Ruichang International Holdings Limited (Stock Code: 1334.HK) successfully listed on the main board of the Hong Kong capital market on July 10, 2024. The company is a leading enterprise in the field of petrochemical equipment manufacturing in China, mainly engaged in petrochemical refining and operations. It is also a manufacturer of sulfur recovery equipment and volatile organic compound incineration equipment for petroleum refining and operations in China. Frost & Sullivan (hereinafter referred to as 'Frost & Sullivan') provides exclusive industry advisory services for the listing of Ruichang International Holdings Limited, and hereby warmly congratulates it on its successful listing.
Ruichang International Holdings Limited (hereinafter referred to as 'Ruichang International') successfully listed on July 10, 2024. The company plans to issue 125 million shares globally (representing 25% of the total shares after issuance), of which 90% will be international offerings and 10% will be public offerings, with an additional 15% being underwritten rights. The price per share is set at HK$1.05, raising a net amount of approximately HK$62 million.
During the process of listing in Hong Kong this time, Frost & Sullivan mainly undertook the following tasks: helping the issuer accurately and objectively understand its positioning in the target market, using objective market data to discover, support and highlight the issuer's competitive advantages, assisting the issuer, investment banks and other intermediaries in completing the writing of relevant parts of the prospectus (such as overview, competitive advantages and strategy, industry overview, business and other important chapters), helping the issuer complete communication with the Hong Kong Stock Exchange and investors, assisting investors in quickly understanding the market ecosystem and competitive landscape, and providing assistance to the issuer in completing feedback on various industry-related issues from the Hong Kong Stock Exchange, etc.
Investment highlights
The company is a leading catalyst cracking equipment manufacturer in China;
The company is the second-largest manufacturer of sulfur recovery equipment and volatile organic compound incineration equipment for petroleum refining and petrochemical operations in China;
The company has accumulated rich industry knowledge;
The company has established and maintained solid and stable business relationships with major clients;
The company has strong R&D and design capabilities;
The company has an experienced management team.
According to the Frost & Sullivan report, ranked by revenue for 2023, the company:
It is the third-largest catalyst cracking equipment manufacturer in China's petroleum refining and petrochemical operations;
It is the second-largest manufacturer of sulfur recovery equipment and volatile organic compound incineration equipment for petroleum refining and petrochemical operations in China;
China's refining capacity has increased from 87.34 million tons in 2018 to 9.36 million tons in 2023, with a compound annual growth rate of about 1.4%. It is expected that oil refining capacity will grow to 10.51 million tons by 2028. Therefore, there is still about 10 million tons of expansion space for new oil refining capacity in the next five years.
Overview of China's Petroleum Refining and Petrochemical Market
According to the Organization of the Petroleum Exporting Countries (OPEC), China's refining capacity increased from 8.734 billion tons in 2018 to 93.6 billion tons in 2023, with a compound annual growth rate of about 1.4%. According to the 'Carbon Dioxide Peaking and Emission Reduction Targetted for 2030' released by the State Council, it is expected that by 2025, China's petroleum refining capacity will reach 100 billion tons per year. Looking ahead, driven by strong domestic demand, it is estimated that petroleum refining capacity will grow to 105.07 billion tons by 2028, an increase of over 10 billion tons compared to 2023.
Source: Organization of the Petroleum Exporting Countries, Ministry of Commerce of China, Frost & Sullivan report
Although Brent oil prices plummeted by about 34.9% from $64.2 per barrel in 2019 to $41.8 per barrel in 2020, the oil refining capacity increased by about 3.5% in the same year, indicating that fluctuations in oil prices are not directly related to China's oil refining capacity.
Data source: Intercontinental Exchange, Frost & Sullivan report
Overview of the China Petroleum Refining and Petrochemical Equipment Market
Static equipment includes furnaces with process burners, heat exchangers, tower equipment, reactors, etc., as well as rotating equipment such as pump impellers and shafts. Equipment for public facilities and auxiliary facilities includes sulfur recovery equipment and volatile organic compound incinerators, water supply and drainage systems, etc. The main equipment includes but is not limited to:
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Sulfur recovery equipment and volatile organic compound incineration equipment
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Catalytic cracking equipment
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Process burner
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Excess heat recovery device
The Chinese petroleum refining and petrochemical equipment market is huge, including various static and rotating equipment. The market scale of petroleum refining and petrochemical equipment in China increased from RMB 484.9 billion in 2018 to RMB 715.1 billion in 2023, with a compound annual growth rate of about 8.1%. With the increasing petroleum refining capacity in China and the rapid development of the petrochemical industry, it is predicted that the market will grow at a compound annual growth rate of about 6.5% from 2023 to 2028, reaching RMB 979.2 billion by 2028.
Data source: National Bureau of Statistics of China, Frost & Sullivan report
Competitive landscape of the petroleum refining and petrochemical equipment market
The overall petroleum refining and petrochemical equipment market in China is fragmented, with over 40,000 petroleum refining and petrochemical equipment manufacturers operating in the market in 2023, producing more than a hundred types of equipment. Each product category of Ruichang International accounts for a relatively small portion of the overall petroleum refining and petrochemical equipment market in China.
The market for sulfur recovery equipment and volatile organic compound incineration equipment manufacturers for petroleum refining and petrochemical operations in China is fragmented. In terms of revenue, the top five market players account for about 16.0% of the total market volume. There are approximately 1,000 players in the market. Ruichang International ranked second in 2023, accounting for about 3.4% of the market share.
Source: Frost & Sullivan report
The market for catalytic cracking equipment manufacturers in China's petroleum refining and petrochemical operations is fragmented, with the top five market players accounting for about 33.2% of the total market revenue. There are approximately 1,000 players in the market. Ruichang International accounted for about 7.6% of the market share in 2023, ranking third.
Source: Frost & Sullivan report
Market Drivers of China's Petroleum Refining and Petrochemical Equipment Industry
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Conducive policy environment
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The petrochemical industry is growing
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Preferring domestic brands
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Industry concentration tends to increase
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Frost & Sullivan has extensive research experience in the chemical and materials industries, assisting well-known enterprises in successfully listing on the capital market. Successful listings include: Wuhan Organic (2881.HK), Migro Group (9879.HK), Jihai Resources (2489.HK), Zhongbao New Materials (2439.HK), Shengneng Group (2459.HK), Jinli Yongci (6680.HK), Avia Avian (IDX: AVIA), Global New Materials (6616.HK), Dafeng Equipment (2153.HK), Yihai International (8659.HK), GHW (9933.HK), Sanhe Fine Chemicals (0301.HK), Xingyu Holdings (2346.HK), Xinghe Holdings (1891.HK), Xuyang Group (1907.HK), Long Resources (1712.HK), Shandong Gold (1787.HK), Henan Jinma (6885.HK), Xingye New Materials (8073.HK), Dongguang Chemicals (1702.HK), Zhongqi Group (1932.HK), Xinbang Holdings (1571.HK), Meigu Technology (8349.HK), Huajin International (2738.HK), Flot Glass (6865.HK), Dinos (1452.HK), Caike Chemicals (1986.HK), Chang'an Renheng (8139.HK), Sansida (1337.TWSE), Born.NYSE, CPC.NYSE, Gu Shan Group (GU.NYSE), Tianhe Chemicals (1619.HK), Yihua Holdings (2121.HK), Sijia Group (1863.HK), and others.
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*The above order is not sequential and is arranged in reverse chronological order based on listing time.
