Earnings Call: Q3 2021

Oct 29, 2021

Morning, ladies and gentlemen. This is Jane Liu of Sinopec Corp. Welcome everyone to Sinopec Corp's earnings conference call for the third quarter of 2021. Please be reminded that the results of presentation for the third quarter of 2021 can be downloaded at www.sinopec.com. All lines have been placed on mute to prevent background noise. After the presentation, there will be a question and answer session. Please follow the instructions given at that time if you would like to ask a question. Now I would like to transfer the call to Mr. Zhang Zheng, Head of Board Secretariat of Sinopec Corp. Mr. Zhang, you may begin. Thank you, Jane. Good morning, ladies and gentlemen. Welcome to Sinopec Q3 results announcement, and thank you for joining us today. This meeting is attended by Mr. Huang Wensheng, Vice President and the Secretary to the Board, Mr. Song Zhenguo, Deputy Head of Finance Department, and Madam Li Li, Deputy Head of Operation Management Department. First, I would like to give the floor to Mr. Chen Yang, Deputy Head of Board Secretariat, to present to you the performance of Q3. Mr. Chen, please. Thank you, Mr. Zhang. Good morning, ladies and gentlemen. Firstly, I will brief on our third quarter results. In the first three quarters, China's GDP grew by 9.8% year on year. International crude oil prices kept growth. Domestic demand for natural gas continued to grow rapidly, with apparent consumption up by 16.6% year on year. Domestic demand for refined oil products recovered steadily, and demand for major chemicals sustained growth. Confronted with the environment where the international oil price went up and the demand for petrochemical products recovered steadily, the company stressed on improving our system, expanding markets, and controlling costs, and eventually achieved good results. EBIT of the first three quarters was CNY 102 billion, up by 124% year on year, and also 32% higher than the same period in 2019. Profit attributable to shareholders was CNY 60.7 billion, up by 149%. EPS was CNY 0.5. We kept optimizing debt structure and increased low-cost financing. Gearing ratio was 51.8%, maintaining a sound financial position. As of September 30, net assets attributable to shareholders of the company were CNY 768.4 billion, up by 3.6% compared with the beginning of the year. In the first nine months, the company enhanced management of inventory, receivables, and payables and optimized the payment of bills. Net cash generated from operating activities was CNY 116 billion, up by 37.4%. Cash used in investing activities was around CNY 100 billion. Net cash used in financing activities was CNY 12 billion. In E&P sector, we continued to promote high efficiency exploration and profit-oriented development, consolidated resource base, and increased production and profits. In terms of exploration, we strengthened risk exploration in new regions and new sectors, which led to new discoveries in key basins and major breakthroughs in continental facies shale oil exploration. In terms of production, we enhanced the efforts in capacity building and output of major natural gas and crude oil products, and the natural gas production increased by 13.7%. Realized price of crude in the first nine months was $60.9 per barrel, up by 59% year-on-year. Natural gas was $6.7 per Mcf, up by 26.7%. Lifting cost was $16.2 per barrel. The EBIT of upstream was CNY 10.9 billion, up by 37.6% year-on-year. In refining, the company actively responded to market changes, increased throughput, kept high utilization rate, actively adjusted product slate, and maximized profits along the industrial chain. We optimized crude oil allocation and cut procurement cost. We insisted on the strategy of shifting from oil to chemicals, lowered refined oil products yield, and increased production of light chemical feedstock. We increased production of higher value-added products and specialties, built six sets of hydrogen purification units, developed high-end needle coke products, and domestic market share of low sulfur bunker fuel ranked the first. In the first three quarters, the company processed 191 million tons of crude oil, up by 9.3% year-on-year, and produced 109 million tons of refined oil products, up by 3.2% year-on-year. The refining margin was $11.8 per barrel, up by 248%. Cash operating cost was $3.96 per barrel. EBIT of refining segment totaled CNY 54.3 billion, made a turnaround, and increased by CNY 56 billion. In marketing, the company leveraged our advantage of integration to expand markets and adopted a targeted marketing strategy, resulting in an increase of scale. We consolidated our resources of customers and marketing throughout the country and continuously improved the quality of our services. We optimized the network layout to reach end users, accelerated the construction of integrated energy service stations, offering petrol, gas, hydrogen, power, and non-fuel services, and put our first carbon neutral station and the BIPV station into operation. In the first three quarters, the total domestic sales volume of refined oil products was 128 million tons, up by 3.8% year-on-year. The company strengthened the development and marketing of branding merchandise, actively sped up the development of non-fuel businesses. Non-fuel business profit was CNY 3.4 billion, up by 10.8%. EBIT for the marketing segment was CNY 24.3 billion. In chemicals, by adhering to following the market and centering on profits, the company sped up the advanced capacity building and structural adjustment. We fine-tuned chemical feedstock to reduce costs. We adjusted the structure of the facilities and optimized maintenance schedule to raise the utilization of profitable facilities. We enhanced integration of production, marketing, and research, and continuously increased the ratio of higher value-added products, raising the ratio of synthetic resin, synthetic rubber, and synthetic fiber by 1.4, 3.7, and 1.6 percentage points respectively. In the first three quarters, ethylene production reached 9.75 million tons, up by 10% year-on-year. By consistently optimizing the structure of feedstock, products, and facilities, we achieved a strong growth margin. Chemical segment EBIT was CNY 23 billion, up by 228% year-on-year. For CapEx, we kept improving the investment management system and raising the quality and efficiency of investment. The CapEx was CNY 89.7 billion in the first three quarters. CapEx for E&P was mainly for oil and gas capacity building and storage, as well as transportation facilities construction. In refining, we focused on construction of Zhenhai and Anqing refining structural upgrading projects. CapEx for marketing was mainly for construction of petrol stations, integrated energy stations, and logistics facilities. For chemicals, was mainly for construction of Zhenhai and Hainan projects. That is all for the presentation. Now, we are pleased to take your questions. Thank you. Thank you, Mr. Chen. We now open the floor for Q&A. Ladies, gentlemen. This concludes the prepared remarks for today, and we are now ready for questions. If you would like to ask any questions, please press star 1. To cancel your questions, press star 2. The first question comes from Parsley of J.P. Morgan. Please go ahead. Thank you. 大家好，我是摩根大通的分析师Parsley。那首先恭喜公司取得这么良好的成绩。这边有两个问题，第一个问题是我们看到国务院近日发布了碳达峰行动方案，到2025年炼油产能限制为十亿吨，石油消费量在2030年将达到峰值。这对中石化的这个炼油销售和加工板块有什么影响呢？那第二个问题是关于天然气情况，那最近全球天然气供应紧缺，中石化也在三季度实现天然气进口亏损，所以王玉成对第四季度和2022年的天然气进口亏损有什么指引吗？中石化打算在中长期如何降低天然气供应成本？据我了解，其实公司打算在未来五年维持一个10%到12%的天然气产量增速，那我们在这方面有没有什么变化？而且中石化未来五年的LNG进口量和储气量会增加多少呢？谢谢。 There are two questions from J.P. Morgan. The first one is regarding the national government has proposed a policy on carbon neutrality. I want to know the impact of the company and what is the future policy or strategy of the company. The second question is regarding the natural gas price escalation recently. What is the impact on the company's LNG business, and what is the future strategy on the company's natural gas business strategy? Thank you. Thank you for your two questions. For the carbon peak and the carbon neutrality has been one of the major missions for the company. Start from the September of last year when President Xi Jinping makes such a commitment. Each of the business is working on their targets and their missions and their execution plans respectively. We are very pleased to find that the central government give us some guidance. The national, the whole nation's activities, objectives. That is the guideline for the companies to realize. For our observations, based on our business, we sell some of 50% of the gasoline, diesel, and jet fuels to the Chinese market. That is our current market share. From our operation, we find the diesel part have been peak out in the year 2017, and we expect that the gasoline may peak out at around the 2025 or 2026. But we have seen the transition of the electrifications in the transportation area. Those are battery electric vehicle, and from long-term perspective, the fuel cell cars can replace some of the use of the gasoline and the diesels. That is going to be a bit threat to our existing business, but it also provide a lot of opportunities for the companies. Up to now, the whole nation's capacity of refining is around some 900 million metric tons. Based on the guidance that is 1 billion. There's still some room, but I personally don't expect that China may reach that capacity given some of the small default refineries. They may knock down based on such a severe situation. Even for my company, we do not have any interest to further increase our capacity. We do a lot of the upgrading of the existing facilities, and even change some operations of some smaller refineries to some feedstock supplier of our chemicals, and integrated those operations with our existing chemical facilities. In the refining side, we do not see a lot of threat, but we see a lot of the opportunity in those areas, given we have been upgrade of refining at a pretty low cost, and we are leveraging the company's logistics advantage and management advantage, produce better, cleaner burn of the fuels at a lower cost. For the marketing business, it's going to be a threat. The threat major come from the transition. We are now trying to do a lot of infrastructures to support those transitions. Likewise, we are now exploring the swap opportunities for the battery, for the EV cars in our existing stations. We also build some hydrogen filling stations to change the filling stations to be integrated service stations, including serve not only the gasoline and diesel, but we are going to add some of the gas, the natural gas, the hydrogens, and the battery services. For the chemicals, as you may know, in China, the demand in the chemicals were pretty strong. Even though our operations of the chemicals operated at full load, 100% at a higher capacity in this year, it is going to be 12.5 million metric tons. China still imports more than 40% of the chemical downstream products in China, and we have ambitious plans to build some new capacity in the upcoming five years to meet the strong market need in China, and we see a lot of opportunity there. You can tell from our CapEx in this year, we have allocated more capacity in the chemical area. For the business overall, we feel this carbon peak and the carbon neutrality is going to be a threat and going to be an opportunity. We see more opportunities for the companies. Thank you for the first questions. The second question for the market, for the natural gas, you are absolutely right, China is deficit in terms of the natural gas supply. In my company, we sell more than 60 billion cubic meters of the natural gas per annum in this year we expected. You can tell more than 50% come from our existing production, and roughly 45%-50% come from the import. Today, the escalation of the natural gas has been bringing a lot of pressure for the earnings in our natural gas business. They took a lot of measures, including hedging some of their trading, and increased their long-term contract proportion. Even for the stock, they use a lot of hedging activities, and at the same time, they negotiate with the downstream customers, trying to pass on some of the higher costs to the customer. We believe from their activities, we feel they really did a great job, and it is going to suffer loss for the import part. But the good news is that from two days ago, the natural gas price internationally has declined a bit. Yesterday, the JKM declined more than 10%. Similarly, the TTF also declined significantly. We are supplying this part. We may see the opportunities, try hard to manage the cost escalations. Thank you very much. The next question comes from Kelly Xu of Morgan Stanley. Please go ahead. Thank you. 关一晨早上好，恭喜公司这次取得了不错的业绩。然后我有两个问题想问一下，一个是财务方面的，我们看到其实三季度它这个化工板块，如果看环比季度来看的话，它的EBITDA其实是跌了大概57%，这个其实跟我们看到其他国内的一些民营大炼化的这个趋势有点不太一样，因为他们的可能在毛利层面上还是保持的环比来说是不错的，想问一下这个原因是什么？然后还有一个问题是关于公司，比如说这些税务，这个税率，还有这些有一些其他的这些，还有那个少数股东权益这一块，感觉跟之前环比来看的话，它这个比例变动好像是有一点跟之前不太一样，想请教一下关一晨这个有什么特别的原因吗？谢谢。 There are two questions from Morgan Stanley. The first one is regarding the profits of the company's chemical segment was down quarter-on-quarter speaking, which was a little different from the performance of the third-party refineries in China. I want to know the reason and please elaborate the reason. The second question is that the profit of the minority shareholders was also different on quarter-on-quarter speaking. Could you also please elaborate the reasons? Thank you. 好，我首先回答关于这个化工的问题。确实，今年这个三季度化工的经营收益和EBT比这个是和二季度环比是有些递减。主要的那个三季度的经营收益是化工板块是26个亿，环比是减少了三个亿。这个主要的原因有两个方面，一方面虽然三季度化工产品的价格还是在往上涨，但是由于原油的价格也是在三季度高企，所以说化工的原材料价格，石脑油的价格也是在大幅度地上升。那么从目前来看，整个三季度化工产品与石脑油的差价还是收窄了大概160元人民币左右的样子，这样会使这个单位毛利下降了20个亿左右的样子，这是一个原因。第二就是关于生产经营安排，在第三季度我们化工板块有一些检修安排到了三季度。那么同时今年为了公司进一步夯实炼油化工的盈利基础，对安全、环保和维修资金做了一个统筹的安排。那么这两个因素主要是导致化工的经营收益和EBITDA减少的一个主要原因。谢谢。 For the chemical segment in the third quarter, the realized profit was around CNY 2.6 billion and decreased around CNY 3.3 billion, quarter-on-quarter speaking. There are two main reasons. The first one is that impacted by the crude oil price escalation, the price of chemical feedstock also increased. The margin between the chemical feedstock and the chemical product also increased for around CNY 160 per ton. This led to the profit decrease around CNY 2.2 billion. The second reason is that we also arranged the facilities maintenance to enhance the chemical segment, which increased the cost for around CNY 0.6 billion. Thank you. 第二个问题，我想这样回答，关于公司的税费，公司对税费管理今年还是加强了税费的一些管控，特别是在所得税费率方面，公司还是做了一些统筹优化的工作，比如争取一些减税、免税的政策等等。我们目前现在的所得税的费率保持在22%左右的样子，是要低于这个25%。从少数股东权益来讲，应该说今年因为油价往上还是有个增加，整个权益有所增加，但是少数股东权益的占比，包括少数股东权益的变化还是不大。谢谢。 Okay. The company also reinforced the management of the tax. This year, the income tax of the company for the first three quarters was up by 22%. In the third quarter, the minority of the shareholders also kept slide. Thank you. The next question comes from Neil of Bernstein. Please go ahead. Thank you. Thank you very much. Just a couple of questions. Picking up on the carbon neutrality question, the company is generating very strong free cash flow. You have a cash balance of over 200 billion CNY. Most companies at this stage would start buying back their own stock, which is not something I expect you to do. Can you elaborate more on what opportunities you see to deploy this cash within low carbon businesses, which are clearly going to be a significant part of energy growth as we head into the energy transition? My second question is really around how you are seeing the fourth quarter. We have seen reports of power shortages in China, gas shortages in China, and that has impacted some of the highly energy-intensive industries, including chemicals. We are also seeing a slowdown in the housing market. Can you comment a little bit about how you see this impacting the fourth quarter, particularly on the chemicals business? Thank you. 有两个问题来自于盛博。第一个就是在当前碳中和的这个背景下，我看到公司的现金流还是非常不错的，公司的现金及现金等价物超过2000亿元人民币，那我想在未来的公司的发展运营，特别是未来的能源转型方面，公司将计划用这些现金流来做些什么，开展一些什么样的活动和计划？第二就是说在现在国家能源短缺，然后还有天然气，特别是天然气短缺的情况下，我想问一下公司的四季度的化工板块的一些表现，以及成本是否会有上升，对化工板块有一些影响？谢谢。 Thank you for your pretty macro questions. You are absolutely right, we keep pretty strong cash flow of the company's operations by the end of this third quarter, and we have more than 200 billion CNY cash in our balance sheet. This is a significant amount. However, we also have quite a significant and ambitious development plan for the 14th five years plan. In that plan, we are going to further enhance the foundation of the resources, including a lot of investment will be allocated on the natural gas parts that will help the whole nation as well as the company change our portfolio in that part to provide more cleaner burn fuels to be contributor in those natural neutralities initiatives. At some time, we also will build several integrated chemical facilities in China to meet the domestic Chinese market need for those high performance compounding materials in particular. In the next several years, you can tell our ethylene production may grow by 8% annually. Apart from that, we also are committed to some investment in the energy transition, in the hydrogen part, that will be also a significant part of the investment. Those investments need cash flow support. We expect in the next several years, the company will try to manage the stable cash flow to support that. At the moment, we do not have a buyback initiative, given in the Hong Kong Stock Exchange as well as Shanghai Stock Exchange, they have strict stipulations in that part. Those initiatives subject to the approval of the shareholders. A lot of those cash will be allocated in our investment as well as to maintain the stable dividend payout. That is the use of those cash. We are very pleased to see this cash has been stable in the past three years at those level of the 180 to 200. This is a pretty challenging marketing situations. The second question regarding the short of the power, short of the supply of the energy, that occurred start from October. You can tell lots of the business as well as the government taxing policies on part and a lot of the policies and the activities related those area and the power shortage have been eventually lived. The shortage of coal, hiking of coal price, have been coming down a bit significantly in the past week. We can see those area, although it's going to be tight, but I fully believe the market as well as the government can have the proper manage those situation in China. In the chemical area and the current situation, that is still very in good shape. Just like previous questions in the third quarter saying we have declined the EBIT contribution in the chemical side in comparing with the second quarter, but we still deliver more than CNY 5 billion EBIT in that business. In the first quarter, the feedstock cost is going to be high for the chemicals, but the chemical products price today still at a relatively high level. The chemical margin still be there. In China, given the demand is continuous, very strong in the first three quarters, the demand for the chemical products grow by some 8%. It has a significant year-on-year growth in terms of demand. We are seeing in first quarter demand will be continuous, will be strong in that part. That's going to help us to deliver a good result in the chemical area. Thank you. The next question comes from Toby of Citigroup. Please go ahead. Thank you. The question was from Citigroup. The first one is that, considering the energy shortage, including the diesel shortage, will the company also increase to optimize the slate of the production and to increase the output of the diesel in the future, especially in the 4Q? In addition, I also noticed that the price of the direct sales of diesel also increased recently. What is the impact on the company's performance? Thank you. 市场供应的供需略偏紧。那么应该说面对这个情况，中国石化还是对市场有非常迅速的反应，在积极地应对。目前我们在四季度的生产经营安排上也做了及时的调整，包括有提高相关的炼油的加工量，通过调整生产经营的结构，包括生产的结构，就像您提到的，比较专业的，柴汽比的调整，包括我们经营策略的调整，包括出口呀，还有供国内方面的整个的一整套的组合拳的行为，来增大国内的供应，提高对市场的供应量。应该说在这个同时，也是扩大了我们中国石化在成品油市场的占有率。我想表达的一个观点就是，越是在这种可能外人看起来比较严肃、比较紧张的经营局面下，越是能体现出中国石化上中下游一体化的整体的优势。比如说前三季度市场形势跟现在市场形势不太完全一样。中国石化的调整的灵活性，调整的空间，这种优势充分发挥出来了。我们也相信，在中国石化的非常好的生产竞争形势下，我们有信心在四季度继续延续前三季度一个好的生产经营形势，在保证安全环保的条件下，通过调整经营策略来取得更好的业绩，赢得市场的尊重。谢谢。 The supply of diesel in domestic market was tight recently, especially in October. We also take the countermeasures to compete with the current situation. We also optimize the slate of the production to increase the output of diesel. We will also decrease the exportation of diesel to increase the supply to the domestic market. We will take advantage of our integrated, and we will make the full use of our integrated advantages to counter the current situation. We are confident that we will achieve a better performance in the full Q4. Thank you. The next question comes from Lawrence of BOCI. Please go ahead. Thank you. 各位领导好，我是中银国际的刘志成。我有三个小问题。第一个是想问一下，我们看见销售板块净运营环比在三季度是下降了大概31%。那我就想理解一下，到底里面是有什么原因导致这个情况呢？那这个情况在四季度会不会持续，还是会恢复比较正常的水平呢？第二就是关于炼油板块，我想了解一下，我们在三季度的这个板块的利润里面，有没有包含任何这种库存的收益？如果有的话，大概是多少的量？最后想问一下天然气，因为国际上的天然气价格都比较高，那我想了解一下，我们公司在国内销售天然气的时候，最近或是这个冬天有没有把价格提升，如果有的话，幅度大概是多少？好，谢谢。我来回答这几个问题。首先回答您关于三季度的销售板块的利润情况。销售板块的经营收益在三季度是56个亿，环比是减少了有25个亿左右。其实主要的原因有两个方面：一个方面是因为在二季度的话，油价上升的幅度要比三季度要高，所以说它的库存的贡献是不如二季度，这里面就差了有13个亿。第二个主要原因还是三季度，你也知道国内的局部疫情，还有主要还是三季度有个洪涝灾害，那么我们成品油的经营量是环比下降了超过280万吨，也减利有11个亿左右。这个就是销售板块在三季度影响的主要因素。那么从四季度来看的话，整个九月份和十月份，特别是十月份效益还是不错。那么从十一月份到十二月份，从目前来看的情况的话，应该说四季度的经营收益和三季度应该是相差不大。这是第一个问题。 Okay. There are three questions from the BOCI. The first one is that I've noticed that the operating profit in the marketing segment was down by more than 30%. Could you please elaborate the reasons? Could you also elaborate the outlook in the full Q4 of this year? The second question is that, are there any inventory gains in the refining segment? Could you elaborate the number? The third question is that, did we also increase the selling price of natural gas in domestic market? The answer for the first question is that the operating profit in the third quarter of the marketing segment was around CNY 5.6 billion, and decreased CNY 3.5 billion Q on Q speaking. The major reason is that the inventory gains in the third quarter decreased to RMB 1.3 billion, Q on Q speaking. The second reason is that impacted by the COVID-19 pandemic outbreak and also the flood disasters in some provinces. The throughput of the sales volume of refined oil products decreased for around 2,860,000 tons and this decreased the profit for around CNY 1.1 billion. 那么我回答第二个问题，应该说公司正常的生产经营运行的保障应该是有20天左右的原油的加工量的库存，还有15天左右的成品油库存。所以说库存对公司的经营收益的影响还是非常大。因为今年油价是呈现一个上行，所以说库存对公司的贡献还是比较大。那么前三个季度整体库存的增利是324亿，你关注的第三季度是70.8亿。第三个季度的整体的库存收益要比二季度的库存的增利还是要少，因为三季度整个的油价走势是缓慢上升，所以说三季度整个的库存要比二季度要少63亿，这也是整个公司三季度要比二季度整体效益稍微差一点的一个主要原因。谢谢。 Okay, for the second question, my answer is that in order to maintain the stable operation, the company normally keeps the inventory of crude oil and refining products at a 20-day processing volume level and 15-day level respectively. So in the first three quarters, due to the increasing of crude oil price, the inventory gains was around CNY 32.4 billion, including the refining, marketing, and chemical segments, increasing for around CNY 163.1 billion compared with the same period of last year. The number for the third quarter was CNY 7.1 billion, including the marketing, refining, and chemical segments. Thank you. 我再回答第三个问题，关于天然气。确实天然气的推价工作也是公司非常重视的。那么今年的天然气的供需情况发生了一个较大的变化，所以说我们公司还是非常注重天然气在整个运营过程的推价工作。那么一到9月份，我们自产的整个天然气的推价是上涨了17.4%。那么进入四季度，特别是目前，随着LNG现货采购价的不断上升，同时在这个销售端也是进入一个采暖季，也是一个旺季。那么公司会两手抓，一方面是大幅度地通过把握采购节奏和销售节奏去控制外采的成本，同时在推价方面加大力度。目前的价格有一个上升的态势，我们预计四季度整个天然气的价格不会低于20%的增长。谢谢。 As for the third question, the company always focus on the sales price of the natural gas. For the first three quarters, the sales price of natural gas was up by for around 17.4%. Currently speaking, the domestic market was into the peaking season, especially in the winter season. We anticipate that in the 4Q, the price of natural gas will be up by 20%. Thank you. Due to time constraints, now last two questions. Thank you. Due to time constraints, we invite last investor to ask questions. The last question comes from Luchen of CICC. Please go ahead. Thank you. 好，谢谢管理层让我提问最后一个问题。我这个问题是关于我们化工新材料的业务，特别是想跟领导问一下，在EVA方面的话，我们看到了今年和明年，包括未来会有一个比较持续的新产能的增长。那么想跟公司咨询一下，就是现在的产能建设情况如何，以及我们对EVA这一块的整体规划未来是怎么样的？除此之外，公司在其他的原材料新材料业务上，是否还有值得提示我们市场看的，在重点规划布局上有没有特别亮点的地方？谢谢。 There are two questions from CICC. The first one is regarding the new material business of the company. Could you elaborate the EVA capacity currently and the future strategy on the EVA business? The second question is that if the company has some other new material business strategy. Thank you. 谢谢你，陆晨。我们现在EVA的总产能是36万吨，作为光伏用的EVA的产能现在是16万吨。我们未来在这个EVA的产能上还有一个新的建设规划，目前正在建设中的两套项目，一个是中科炼化，是光伏用EVA，是10万吨，还有一个是在古雷，这个光伏用的EVA是30万吨。这样的话，截止到明年的下半年，我们的光伏用EVA的总产能能够达到56万吨。除此以外，刚才黄总也讲到了，我们是在化工方面，是要着重这个新材料等高附加值产品的研发和生产。现在所规划的一些大的化工项目，主要设计的主要是增加这些产品的产量，包括像POE，还有我们在炼厂的针状焦产品，以及Alpha-olefins，还有高端的树脂、高端的化纤，都是在研发和生产的过程中。总之，公司将会在新材料这方面，在未来的五年会有很好的表现。我们主要是要在抗周期方面，公司将做大量的工作。谢谢。 Thank you for your question. Currently we have around 360,000 tons of capacity for EVA, and for the capacity of EVA used in the photovoltaic generation was around 160,000. There are also two projects will come stream in the next year, which is 中科 and Gulei. At that time, the total EVA for photovoltaic generation will reach for around 560,000 tons. For your second question, I would like to say that the company will always focus on the new material business construction and development, and we will focus on the capacity construction on new high-end materials including the POE, the needle coke, the alpha-olefins, and as well as the high-end plastics. I would expect that in the next five years, the new material business of the company will show a good performance and deliver sound results in the next five years. Thank you. Thank you again for attending Sinopec's announcement and your continuous support. If you have any further questions, please contact our secretary and IR people based in Beijing, Hong Kong and Houston. That concludes today's announcement. Thank you.