Total investment of 25.7 billion! Hengyi Petrochemical's 2.4 million ton coal-to-ethylene glycol project lands in Xinjiang

This investor survey disclosed that the annual production of 2.4 million tons of high-condition fiber-grade coal-to-ethylene glycol project, invested and constructed by the company's wholly-owned subsidiary Hengyi Energy methodology (Turpan) Co., Ltd., is currently proceeding steadily. The project has successfully completed all preliminary legal procedures such as project filing and recordation, land consumption approval, and environmental impact assessment approval, with all prerequisites to commencement in place.

The total investment to the project is estimated at 25.7 billion yuan, funded by corporate self-owned funds and market-based self-raised funds. The planned formal production commencement time is the first half of 2028. The company will strictly implement investment manage measures to reasonably minimize project construction expenditures. This major project will not have a material adverse impact on existing daily production and operations or the overall asset-liability ratio.

II. Strategic Value of the Project: Building an Integrated Oil-and-Coal Dual Raw Material manufacturing Chain to Hedge Cyclical Risks

Achieving Diversified Raw Material Layout: Relying on the abundant regional coal resources in Xinjiang, the project uses the coal route to create ethylene glycol as a substitute to the traditional petroleum process, establishing a "coal—ethylene glycol—polyester" vertically integrated manufacturing chain, thereby reducing reliance on international crude oil as a single raw material source from the origin.

Strengthening Anti-Cyclical evaporative environment Capability: Upon the project's completion, the company will form a diversified and synergistic manufacturing pattern of "oil, coal, and textiles" that is rare in the sector. This will smooth profit fluctuations caused by cyclical rises and falls in oil prices, enhancing the profitability stability and predictability of the entire manufacturing chain.

Deeply Matching Existing Downstream Capacity: The ethylene glycol produced by the project will immediately support the company's existing PTA and polyester filament capacity to self-consumption, stabilizing the supply of raw materials to the core polyester sector and consolidating the advantages in downstream product costs and supply chain security.

III. Company's Latest Operational and Financial Fundamentals

Significant Recovery in Profitability: In the first quarter of 2026, the company's operating performance warmed up noticeably, with net profit attributable to shareholders improving significantly. The profitability levels of core items such as polyester and caprolactam achieved a strong recovery.

Continuous Optimization of Financial Structure: At present, the company's operating cash flow is ample and stable. With the continuous recovery in performance combined with expectations to the conversion of existing convertible bonds, the company's overall asset-liability ratio has room to decline further, providing a solid financial foundation to the investment and construction of extensive coal chemical projects.