MEG Capacity Expansion and Overseas Projects in 2025 to Boost WanKai New Materials' Performance

In the context of accelerating global economic integration and the mainstream trend of green and sustainable development, the plastic industry, especially the polyester materials sector, is undergoing unprecedented changes. With increasingly stringent environmental regulations and growing consumer demand for sustainable products, the market demand for emerging fields such as bio-based materials, recycled plastics, and high-performance polymers continues to heat up. Against this backdrop, WanKai New Materials Co., Ltd. (hereinafter referred to as "WanKai New Materials"), as a leading domestic supplier of polyester bottle-grade materials, is rapidly rising to become a global leader in the bottle-grade PET market, thanks to its forward-looking strategic layout and technological innovation.

Recently, when answering investors' questions, WanKai New Materials mentioned that the company's upstream MEG capacity layout and overseas projects are expected to be implemented in 2025, which will boost performance. WanKai New Materials is committed to becoming a "global leader in bottle-grade PET" and has formulated three core development strategies to this end: "optimization of the industrial chain, expansion of overseas markets, and innovation-driven development." These strategies have not only driven the company to steadily move forward on the path of high-quality development but also accumulated momentum for its long-term sustainable and healthy development.

In addition to traditional consumer packaging fields such as bottled water and beverages, the demand for PET bottle chips in emerging application areas such as medical aesthetics, cosmetics, small household appliances, and construction materials is growing rapidly. In particular, WanKai New Materials' innovative subsidiary, KaiPuQi, has developed PETG and modified PET products that have shown good market prospects and achieved profitability in the above-mentioned new application areas with modification needs. This marks the company's gradual transition from the traditional market to the high-value-added new materials field, bringing new profit growth points to the enterprise.

Since 2023, the domestic bottle-grade PET industry has entered a short-term period of capacity release. The capacity of polyester bottle chips increased from 12.31 million tons at the end of 2022 to 18.83 million tons by the end of June 2024, a year-on-year increase of over 50%. However, the rapid growth on the supply side has led to overall pressure on industry processing fees. Despite this, with the current round of industry capacity expansion cycle nearing its end, the industry is still expected to have broad growth prospects in the future.

To address the domestic market situation of oversupply, WanKai New Materials has accelerated its pace of expanding into overseas markets. The company has established an overseas warehousing base in Indonesia and reorganized its sales channels in Central Asia. In the first half of 2024, sales volumes to Central Asia and Indonesia reached 45,500 tons and 27,000 tons, respectively, representing year-on-year increases of 54.46% and 30.13%. The proportion of overseas business revenue has increased to 36.49%. In addition, the company's first overseas attempt in Nigeria—a 300,000-ton-per-year bottle-grade PET production base—is expected to be completed by the end of 2025, further enhancing the company's international competitiveness.

Currently, WanKai New Materials has completed the Phase III PET project in Chongqing and put the MEG project into operation, creating a complete natural gas-ethylene glycol-polyester industrial chain. This has strengthened the synergy of the industrial chain and reduced the cost of its main business. The Chongqing base is close to the Puguang Gas Field, which can provide sufficient and low-cost natural gas supply, giving the company an advantageous position in raw materials.

WanKai New Materials continues to focus on research and development innovation, with key R&D projects including bio-based furan polyester, new heat-resistant copolyester, and PET chemical recycling technology. These projects not only align with market trends and future directions but also meet the market demand for high-barrier packaging applications in functional beverages, dairy products, beer, and pharmaceutical packaging. They have also expanded the application market for home appliance and automotive injection molding materials and met the market's demand for R-PET and related products.

The market believes that the company's pioneering efforts in the southwestern market and its expansion upstream in the industrial chain are significant. Based on its existing bottle-grade polyester business, the company has expanded upstream to raw materials such as MEG and intermediates such as DMC, strengthening the synergy of the industrial chain. With the upcoming completion and operation of the MEG project, the company will create a complete natural gas-ethylene glycol-polyester industrial chain. The company's cost control advantage in its main business is expected to continue to be strengthened, and it is anticipated to have a promising market outlook.