\u3000\u3 Guocheng Mining Co.Ltd(000688) 065 Cathay Biotech Inc(688065) )
Performance review
The company released its annual report for 2021 on April 6. In 2021, it realized an operating revenue of 2.197 billion yuan, a year-on-year increase of 46.77%; The net profit attributable to the parent company was 608 million yuan, a year-on-year increase of 32.82%. Q4 achieved a revenue of 565 million yuan in a single quarter, with a year-on-year increase of 63.71% and a month on month decrease of 8.70%; Q4 realized a net profit attributable to the parent company of 118 million yuan in a single quarter, a year-on-year decrease of 13.54% and a month on month decrease of 27.92%.
Business analysis
The sales volume of long-chain dicarboxylic acid is growing rapidly, and the sebacic acid project is about to be put into operation. In 2021, the company continued to dig deep into the long-chain dicarboxylic acid Market and superimposed the demand repair brought by the epidemic relief. The annual sales volume was 61500 tons, with a year-on-year increase of 42.5%. The gross profit margin decreased due to the rise in the price of upstream raw materials and the transfer of transportation fees to operating cost accounting. The 40000 ton biological sebacic acid project of the company is expected to be put into operation in the first half of 2022, which will further expand the market scale of the company’s long-chain dicarboxylic acid.
The downstream application of bio based polyamide is gradually developed, and the Shanxi project is gradually promoted. The company’s Wusu base project with an annual output of 50000 tons of bio based glutamine and 100000 tons of bio based polyamide has been put into operation in the middle of 2021, with an annual operating revenue of 153 million yuan and a gross profit margin of 3.4%. The company’s bio based polyamide products have developed more than 300 customers and began to form sales, and gradually developed in many fields such as civil silk, industrial silk, non-woven fabric, engineering plastics and so on. In January 2021, the company’s annual output of 900000 tons of bio Based Polyamide project in Shanxi base began to lay the foundation. At present, it is in the process of design, civil engineering and equipment procurement. It is expected to be put into operation gradually after 2023.
Synthetic biology is in line with the low-carbon development goal, and the straw project is expected to further open the growth space. Synthetic biology is an effective way to solve the problems of carbon emission reduction and carbon neutralization. According to the third-party detection, the carbon emission per ton of pa56 of the company is 4-5 tons less than that of traditional PA66 or PA6, and the carbon of biological sebacic acid is about 20% less than that of chemical sebacic acid. The pilot experiment of straw treatment and application in lactic acid production carried out by the company is progressing smoothly. The subsequent industrialization demonstration of straw will be promoted in Shanxi. The breakthrough of straw technology will effectively promote the further popularization of biochemical industry and open up growth space for the further development of the company.
Investment advice
The company’s long-chain dicarboxylic acid market continues to expand, sebacic acid and polyamide projects will gradually contribute to the performance, and the breakthrough of straw process will open up the growth space for the company. It is predicted that the net profit attributable to the parent company in 20222024 will be 712, 874 and 1105 million yuan respectively, EPS will be 171, 2.10 and 2.65 yuan respectively, and the corresponding PE will be 64.5, 52.5 and 41.5 times respectively, maintaining the “overweight” rating.
Risk tips
The industrialization progress of new business is not as expected, the long-chain binary acid landscape is downward, and the rise of oil price affects the company’s profit
