,734,835.29
4. Investment income
428
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Amount incurred in current Amount incurred in previous
Item
period period
Income from long-term equity investment
0.00 744,772,962.00
checked with cost method
Income from long-term equity investment
-37,178.87 26,702.76
checked with equity method
Total -37,178.87 744,799,664.76
XVI. Further information
1. List of non-recurring profits and losses in this year
Item Amount
Profits and losses from disposal of non-current assets 128,936,835.05
Tax returns and reduction upon unauthorized approval, or without official document
24,841,218.44
of approval or accidental
Governmental subsidies recorded into current profits and losses, but closely related
to the Company’s normal business, in compliance with relevant national policy
179,870,984.15
provisions, excluding governmental subsidies continuously enjoyed in certain
standard quota or in fixed quantify
Subsidiaries’ net current profits and losses (from the end of year to the combination
0.00
date) generated by business merger under the same control
Profit or loss from contingencies irrelevant to normal business operations of the
0.00
Company
Except effective hedging business related to the Company’s normal business,
changes in fair value recognized in profit or loss due to held-for-trading financial
assets, derivative financial assets, trading financial liabilities and derivative financial
-448,914,776.35
liabilities as well as investment income obtained by disposal of trading financial
assets, derivative financial assets, trading financial liabilities, derivative financial
liabilities and other equity investments.
Roll-back of impairment reserves of accounts receivable subject to separate
0.00
impairment testing
Profits or losses from entrusted loans 48,520,852.95
Income from custodian fees obtained from entrusted operation 1,698,113.19
Other non-operating income and expense in addition to the above 612,146.73
Other profit or loss items that meet the definition of non-recurring profit and loss 17,898,857.26
429
2022 Annual Report of Hengyi Petrochemical Co., Ltd.
Item Amount
Subtotal -46,535,768.58
Income tax influence amount 91,691,403.61
Influenced amount of the minority shareholders’ equity (after-tax) -151,013,993.42
Total 12,786,821.23
Note: “+” in the column of non-recurring profit and loss stands for earnings or income, and "-" for loss or
expenditure.
Non-recurring profits and losses shall be confirmed by the Company in accordance with
relevant provisions in the Explanatory Announcement No.1 on Information Disclosure for
Companies That Offer Securities to the Public – Non-recurring Profits and Losses (ZJKGG
No. 43 [2008]).
2. Return on equity and earnings per share
Weighted average Earnings per Share
return on net assets
Profits in reporting period (%) Basic earnings
Diluted EPS
Rate of return (%) per share
Net profits assigned to the Company’s common
-4.31 -0.30 -0.30
shareholders
Net profits assigned to common shareholders after
-4.36 -0.30 -0.30
deduction of non-recurring profits and losses
Note: Due to the anti-dilution caused by the convertible corporate bonds in this period, the
diluted earnings per share are determined based on the basic earnings per share.
Hengyi Petrochemical Co., Ltd.
President: Qiu Yibo
April 20, 2023
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