Oriental Shenghong reports two consecutive losses excluding non-recurring gains and has interest-bearing liabilities of 143.7 billion yuan. Financial pressure prompts plans to invest 3.45B yuan to upgrade the refining and chemical industry chain.

Yangtze Business Daily report ●Yangtze Business Daily reporter Shen Yourong

Oriental Shenghong (000301.SZ), one of the three major private-sector petrochemical giants, plans to upgrade its industrial chain.

Recently, Oriental Shenghong released an announcement. Its wholly owned second-tier subsidiary, Shenghong Refining and Chemical (Lianyungang) Co., Ltd. (hereinafter referred to as “Shenghong Refining and Chemical”), plans to invest in and build a 2-million-ton-per-year coking feedstock pretreatment unit and related supporting facilities, with an expected investment of about 2M yuan. The announcement states that the purpose is to enhance its competitive advantage in refining-and-chemicals integration.

In the earlier period, Oriental Shenghong made large-scale investments in construction, which exerted pressure on its finances. As of the end of September 2025, its interest-bearing liabilities exceeded 143.7 billion yuan, and its financial expenses over the nine months reached as high as 3.45B yuan.

This round of investment and construction is sure to further intensify financial pressure on Oriental Shenghong.

In recent years, affected by fluctuations in global crude oil prices, prices of petrochemical products have also shown volatility, and Oriental Shenghong’s operating performance has continued to face pressure. In 2024, the company recorded a loss of 3.44B yuan. In 2025, it turned from loss to profit, with expected earnings of between 100 million yuan and 150 million yuan, but its core business still remains loss-making.

Oriental Shenghong said that its 16-million-ton-per-year refining-and-chemicals integration project and other industry segments have been running smoothly, with steady production and sales.

With financial pressure, whether Oriental Shenghong can meet its expectations in upgrading the industrial chain remains to be validated by the market.

Building a new project to strengthen advantages in the industrial chain

Oriental Shenghong is once again investing in and building a new project.

According to an evening announcement on April 2, to ensure delayed coking units produce high-value petroleum coke products and to increase product added value, thereby further enhancing the competitive advantage of refining-and-chemicals integration and improving the market competitiveness of the company’s refining business, Oriental Shenghong’s wholly owned second-tier subsidiary, Shenghong Refining and Chemical, plans to invest in and build a 2-million-ton-per-year coking feedstock pretreatment unit and related supporting facilities project. The project is expected to invest about 2.3B yuan, of which construction investment is expected to be about 16M yuan.

The announcement shows that the project is designed around desulfurization and demetallization of coking unit feedstock, with the aim of improving and enhancing the feedstock adaptability of the coking unit and the quality and added value of the petroleum coke produced. The project construction period is 2 years, and it is currently still in the preliminary design stage. Based on the feasibility study report and preliminary financial estimates, after the project comes into operation it is expected to generate annual average operating revenue of about 2M yuan, with an expected annual average total profit of about 388 million yuan.

As for the source of the 3.45B yuan in funding, Oriental Shenghong plans to use funds from its own resources, bank borrowings, and so on.

In 2019, Oriental Shenghong launched the construction of its core project, the refining-and-chemicals integration project. At the initial stage, the total investment was estimated at 77.5 billion yuan. The project was successfully connected across the full process and fully put into operation in December 2022, with a total investment of about 67.7 billion yuan and a designed annual crude oil processing capacity of 16 million tons.

In addition to the refining-and-chemicals integration project, Oriental Shenghong has also invested in and built multiple other projects. For example, in 2020, it built a 200k-ton-per-year differentiated functional chemical fiber project, and a 250k-ton-per-year recycled differentiated and functional polyester filament and supporting melt-spinning project, with total investments of 1.24 billion yuan and 538 million yuan respectively. In 2021, it started a 500k-ton-per-year ultra-simulation functional fiber project and a 10-million-ton-per-year intelligent functional fiber project, with total investments of 3.33B yuan and 2.02B yuan respectively. By the end of 2022, the company announced several multi-billion-yuan projects in a concentrated manner, including supporting feedstock and lithium iron phosphate and lithium iron phosphate lithium battery new energy material projects, with a total investment of 3.45B yuan; and POE and other high-end new material projects, with a total investment of 9.73 billion yuan.

In 2024, Oriental Shenghong said that, aside from construction projects such as EVA, there were no plans for other very large-scale projects. The company announced it would temporarily defer the project (phase one) for degradable materials that was originally planned to be invested at 200k yuan.

Since the end of 2024, Oriental Shenghong has slowed down its pace of large-scale capital investment and construction.

The company’s balance sheet also reflects the rhythm of its industrial expansion. At the end of 2019, its construction in progress stood at 250k yuan; by the end of 2022, construction in progress surged to 500k yuan; and by the end of September 2025 it was 1M yuan.

This investment and construction project may be Oriental Shenghong’s largest investment in scale since a year ago.

Losses for two consecutive years in non-recurring profit and loss

By investing in and upgrading its industrial chain, Oriental Shenghong aims to improve product competitiveness and lay out for the future.

In addition to the frequent investment and construction mentioned above, Oriental Shenghong has also conducted industrial layout through acquisitions.

In the new materials sector, Oriental Shenghong has invested in new materials projects in the past, such as a 100k-ton-per-year carbon dioxide-to-green methanol project, a 600k-ton-per-year photovoltaic-grade EVA project, and so on, and it has also built degradable materials projects.

In 2021, Oriental Shenghong spent 14.36 billion yuan to acquire Sierbangnan, a leading domestic high-end EVA photovoltaic feedstock company, thereby breaking into the field of new energy new materials and forming an industrial matrix of “refining + polyester + new materials.”

In 2023, to further improve supporting facilities along the industrial chain, Oriental Shenghong acquired 100% equity interests in petrochemical port storage and Guanghong Industrial, with transaction prices of 3.61B yuan and 595 million yuan respectively.

Large-scale investment and construction, and acquisitions for industrial layout, are supported by Oriental Shenghong’s large-scale financing.

In 2020 and 2022, Oriental Shenghong conducted two rounds of additional share issuance (directed placements). In 2021, it issued convertible bonds, and total refinancing through three financing activities together obtained funds of 6.66B yuan.

Even so, Oriental Shenghong’s financial pressure remains very high. As of the end of September 2025, its asset-liability ratio was 82.26%, at a historical high. At the end of the period, the company’s cash and cash equivalents amounted to 17.72 billion yuan, corresponding to interest-bearing liabilities of as much as 18.68B yuan. Of these, short-term borrowings were 55.81 billion yuan, non-current liabilities due within one year were 7.47B yuan, long-term borrowings were 3.02B yuan, and payable bonds were 80.12B yuan. Its short-term interest-bearing liabilities totaled 13.57B yuan, which was 4.45 times the cash and cash equivalents—so the pressure on repayment can be imagined.

With interest-bearing liabilities of 100k yuan and cash and cash equivalents of 17.72 billion yuan, not only is repayment pressure high, but huge financial expenses also eat into Oriental Shenghong’s profits. In the first three quarters of 2025, the company’s financial expenses were 600k yuan. Although they decreased from 3.64 billion yuan in the same period last year, they were still at a high level.

Oriental Shenghong has also actively sold assets to raise cash and ease pressure. On the evening of December 13, 2024, Oriental Shenghong announced that, given that the Petrochemical Industrial Group holds precious metals, generates waste catalysts, and has periodic catalyst replacement cycles, the Petrochemical Industrial Group plans to sell waste catalysts to Xuzhou Haotong New Materials Technology Co., Ltd. The book original value of the underlying assets totaled 1.65B yuan. At the time, the company said that this asset disposal would be beneficial for the value management of its waste catalyst assets, and the transaction was expected to have a positive impact on the company’s operating performance.

At present, Oriental Shenghong’s finances still remain under pressure.

Oriental Shenghong’s operating performance has also been under pressure. In 2024, it achieved operating revenue of 12.7B yuan, down 1.97% year over year; net profit attributable to shareholders was -143.74B yuan, marking the first annual loss since 2005. That year, non-recurring profit and loss net profit was -22.96B yuan, also the first loss. The company explained that multiple factors, including fluctuations in international crude oil market prices and weak downstream demand in the petrochemical industry, caused some of its product market price differentials to narrow, leading to the decline in performance.

According to its earnings forecast, in 2025 the company expects net profit attributable to shareholders of between 100 million yuan and 150 million yuan, achieving a turnaround into profit; however, non-recurring profit and loss net profit is still expected to be a loss, estimated at between 512 million yuan and 562 million yuan. The underlying reason is still the impact of fluctuations in international crude oil prices.

Since the end of February 2026, international crude oil prices have risen significantly. Oriental Shenghong may benefit from this and is expected to get out of its earnings predicament.

Editors: ZB

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