\u3000\u3 Guocheng Mining Co.Ltd(000688) 065 Cathay Biotech Inc(688065) )
Performance review
The company released the performance express of 2021 on February 24. It is expected to achieve an operating revenue of 2.198 billion yuan in 2021, with a year-on-year increase of 46.78%; The net profit attributable to the parent company was 604 million yuan, a year-on-year increase of 31.89%. Q4 is expected to achieve a revenue of 565 million yuan in a single quarter, with a year-on-year increase of 63.74% and a month on month decrease of 8.68%; Q4 is expected to realize a net profit attributable to the parent company of 114 million yuan in a single quarter, a year-on-year decrease of 16.68% and a month on month decrease of 30.54%.
Business analysis
The long-chain dicarboxylic acid needs to be repaired, and the sebacic acid project is expected to be put into operation in the middle of the year: since 2021, the company has continued to cultivate the long-chain dicarboxylic acid market, maintained and consolidated its leading position in the international Chinese market, reduced the negative impact of covid-19 epidemic, and increased the company’s long-chain dicarboxylic acid business income. In the second quarter of 2022, the 40000 ton sebacic acid project of the company is expected to be put into operation, and the market scale of the company’s long-chain dicarboxylic acid will be further expanded at that time. Since Q4, the oil price has continued to rise, and the cost of alkane raw materials has increased, which has a certain impact on the company’s profits.
Polyamide began to contribute revenue, and the straw project is expected to further open up growth space: after the second half of 2021, the company’s Wusu base with an annual output of 50000 tons of bio amyl diamine and 100000 tons of bio based polyamide has been gradually put into operation and continued product development. At present, pa56, pa510, pa512 and other products have been developed, which are widely used in engineering plastics, industrial silk Civil silk and other fields. The annual output of 500000 tons of bio based glutamine and 900000 tons of bio Based Polyamide projects in Shanxi Taiyuan base have been under construction and are expected to be put into operation gradually after 2023. The company’s straw project is undergoing pilot test. In the future, a 10000 ton straw lactic acid project will be built in Shanxi. The breakthrough of straw process will effectively promote the further popularization of biochemical industry and open up growth space for the further development of the company.
Profit adjustment
Considering the impact of rising oil prices on the company’s costs and the time needed for the promotion of bio based polyamide, we expect the company’s revenue to be RMB 2.198/38.53/5.276 billion from 2021 to 2023; The net profit attributable to the parent company was 604 / 712 / 878 million yuan (of which, it was reduced by 9% / 7% respectively in 21 / 22 years), corresponding to 101 / 85 / 69 times of PE, maintaining the rating of “overweight”.
Risk tips
The industrialization progress of new business is less than expected, the customer certification is less than expected, the long-chain binary acid landscape is downward, and the rise of oil price affects the company’s profit
