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When the overall revenue and profit of the industry were both declining, Satellite Chemical's gross profit margin reached a relatively high level of 21.08% in the first half of the year

On the evening of July 17th, the first semi-annual report for 2024 of the Shenzhen Stock Exchange's main board was released. The semi-annual report of Satellite Chemical, a leading player in the light hydrocarbon industry, for 2024 shows that while the overall revenue and profit of the industry have both declined, Satellite Chemical achieved a gross profit margin of 21.08% during the reporting period, demonstrating its ability to weather the cycle.

According to the semi-annual report, Satellite Chemical achieved a net profit attributable to shareholders of 1.033 billion yuan and a non-GAAP net profit of 1.171 billion yuan in the second quarter, both showing growth compared with the first quarter. In the first half of the year, Satellite Chemical achieved operating revenue of 19.4 billion yuan and net profit attributable to shareholders of the listed company of 2.056 billion yuan, representing a year-on-year increase of 12.51%. The overall performance withstood the impact of the industry's sluggishness and major overhauls of ethylene and other facilities.

Steady progress and long-term improvement of quality and efficiency throughout the entire value chain

The petroleum and chemical industry prosperity index jointly compiled by the China Petroleum and Chemical Industry Federation and Shandong Zhuochuang Information Co., Ltd. shows that despite the rising raw material prices and the persistently weak downstream demand, the prosperity index of the rubber, plastic and other polymer products manufacturing industry remains at a historically low level.

Due to the low prosperity index, Satellite Chemical stated that it will more resolutely implement the annual business strategy of "steady progress and long-term development", and deeply explore the green, low-carbon and cost advantages of the industrial chain. It is precisely by implementing this train of thought that Satellite Chemical has achieved remarkable results in the stable operation of its facilities and the improvement of management quality and efficiency in the first half of the year.

During the reporting period, the super absorbent resin plant independently developed and innovated by Satellite Chemical achieved full-load operation. The ethane cracking unit for ethylene production has been operating efficiently and stably for three years, with a leading capacity utilization rate in the industry. It has set a new record for the first long-term operation of similar units in the industry. The routine maintenance of the unit was completed in the first half of the year, further optimizing the technical indicators. The comprehensive unit consumption of the propane dehydrogenation to propylene plant has been continuously optimized, and the daily output of propylene has reached a record high. The new acrylic acid and ester plant has achieved new process innovation, with a new high operation cycle and leading cost in the industry.

A series of "blue ocean" projects have been successively launched to seize the first-mover advantage in the large-scale ethylene cycle

On June 24th, the first domestic high-end new materials industrial park project for comprehensive utilization of α -olefins, with a total investment of 26.6 billion yuan, was officially launched by Satellite Chemical Investment. This is the first industrial application of the α -olefin technology independently developed by Satellite Chemical.

Satellite Chemical stated that α -olefins are key raw materials for high-end polyolefins such as polyolefin elastomers (POE) and high-end lubricants. However, due to the long-term lack of independent core technologies in high-performance catalysts, polymerization processes and key equipment, a large amount of α -olefins and their derivatives need to be imported every year. Satellite Chemical also cited Wood Mackenzie's forecast data in its semi-annual report, stating that in terms of per capita ethylene consumption, China's per capita ethylene consumption in 2022 was 44 kilograms per person, while in the United States, Western Europe, and Japan it was 90/74/73 kilograms per person respectively during the same period. China's per capita ethylene consumption remains at a low level. Meanwhile, as the manufacturing industry continues to move towards the medium and high end of the global value chain, China imports over 13 million tons of polyethylene annually. Particularly, there are still technical bottlenecks in the high-end polyethylene sector at present. The market space for ethylene and its downstream products, especially high-end polyolefins, remains extremely broad.

In line with the above trends, Satellite Chemical is striving to seize the first-mover advantage in the large cycle of ethylene and is deeply advancing the strategic deployment of "focusing on the integration of light hydrocarbons and building a low-carbon chemical new materials technology company". The company adopts its independently developed high-carbon α -olefin technology, leading industrial innovation with technological innovation. It extends its downstream layout to 1.7 million tons of high-end polyolefins (including metallocene polyethylene), 600,000 tons of polyethylene elastomers, and 30,000 tons of polyα -olefins, and also makes resource utilization of carbon dioxide and hydrogen.

Satellite Chemical stated that relying on this project, the company will accelerate the industrial landing and domestic substitution of new energy, new materials, and high-end chemicals, and continuously advance towards the upstream of the industrial chain, innovation chain, and value chain. In the future, the high-end polyolefin products laid out by Satellite Chemical will seize the advantages of market first-mover and technological autonomy in the process of "domestic substitution" of high-end new materials, and shape a new driving force for the development of new quality productivity.

In addition, according to the "Announcement on the Smooth Commissioning of the First Phase of the Third Phase Project of Satellite Energy" disclosed by Satellite Chemical on July 16th, the 800,000-ton multi-carbon alcohol plant has been put into operation. The integration degree of the C3 industrial chain has reached a new height, which will be able to more efficiently utilize the propylene resources of PDH to produce multi-carbon alcohols and achieve self-supply of core raw materials. Form a closed industrial chain of propylene - acrylic acid - acrylate, further enhancing the core competitiveness of the industry.

Meanwhile, the new acrylic acid production capacity project is also being steadily advanced, providing raw material guarantees for the upgrading and capacity expansion of Satellite Chemical's super absorbent resins and polymer emulsions, and achieving the expansion of upstream products to downstream high-end products.

High-intensity innovation shapes new driving forces and breaks through the "bottleneck" new material technologies

Innovation has always been the pursuit of Satellite Chemical, and it has already built several "first-of-its-kind" facilities in the industry. The report shows that Satellite Chemical's R&D investment in the first half of the year exceeded 795 million yuan, a year-on-year increase of 10.25%. It applied for 115 patents and obtained 63 authorized patents, continuing the trend of high-intensity investment in R&D and innovation.

At present, the pilot products of Satellite Chemical's α -olefins (C4, C6, C8) and polyolefin elastomers (POE) have reached international standards. The research and development achievements such as metal-organic functional material catalysts and low ammonia-to-hydrogen amination catalysts have met the requirements for industrialization, achieving breakthroughs in technical bottlenecks and accelerating industrial transformation. Super absorbent resin is accelerating the customer-centered approach. Besides ensuring the stability of existing products, it is also speeding up the research and development of the latest generation of products.

To foster new growth drivers, four days after the official awarding of the National Postdoctoral Research Workstation of Satellite Chemistry on May 24th, the Satellite Future Research and Development Center was officially launched on May 28th. Yang Weidong, the chairman and president of Satellite Chemical, stated that the company will be guided by the strategic requirement of "actively cultivating emerging and future industries", proactively incorporate the future industries of satellites into the national industrial layout plan, lead scientific and technological progress, drive industrial upgrading, and cultivate new quality productive forces.

Relying on the future R&D center, Satellite Chemistry will invest over 10 billion yuan in R&D in the next five years, with innovation incentives exceeding 1 billion yuan. It will continuously increase the recruitment of high-end talents both at home and abroad, and build an R&D and innovation system for low-carbon chemical new materials technology companies. Build a research and development innovation and industrialization development platform focusing on key basic materials and frontier new materials in key strategic fields such as high-performance catalysts, new energy materials, polymer new materials, and functional chemicals. Through the construction of strategic and leading projects, strive to break through a number of "bottleneck" technologies.