On August 13, Ningxia Baofeng Energy Group Co., Ltd. (hereinafter referred to as "Baofeng Energy") released its 2026 semi-annual report. In the first half of the year, the company recorded an operating revenue of 30.198 billion yuan, a year-on-year increase of 32.33%, and a net profit of 9.728 billion yuan, up 70.14% year-on-year. Both revenue and net profit saw significant growth, reaching new highs for the first half of the year since the company’s public listing in 2019.
Liu Yuanguan, President of Baofeng Energy, stated to a reporter from *Securities Daily* that as a domestic leader in the coal-to-olefins sector, the company’s strong performance in the first half of the year is driven by its cost advantages in coal-to-olefins production and the scale benefits resulting from continuous capacity expansion. With further capacity growth, Baofeng Energy’s total polyolefin production capacity is set to reach 6 million tons by the end of 2026. This will not only support the company’s continued growth but also contribute more effectively to national energy security and the transformation and upgrading of the energy structure.
Baofeng Energy’s core business involves the production of olefins (ethylene and propylene) from coal, which are then used as feedstock to manufacture polyolefins (polyethylene and polypropylene) and ethylene-vinyl acetate (EVA) copolymers. Polyolefins represent the most widely consumed synthetic resins globally and serve as essential foundational materials for the national economy. As of the end of 2025, Baofeng Energy’s coal-to-olefins production capacity accounted for approximately 34% of the national total, ranking first in the industry.
According to the semi-annual report, the company’s output of its primary products—polyolefins (including EVA)—reached 2.9731 million tons in the first half of the year, an increase of 23.64% year-on-year. Meanwhile, coke production reached 3.4681 million tons, a year-on-year increase of 1.47%.
Publicly available information indicates that olefins can be produced via various routes, including oil-based, gas-based, and coal-based processes. Oil-based production remains the mainstream method, while coal-based production represents a distinct, advantageous route specific to my country. In the first half of 2026, profit margins varied significantly across these different production pathways. Oil-based olefin and propane dehydrogenation (PDH) processes faced rising production costs due to increased prices for feedstocks such as crude oil and propane, leading to a year-on-year decline in profit margins. According to data from JLC (Jinlianchuang), the average profit per ton for oil-based polyethylene fell by 527 yuan, while the average profit per ton for oil-based polypropylene dropped by 215 yuan compared to the previous year.
Conversely, the coal-based olefin production route benefited from China’s abundant coal reserves and a stable, sufficient coal supply. This resulted in relatively stable production costs and a notable improvement in profit margins. JLC statistics show that in the first half of the year, the average profit per ton for coal-based polyethylene rose by 333 yuan, and the average profit per ton for coal-based polypropylene increased by 1,070 yuan. Compared to oil-based and PDH routes, the advantages of coal-based olefin production—specifically regarding supply chain security and cost competitiveness—have become even more pronounced.
Liu Yuanguan stated that by the end of 2026, Baofeng Energy’s total polyolefin production capacity is expected to increase from the current 5.2 million tons to 6 million tons. This capacity could displace over 30 million tons of crude oil imports annually—equivalent to approximately 5% of China’s total national oil imports. Given my country’s resource endowment—characterized by "abundant coal, scarce oil, and limited gas"—and its continued high dependence on imported oil and gas, this expansion will provide vital industrial support for ensuring national energy security and facilitating the transition of the country’s energy structure.
According to Baofeng Energy’s semi-annual report, the company’s net cash flow from operating activities for the first half of 2026 reached 11.964 billion yuan—a year-on-year increase of 49.74%. The company plans to distribute 3.055 billion yuan in cash dividends for the period, representing 31.4% of its net profit for the same timeframe.
Zhang Xiaofeng, a professor at the School of Economics at Beifang University of Nationalities, noted in an interview with *Securities Daily* that Baofeng Energy’s steady performance growth, combined with a high dividend payout ratio, not only provides a strong boost to market confidence but also enhances the sense of gain for investors.
Liu Yuanguan stated that, as the company stands at the historic threshold of the start of the "15th Five-Year Plan" period, Baofeng Energy will continue to deepen its focus on the high-end coal chemical sector, aligning its own high-quality development with the broader national development agenda.
