Sinopec Yizheng Chemical Fibre Company Limited BNP PARIBAS PEREGRINE

1. SinopecYizheng Chemical Fibre Company Limited BNP PARIBAS PEREGRINE China Economic Development Forum October 2002, Qingdao

2. 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.

3. Business scope PX PTA MEG Polymerization & esterification Existing major products of Yizheng Polyester chips Spinning SSP Remelting PET Resin Film Fibre Bottles Tapes Staple fibre Filament Containers Disks Apparel Industrial plastics Upholstery Industrial fibre

4. Share capital structure Sinopec 1,680 million shares CITIC 720 million shares 1,400 million H shares 200 million circulating A shares 42% 18% 35% 5% 100% Yizheng 100% 95% 100% 100% Foshan Complex Kangqi Company Forerunner (HongKong) Forerunner (Europe) 5% 41% 59% Foshan Polyester • Total issued shares: 4 billion • A diversified share capital structure is helpful to a healthy corporate governance

5. 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

6. Structure restructuring (1) Underwent several structure restructuring since 1997 to improve profitability and competitiveness Product unit manufacturing costs comparison The Company’s employee number Total liabilities to total assets ratio (%) Source: the Company

7. Structure restructuring (2) Product differential ratio was increased substantially Product differential ratios (%) Product types

8. 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 Company’s estimates

9. Market review--supply Domestic supply of polyester fibre increased by 21.7%in 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 Company’s estimates

10. 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 Company’s product price quotation(excluding VAT) International supplier contract price quotation (excluding taxes, compared to the price of the Company’s polyester chips) Rmb/tonne US$/ tonne 1/2001 3/2001 6/2001 9/2001 12/2001 3/2002 6/2002 Source: the Company

11. 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

12. Financial highlights for 1H2002

13. Operation environment for 2H2002 Overall operating environment will be better than the corresponding period of last year • 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

14. Operation plans for 2H2002 Maximize profit Emphasize overall operation optimization • The Group’s planned production volume of polyester products is 711,600 tonnes, representing an increase of 11.8 per cent as compared with last year . The Group’s 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

15. Outlook for China polyester industry A new round of structure restructuring for China’s 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

16. Provides more rooms for future development The Group’s strengths Dalian Qingdao Zhengzhou Xian Yangzhou Yizheng Nanjing Hefei Wuhan Shanghai Chongqing Shaoxing Ningbo Xiamen Guangzhou Foshan • 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

17. Development strategy (1) Continue to raise ROCE. The average ROCE of new projects implemented in next three years will be kept between 12 to 15 per cent Average yearly capital expenditure budget to sales will be set at around 7 per cent so as to maintain a healthy capital structure and sufficient cash flow Adhere to two principles Prudent investment policy Market orientated

18. Development strategy (2) Specialized in polyester industry, develop apparel, industry and upholstery polyester Try to raise the proportion of the equipment investment to the total investment above 80 per cent Raise the differential rate, increase output of the high value-added product Adhere to three strategies Specialty Connotation development Technology improvement

19. Expansion projects for 2002 New profit-generating sources for the Group • 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 The planned capital expenditure is Rmb1292 million, total capital expenditure for 1H2002 amounted to Rmb603 million

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