\u3000\u3 Guocheng Mining Co.Ltd(000688) 065 Cathay Biotech Inc(688065) )
Event: on April 6, 2022, the company announced that the annual report of 2021: the company realized an operating revenue of 2.197 billion yuan in 2021, with 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%; The net profit attributable to the parent company after non deduction was 575 million yuan, a year-on-year increase of 43.17%; The net cash flow from operating activities was 594 million yuan, a year-on-year increase of 15.38%. In Q4 of 2021, the company achieved an operating revenue of 565 million yuan, a year-on-year increase of 63.71% and a month on month decrease of 8.70%; 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 net cash flow from operating activities was 161 million yuan, a year-on-year decrease of 35.86% and a month on month increase of 69.51%.
Comments:
In 2021, the operating revenue was 2.197 billion yuan, with 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%; Both revenue and net profit attributable to parent company increased significantly, and the company’s operating revenue and net profit attributable to parent company increased significantly in 2021, mainly for three reasons: 1) the negative impact of covid-19 epidemic weakened. 2) During the reporting period, the company continued to cultivate the long-chain dicarboxylic acid market, maintained and consolidated its leading position in the international and Chinese market, and the company’s long-chain dicarboxylic acid business income increased. 3) The company’s bio Based Polyamide production line was put into operation. Wusu project added 50000 tons of glutaric diamine capacity and 100000 tons of bio Based Polyamide capacity. The company’s polyamide related income increased. Q4 single quarter revenue the company achieved an operating revenue of 565 million yuan, a year-on-year increase of 63.71%; The net profit attributable to the parent company was 118 million yuan, a year-on-year decrease of 13.54%. The main reasons for the decrease include: 1) among the main business costs, the rise of raw materials and international freight. 2) In the process of capacity climbing of Wusu project, the shared cost is relatively high.
R & D investment has increased year by year, and technological advantages have created a moat for the company’s profits
The inventory of long-chain dicarboxylic acid series was 1639194 tons, maintaining a low level, with a year-on-year decrease of 22.14%. The fixed assets at the end of the period were 2.21 billion yuan, with a year-on-year increase of 87.38%, mainly due to the conversion of 100000 tons of polyamide production line to fixed assets. In 2021, the company’s sales expense ratio was 1.90%, a decrease of 3.09 percentage points over the same period last year, which is due to the change of accounting policies and the transfer of transportation expenses from sales expenses to main business costs. The R & D expense rate was 6.08%, with a year-on-year increase of 0.45 percentage points. This is mainly because the company has increased its R & D investment, and the number and salary of R & D personnel have increased. The company has R & D teams in synthetic biology, cell engineering, biochemistry, polymer materials and engineering and other disciplines. The high-throughput R & D platform across multiple disciplines is one of the company’s R & D characteristics.
The company has four core technologies: 1) using synthetic biology to develop microbial metabolic pathways and construct efficient engineering bacteria; 2) Microbial metabolic regulation and efficient microbial transformation technology; 3) Separation and purification technology of biotransformation / fermentation system; 4) Polymerization process and its downstream application development technology. Core technology is the basis for the company to maintain competitive advantage.
Green production and carbon emission reduction policies are favorable
In 2020, countries put forward new requirements for carbon emissions, and China also proposed that China will increase its national independent contribution and adopt more powerful policies and measures to achieve carbon neutrality by 2060. The guiding opinions of the State Council on accelerating the establishment and improvement of a green and low-carbon circular development economic system issued in February 2021 put forward the development directions of “improving the recycling level of industrial parks and industrial clusters” and “encouraging the research and development of green and low-carbon technologies”. In this context, synthetic biomaterials have ushered in the opportunity of rapid development. Through the third-party detection, the production of bio Based Polyamide 56 per ton reduces carbon by 4-5 tons compared with traditional nylon 66 or nylon 6; The carbon reduction per ton of biological sebacic acid is about 20% lower than that of chemical sebacic acid; In addition, the company’s bio based polyamide products use plastic instead of steel for lightweight applications, end products reduce consumption and energy conservation due to weight reduction, and plastic instead of plastic instead of thermosetting materials to realize material recycling, which can make a beneficial contribution to carbon neutralization.
Taiyuan sebacic acid project is expected to be put into operation in the first half of 2022 to realize the industrialization of biological sebacic acid
The 40000 t / a biological sebacic acid construction project, one of the projects raised and invested by the company, is under construction in Kaisai Taiyuan production base and is planned to be put into trial operation in the first half of 2022. Sebacic acid can be used as a polymeric monomer to produce long-chain nylon, sebacic acid esters and other products. DC10 (sebacic acid) is traditionally produced by hydrolysis and cracking of castor oil, with a global market scale of about 110000 tons. The company is building a 40000 ton biological sebacic acid production line, which will compete in the sebacic acid market after completion.
In the capacity climbing of Wusu pentanediamine project and polyamide project, the construction of 500000 tons of bio based pentanediamine and 900000 tons of bio Based Polyamide projects has been steadily promoted
The large-scale production line of Wusu factory has been put into operation in the first half of 2021. In 2021, the production capacity will be 16800 tons and the sales volume will be 7400 tons. After that, the production capacity will be gradually increased. In January 2021, the foundation laying ceremony for the project of annual output of 40000 tons of biological sebacic acid and 900000 tons of bio based polyamide in Shanxi synthetic biological industrial park was held. The polyamide project is expected to be put into operation in 2023. After completion, 500000 tons of bio based glutamine and 900000 tons of Bio Based Polyamide will be added.
Actively explore new application scenarios
The company further deepens cooperation with downstream customers, actively develops potential downstream applications of products, and continues to explore market space. For example, dc18 products cooperate with international well-known pharmaceutical enterprises to help them develop and produce a new generation of hypoglycemic drugs; Based on the verification of downstream international customers, the company continues to expand the application of isocyanate, epoxy curing agent and other fields; The expansion and application of bio based polyamide in new energy vehicles, wind power blades, pipes, sectors, building materials, structural parts and other large-scale application scenarios and fields. In addition, the new bio based polyamide with the comprehensive advantages of high strength, temperature resistance, recyclability and low cost has completed the pilot test, and is expected to enter the large scene application stage of “plastic instead of steel and plastic instead of plastic” to replace metals and thermosetting materials.
R & D and product development plan
The company will continue to promote the construction of high-throughput R & D platforms for disciplines such as gene editing, bioengineering, biochemistry, biomaterial polymerization, textile, modification and evaluation. Through continuous R & D and innovation, the company will further improve the product structure, enhance the cost performance of products, enrich downstream applications, maintain the leading edge of technology and enhance the competitiveness of the company as a whole.
Production and industrialization promotion plan
Continue to optimize strains and production processes for existing production lines and reduce costs; Gradually improve the capacity utilization rate of Wusu material bio amyl diamine and bio polyamide industrialization facilities, and promote the early production; Continue to promote the construction and commissioning of the company’s production projects. The company’s raised project, Shanxi Taiyuan 40000 t / a biological sebacic acid project, is planned to be put into trial operation in the first half of 2022. The “bio Based Polyamide Engineering Technology Research Center” and “Kaisai (Wusu) Biotechnology Co., Ltd. with an annual output of 30000 tons of long-chain dicarboxylic acid and 20000 tons of long-chain polyamide project” are constructed in an orderly manner as planned, And steadily promote other Shanxi industrial park projects as planned, including deep processing of corn and other crops, polyester amide, lactic acid, polylactic acid, spinning, weaving and other downstream supporting projects; Promote the construction and verification of high-value utilization demonstration projects of agricultural wastes.
Market development and customer development plan
On the basis of the long-term application of bio acid to a number of well-known customers in China, the company will further expand the market of bio acid in China; Bio based polyamide products have developed more than 300 customers in the fields of civil silk, industrial silk and engineering materials; The new bio based polyamide, which has the comprehensive advantages of high strength, temperature resistance, recyclability and low cost, has completed the pilot test and is expected to enter the stage of large scene application to realize “replacing steel with plastic and plastic with plastic”; Based on the characteristics of bio based glutamine and bio Based Polyamide functional materials, the company will carry out customer development and layout respectively, strive to improve the customer service level, strengthen the ability of market information collection, analysis and management, accurately grasp the needs and potential needs of customers, and realize the synchronous improvement of customer number and satisfaction.
Talent development plan
The company attaches great importance to the construction of human resources. Based on the existing team, the company combines internal talent training with external introduction to ensure the talent demand of R & D and new projects, and attracts and retains talents through effective talent incentive mechanism and good corporate culture. The company will further improve the management mechanism of human resources training, introduction, use and withdrawal, realize the rational allocation of human resources and comprehensively improve the core competitiveness of the enterprise.
It is estimated that the net profit attributable to the parent company in 2022, 2023 and 2024 will be 865 million yuan, 1333 million yuan and 1755 million yuan respectively, corresponding to 53.03, 34.41 and 26.13 times of PE, maintaining the “buy” rating.
Risk tips: the risk that the project is not put into operation as expected, the risk of product price decline, the risk of product demand decline, the risk of factory safety and environmental protection production, the risk of raw material price fluctuation, the risk of exchange rate fluctuation, the risk that sales do not meet expectations, etc.
