Core Viewpoint - The report on Hengli Petrochemical (600346) highlights its significant advantages in refining facilities and positions it as an industry leader poised for growth, with a buy rating assigned for the first time [1] Company Overview - Hengli Petrochemical has established a fully integrated industrial chain, evolving from a textile factory to a large chemical platform that deeply integrates oil, coal, and chemicals [2] - The company achieved a revenue of 234.9 billion yuan in 2023, reflecting a year-on-year growth of 5.62%, demonstrating resilience even in challenging market conditions [2] - Capital expenditures are expected to decrease as the upstream refinery and downstream new materials platforms are nearly completed, enhancing the company's dividend potential [2] Refining Capabilities - The company has a higher proportion of heavy oil feedstock at 60%, yet maintains a leading complexity and processing depth in its refining operations [2] - Advanced technologies, including ebullated bed residue hydrocracking, allow the company to convert lower-value residue into higher-value products, maximizing refinery efficiency [2] Product Profitability - The company’s aromatics production capacity is significant, with a capacity of 4.5 million tons per year for PX, and profitability is expected to improve across various product lines [3] - The olefins segment has substantial room for profit improvement, with current margins below 30%, and a recovery in downstream demand is anticipated to boost profitability [3] - The polyester segment is expected to see improved profitability due to a slowdown in supply growth and low inventory levels [3] Subsidiary Development - The subsidiary Kanghui New Materials has a comprehensive industrial chain and focuses on high-end, differentiated, and environmentally friendly materials, enhancing the company's competitive edge [3] Investment Projections - Projected net profits for Hengli Petrochemical from 2024 to 2026 are 6.569 billion, 8.093 billion, and 8.937 billion yuan, respectively, with corresponding EPS of 0.93, 1.15, and 1.27 yuan [4] - The price-to-earnings ratios are projected to be 16, 13, and 12 times for the respective years, indicating a favorable valuation [4]