Hengyi Petrochemical Brunei Project in Doubt for Refinancing Prop Up Market

Genuine ups and downs, and a Chinese petrochemical private enterprises call for overseas expansion pronouncements.

April 10, Hengyi Petrochemical (000703.SZ release announcement, said the directors of the Company meeting examined and adopted about the investment and construction PMB petrochemical project (a motion >> agreed to in the text Darussalam Mora Island investment in the construction of PMB petrochemical project.

The principal the Hengyi petrochemical owned subsidiary of Hang Yat Industrial (Brunei, Inc. as the implementation of the project, after Heng Yi Sinopec completed Cash 72.2514 million U.S. dollars acquisition of the former 90% equity.

Notice of PMB petrochemical projects in an investment estimated to be $ 4.292 billion, land use estimates 260 hectares reserved for the reclamation site, the construction of 800 tons / year refining device, as well as crude oil, refined oil terminals, power plants configuration works, after the completion of the annual production capacity of main products, respectively, for the PX150 ten thousand tons, 500,000 tons of benzene, 1(http://www.agile-news.com/).5 million tons of diesel, 400,000 tons of gasoline, aviation kerosene, 1 million tons, 1.5 million tons of light naphtha.

Previously, media reports had said the Sultan last Hengyi Group invested $ 6,000,000,000 construction of refinery and aromatics cracking project in the country, including an investment of $ 2(Finance News http://www.agile-news.com/).5 billion was approved in July, but then Group Hengyi released clarify announcement.

Compared to previous speculation, of Hengyi Petrochemical's announced an investment amount significantly greater, but as a private enterprise, in the out tens of billions of dollars of investment orders, their financial strength is also being come the doubts.

Were thrown from Hang Yat petrochemical investment program, the skepticism from the outside is trying to take the opportunity to open for additional raise the stock price, it did not see the substantial progress of the investment program. 'An industry analyst said.

Accept the reporter's telephone interview for this rumor, the the Hengyi petrochemical secretaries do a who is not positive to comment on the Brunei project also gave no further details.

'We can only say that this is normal investment behavior,' said Heng Yi Sinopec source said.

Investment or speculation?

Although the petrochemical Hengyi The announcement stressed that the foreign investment is based on the company's main business development needs and to address key issues for the company's sources of raw materials, but compared to the Brunei project, Hengyi Petrochemical trying to re-financing with the capital market intention to achieve the domestic PTA production capacity expansion seems to be more urgent.

Understand Hengyi petrochemical business structure to industry sources, based on the the Hengyi Petrochemical position in the PTA industry, and the entire chemical fiber textile industry, optimistic, the Hengyi petrochemical anxious intention to expand the existing scale is even more obvious.

'Does not exclude the possibility of speculation by the Brunei project, but the expansion of the company's PTA project has been the the Hengyi petrochemical one of the goals.' The source said.

In fact, since the backdoor listing in June last year, Heng Yi Sinopec plans to move with the capital market to raise funds will never stop. The Hengyi Sinopec announced its completion of the restructuring, the plan of non-public issuance of fund-raising 3 billion yuan, expansion of its three PTA project.

However, since the announcement, Hengyi Petrochemical face the reality that is not satisfactory. February mid-Heng Yi Sinopec announcement again, want to reduce the fund-raising amount to $ 2.5 billion, but given the increase in the reserve price unchanged. This will also allow Analysts have speculated that the underlying purpose of implementation to pave the way for additional success.

'It can be seen to the Hengyi petrochemical optimism on the domestic PTA market, as well as the determination to raise funds, regardless of whether the Brunei project can go, to attract investors to complete the issuance of it you're done.' The source said.

The reporter noted, Hengyi Petrochemical PTA market in the country has been called the leader, but for the supply and demand status of Hengyi Sinopec's ambition seems to.

'Compared with Sinopec, Emori petrochemical the Hengyi petrochemical would like to further expand market share, extend the industrial chain, and therefore the expansion of the existing size of the project on the high aspirations.' Understand Hengyi petrochemical sources said.

Release Brunei PMB investment projects, petrochemical Hengyi 11 share price limit, or 10%, now at 21.01 yuan.

Brunei Lazi undetermined

Although informed sources close to the Hengyi petrochemical interview with this reporter, said raw material PX profits space, does not exclude the possibility of its punch to invest in projects in Brunei, but the reporter has contact the Hengyi petrochemical stakeholders and Brunei operation of the project team, the project progress seems to have remained Yunshanwuzhao.

The Hengyi petrochemical an insider told this reporter that, within the company has been set up specifically for the project 'Brunei project department, but the Hengyi Petrochemical who claimed that secretaries do not the establishment of the department, but at present, a team. 'For the team size, these people is not a positive response.

Brunei PMB project plan and promote the timetable above Hengyi petrochemical who were unable to reveal more details.

At the same time, in the the Hengyi petrochemical previously released announcement, the uncertainty of the project also repeated instructions that the project still need to get the approval of the company's shareholders' meeting as well as China and Brunei between the two governments approval of the project is still in the government approval stage, not yet made any formal government approval documents.

In addition to the project itself is hard to set off outside the urgent need for funds Hengyi petrochemical whether they have the financial strength of the projects are also in doubt.

Chain status for enterprise funds secretaries do the interview with this reporter failed to published positive to comment, said that 30 percent of project funds required by the company self-resolved, and the remaining 70% will be resolved through bank loans or other financing channels but did not disclose to the lending bank name.

'On the one hand to finance the expansion of the existing plant, on the one hand but also generous foreign investment, a short time is difficult to achieve.' Near Hengyi petrochemical industry source said, 'may (Heng Yi Sinopec) really want to invest in Brunei but this announcement, or want to raise the stock price. '