\u3000\u3 Guocheng Mining Co.Ltd(000688) 065 Cathay Biotech Inc(688065) )
Main points:
Event description
Cathay Biotech Inc(688065) released the annual report for 2021 on April 7. According to the announcement, the operating revenue in 2021 was 2.197 billion yuan, with a year-on-year increase of 46.77%, and the net profit attributable to shareholders of listed companies was 608 million yuan, with a year-on-year increase of 32.82%. Weighted average roe5 76%, down 1.14 percentage points year-on-year. In 2021, the company realized a net profit attributable to the parent company of 608 million yuan, with a year-on-year increase of 32.82%. In 2021, the company realized a gross profit of 857 million yuan, with a year-on-year increase of 108 million yuan. In 2020, the company’s financial expenses were -182 million yuan, mainly due to the increase of interest income; The management fee was 134 million yuan, a year-on-year increase of 11.23%; The sales expense was 4200 yuan, with a year-on-year increase of 74.71%, mainly due to the increase of income, packaging expense and the number of salespeople; The R & D cost was 134 million yuan, a year-on-year increase of 58.40%, mainly due to the company’s increased R & D investment and the increase in the number and salary of R & D personnel; R & D investment accounted for 6.08% of revenue, an increase of 0.9 percentage points year-on-year. The company’s net cash flow from operating activities was 594 million yuan, a year-on-year increase of 15.38%; The net cash flow from investment activities was – 126 million yuan, an increase of 89.45% year-on-year, mainly due to the decrease of the company’s structured deposit products; The net cash flow from financing activities was 2.987 billion yuan, a year-on-year decrease of 50.73%, mainly because the company received investment funds from minority shareholders this year and had the impact of funds raised from initial public offering last year. The inventory turnover days were 263 days, a year-on-year decrease of 123 days. The cash (capital expenditure) paid by the company for the purchase and construction of fixed assets, intangible assets and other long-term assets in the whole year was 1.475 billion yuan, a year-on-year increase of 93.24%, and the construction in progress was 774 million yuan, a decrease of 51.93% over the beginning of the period.
In a single quarter, Q4’s revenue was 565 million yuan, an increase of 63.71% year-on-year and a decrease of 8.70% month on month; The gross profit was 201 million yuan, a year-on-year decrease of 12.61%; The gross profit margin was 35.58%, a year-on-year decrease of 31.09 percentage points; The net profit attributable to the parent company was 118 million yuan, a year-on-year decrease of 13.54% and a month on month decrease of 27.92%. The downstream customers of the company are mainly overseas customers. Affected by the epidemic, overseas demand decreases.
In terms of sub regions, the company’s overseas revenue in 2020 was 995 million yuan, a year-on-year increase of 36.56%; China’s revenue reached 1.159 billion yuan, a year-on-year increase of 52.63%, accounting for 51.50%, a year-on-year decrease of 2.98 percentage points.
Continuation of the leading position of long-chain dibasic acid
The company’s technology level of biological long-chain dicarboxylic acid continues to improve, and its products continue to dominate the global market. In 2021, the negative impact of covid-19 epidemic weakened, the company’s long-chain dicarboxylic acid revenue increased, and the long-chain dicarboxylic acid business is currently the main source of profit of the company. In 2021, the company’s long-chain dicarboxylic acid revenue was 1.996 billion yuan, a year-on-year increase of 36.98%, accounting for 90.85% of the total revenue; The gross profit was 845 million yuan, a year-on-year increase of 14.54%, accounting for 98.60% of the total gross profit; The gross profit margin was 42.33%, down 8.29 percentage points year-on-year. In terms of production and sales, the company’s output of long-chain dicarboxylic acid was 59400 tons in 2020, with a year-on-year increase of 35.42%; The sales volume was 61500 tons, with a year-on-year increase of 42.49%. The company’s biological sebacic acid DC10 will be put into trial operation in the first half of 2022.
The industrialization of biological ginilon has landed and entered the big scene of biological manufacturing
In 2021, the company’s annual revenue of bio based nylon was 153 million yuan, accounting for 6.94% of the total revenue. The output was 16800 tons and the sales volume was 7400 tons. Kasai (ussu) bio based nylon production line with an annual output of 100000 tons has been put into operation as scheduled at the end of the first half of 2021. By the end of 2021, bio based nylon products have developed more than 300 customers and began to form sales. They are favored by many global well-known brands such as Solvay, petropol and somet, and are widely used in textile, industrial silk, engineering plastics and other fields to provide green solutions for global low-carbon development. The company’s new bio based nylon, which has the comprehensive advantages of high strength, temperature resistance, recyclability and low cost, has completed the pilot test certificate and is expected to enter the large scene application stage of “replacing steel with plastic and plastic with plastic” to replace metals and thermosetting materials.
For different application scenarios of bio based nylon, the company registered the trademark “Talon” mainly used in the field of textile and the trademark “ecovent” mainly used in the field of engineering materials. ECOPENT ® The melting point range of series products covers 130 ℃ – 300 ℃, which can be used in the fields of automobiles, electronic appliances, industrial products and daily necessities. E-Series products such as e-1273 and e-2260 have been widely recognized by downstream customers. E-6300 is a new bio based material with high heat resistance, high strength, good creep resistance, chemical corrosion resistance and high cost performance. In addition, the company’s bio based nylon is also mainly used in the field of civil silk, such as sportswear, underwear, socks, fabrics blended with cotton, hemp, silk and wool, bags, carpets, etc; Industrial silk field, such as tire cord fabric, luggage, airbag wire, demoulding fabric, etc; Non-woven fabrics, such as facial mask, hygiene products, etc. Engineering plastics field, such as auto parts, electronic appliances, ties, heat insulation strips, etc; Glass fiber reinforced composites and carbon fiber reinforced composites are used in lightweight fields, such as new energy vehicles, wind power blades, pipes and building materials; Nylon elastomer field, such as fabrics and shoe materials.
In addition, the company’s bio amyl diamine technology continues to achieve breakthroughs. The large-scale production line of Wusu factory has been put into operation at the end of the first half of 2021. In addition to the use of nylon products, bio amyl diamine continues to expand the application of isocyanate, epoxy curing agent and other fields. Bio nylon, bio glutamine and bio nylon industrialization technology were listed as key common technologies of the industry by the Ministry of industry and information technology in 2015; For two consecutive years, the Ministry of industry and information technology of the people’s Republic of China listed biokinilon 56 as the first batch of application demonstration guidance catalogue of key new materials (2018 / 2019), (2019 / 2020).
The company has made new progress in safeguarding intellectual property rights
Cathay Biotech Inc(688065) protect the legitimate rights and interests of intellectual property through legal means. On December 23, 2021, according to the effective judgment of the Supreme People’s court, Shandong Guiyuan and Laiyang Hengji’s use of Kasai’s intellectual property rights to produce and sell long-chain dicarboxylic acid infringed Cathay Biotech Inc(688065) patent rights, and the long-chain dicarboxylic acid products they produced were products infringing Cathay Biotech Inc(688065) relevant patent rights. Shandong Guiyuan and Laiyang Hengji should immediately stop selling infringing products and compensate Cathay Biotech Inc(688065) economic losses. So far, Cathay Biotech Inc(688065) in the process of protecting the intellectual property rights of long-chain dicarboxylic acid, has obtained a number of effective and successful judgments against the infringement of Shandong Hanlin Biotechnology Co., Ltd., Laiyang Shanhe Biological Products Management Co., Ltd., Laiyang Hanfeng Biotechnology Co., Ltd., Laiyang Hengji Biological Products Management Co., Ltd. and Shandong Guiyuan Biotechnology Co., Ltd.
In the context of “carbon neutralization”, bio based materials have application potential in many large scenarios
The company hopes to realize “carbon neutralization” by means of biological manufacturing, and has established the development strategic focus: (1) develop new bio based materials with large application scenarios, especially thermoplastic fiber reinforced composites and biomass degradable materials.
The high temperature resistant bio based nylon reinforced with glass fiber and carbon fiber developed by the company has the characteristics of lightweight, high strength, high temperature resistance, high wear resistance and corrosion resistance. It has the advantages of renewable raw materials, recyclable products and competitive cost. It will be popularized in the application fields requiring lightweight, such as vehicles, wind power, aviation and building materials. (2) Industrial utilization of biological waste. The company plans to develop efficient comprehensive technologies such as pretreatment of biomass fiber, cellulose saccharification and biological utilization of miscellaneous sugar. The goal is to use agricultural wastes such as straw as biological manufacturing raw materials to achieve or exceed the economic efficiency of using grain raw materials such as corn. The company will choose lactic acid / polylactic acid and other biodegradable materials as the industrialization demonstration project of straw raw materials, and develop biological waste for polyamide, amino acid, biofuel and other products with mature markets, so as to realize “no competition for food and land with people” in the large-scale biological manufacturing. In order to solve the long-term supply of biological manufacturing raw materials and the reuse of biological waste, the company is carrying out the pilot experiment of straw treatment and application in lactic acid production, which is progressing smoothly. The next step is to develop the purification process of L-lactic acid fermentation broth produced by fermentation with straw as raw material, with chemical purity ≥ 99% and optical purity ≥ 99.5%. (3) Establish R & D and production facilities for the whole industrial chain of synthetic biology. The company takes technological innovation as the driving force for the sustainable development of the enterprise, strengthens the construction of high-throughput R & D facilities in the whole industrial chain of synthetic biology, and selects projects with relative competitiveness, foresight, social significance and commercial value for systematic key R & D.
Investment advice
It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 857 million yuan, 1043 million yuan and 1261 million yuan respectively, with a year-on-year growth rate of 41.0%, 21.7% and 20.9%. The corresponding PE was 53.50, 42.97 and 36.37 times respectively. Maintain the “buy” rating.
Risk tips
The risk of uncertainty in the development progress and sales of new products, the risk that the progress of projects under construction and raised investment projects is less than expected, the risk of leakage or confidentiality of core technologies, the risk of fluctuations in raw material and energy prices, litigation risk, the continuous impact of the epidemic, etc.
