Sinopec Yizheng Chemical Fibre Company Limited

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Sinopec Yizheng Chemical Fibre Company
Limited BNP PARIBAS PEREGRINE China Economic
Development Forum October 2002, Qingdao
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Forward Looking Statement
This presentation contains forward looking
statements that involve risks, uncertainties and
assumptions. These statements are generally
indicated by the use of forward looking
terminology such as believe, expect,
anticipate, estimate, plan, project,
target, may, will, or other similar words
that address expectations or projections about
the future. You should not place undue reliance
on these forward looking statements, which apply
only as of the date of this presentation. These
forward looking statements are based on our own
information and on information from other sources
we believe to be reliable. Our actual results may
be materially less favorable than those expressed
or implied by these forward looking statements
which could depress the market price of our A and
H shares. We urge you to review our latest annual
report and quarterly reports for a discussion of
some of the factors which could cause actual
results to differ materially.
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Business scope
MEG
PX
PTA
Polymerization esterification
Existing major products of Yizheng
Polyester chips
Spinning
Remelting
SSP
PET Resin
Film
Fibre
Bottles
Tapes
Staple fibre
Filament
Containers
Disks
Apparel
Industrial plastics
Upholstery
Industrial fibre
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Share capital structure
Sinopec 1,680 million shares
CITIC 720 million shares
200 million circulating A shares
1,400 million H shares
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18
35
5
100
Yizheng
100
100
95
100
Kangqi Company
Forerunner (HongKong)
Forerunner (Europe)
Foshan Complex
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Foshan Polyester

• Total issued shares 4 billion
• A diversified share capital structure is helpful
  to a healthy corporate governance

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Production scale
The 5th largest and the largest one-site
polyester manufacturer in the world
Polymerisation facilities capacity 1.13 million
tonnes per year PTA facilities 325,000 tonnes
per year SSP facilities capacity 164,000 tonnes
per year Spinning and drawing facilities 665,000
tonnes per year Of which Staple bire
347,000 tonnes per year
Hollow fibre 37,000 tonnes per year
POY 186,000 tonnes per year
FDY 95,000 tonnes per year DTY 113,000
tonnes per year
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Structure restructuring (1)
Underwent several structure restructuring since
1997 to improve profitability and competitiveness
Product unit manufacturing costs comparison
Total liabilities to total assets ratio ()
The Companys employee number
Source the Company
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Structure restructuring (2)
Product differential ratio was increased
substantially
Product differential ratios ()
Product types
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Market review--demand
Export volume of textile products increased by
6.96 and domestic consumption of polyester fibre
increased by 25.7 in 1H2002,
The PRC Polyester fibre consumption
The PRC textile product export
000 tonnes

US Bn
Sources the PRC Custom, the Chemical Fibre
Association of China and the Companys estimates
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Market review--supply
Domestic supply of polyester fibre increased by
21.7in 1H2002. The growth of the polyester
production capacity has significantly declined.
Domestic supply of polyester fibre
Supply Structure
000 tonnes
000 tonnes
Sources the Chemical Fibre Association of China
and the Companys estimates
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Market review--prices
The prices of domestic polyester products
rebounded strongly owing to the substantial
increases in polyester raw materials prices. But
both prices were lower as compared with the same
period of last year.
The Companys product price quotation(excluding
VAT)
International supplier contract price quotation
(excluding taxes, compared to the price of the
Companys polyester chips)
Rmb/tonne
US/ tonne
1/2001
6/2002
3/2001
6/2001
12/2001
9/2001
3/2002
Source the Company
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Operations review for 1H2002
tonnes

• Succeeded in reducing cost and expenses by Rmb196
  million
• Unit comprehensive energy consumption decreased
  by 7.9 per cent
• Consumption of main raw materials was further
  reduced
• Administrative expenses and financial expenses
  further decreased by 6.3 and 19.1 respectively

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Financial highlights for 1H2002
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Operation environment for 2H2002

• Since mid-July, the prices of polyester products
  rebounded again. Prices of polyester products are
  expected to remain stable and increase
• Prices of major polyester raw materials such as
  PTA, MEG and PX are expected to remain stable

• There are also some uncertainties for the global
  economy
• Competition between domestic polyester
  manufacturers will become more intense in the
  fields of product categories, quality and cost
  given the current demand and supply situation
• Prices of raw materials may be high, which will
  bring much pressure for the petrochemical and
  chemical fibre sectors

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Operation plans for 2H2002
Emphasize overall operation optimization

• The Groups planned production volume of
  polyester products is 711,600 tonnes,
  representing an increase of 11.8 per cent as
  compared with last year . The Groups planned
  sales volume of polyester products is 572,100
  tonnes. The ratio of sales to production will
  reach 102 per cent.
• The planned production volumes of differential
  polyester fibre and chip is 100,200 tonnes and
  141,000 tonnes respectively
• The cost and expenses reduction target is
  Rmb66,380,000
• ERP system will be Implemented by the end of
  October

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Outlook for China polyester industry
A new round of structure restructuring for
Chinas polyester industry
China and the world polyester production 1995-2005
China polyester capacity growth
1990-2001 CAGR ()
2000-2005 CAGR ()
(Million tonnes) 1995 2005
Total 17.82 Total 40.92
Intensified competition in quality, product
types, cost and service
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The Groups strengths

• Provides more rooms for future development

• Raw materials sourcing ability and comprehensive
  utilities
• Extensive sales network, well recognized brand
  name and a positive corporate image
• Product development, technical upgrading and
  engineering ability
• Sound financial position

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Development strategy (1)
Adhere to two principles
Prudent investment policy
Market orientated
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Development strategy (2)
Adhere to three strategies
Specialty
Connotation development
Technology improvement
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Expansion projects for 2002

• The planned capital expenditure is Rmb1292
  million, total capital expenditure for 1H2002
  amounted to Rmb603 million

• The SSP project with an annual capacity of
  100,000 tonnes, the DTY project with an annual
  capacity of 50,000 of the Company and the DTY
  project with an annual capacity of 5,000 of the
  Foshan Polyester were all put on operation in
  March
• The construction of sea island filament yarn
  project with an annual capacity of 750 tonnes
  and the POY project of Foshan Polyester with an
  annual capacity of 5,000 tonnes were completed
  recently
• The PTA project with an annual capacity of
  450,000 tonnes , the staple fibre project with an
  annual capacity of 90,000 and the differential
  polyester chip project with a daily capacity of
  450 tonnes will be completed in 2Q and 3Q
  respectively next year

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Yizheng is weaving a global network
http//www.ycfc.com