\u3000\u3 Guocheng Mining Co.Ltd(000688) 065 Cathay Biotech Inc(688065) )
Event:
On April 26, 2022, the company released the first quarterly report of 2022: in 2022q1, the company achieved a revenue of 661 million yuan, a year-on-year increase of + 35.77% and a month on month increase of + 17.10%; The net profit attributable to the parent company was 175 million yuan, a year-on-year increase of + 23.54% and a month on month increase of + 48.04%; The net profit deducted from non parent company was 169 million yuan, a year-on-year increase of + 27.59% and a month on month increase of + 57.08%; The net cash flow from operating activities was 144 million yuan, up + 27.40% year-on-year and – 10.12% month on month; The weighted average return on net assets was 1.62%, an increase of 0.27 percentage points year-on-year and 0.50 percentage points month on month. The gross profit margin of sales was 36.10%, a year-on-year decrease of 8.13 percentage points and a month on month increase of 0.54 percentage points; The net sales interest rate was 28.94%, a year-on-year decrease of 0.09 percentage points and a month on month increase of 5.28 percentage points.
Key investment points:
With the rapid development of the company, Q1 performance and net profit increased
In 2022q1, the company achieved a revenue of 661 million yuan, a year-on-year increase of + 35.77% and a month on month increase of + 17.10%; The net profit attributable to the parent company was 175 million yuan, a year-on-year increase of + 23.54% and a month on month increase of + 48.04%. The growth of revenue and net profit attributable to the parent company benefited from two points: 1) the bio Based Polyamide production line of Wusu material was put into operation and formed sales; 2) The sales revenue of long-chain dicarboxylic acid also increased significantly compared with the same period last year.
Q1 company maintained a high R & D expense rate in 2022. In 2022, the sales expense ratio of Q1 company was 1.78%, with a year-on-year decrease of 5.32 percentage points and a month on month decrease of 1.20 percentage points; The management fee rate was 4.59%, a year-on-year decrease of 2.05 percentage points and a month on month decrease of 1.40 percentage points; The financial expense ratio was – 8.89%, a year-on-year decrease of 2.86 percentage points and a month on month increase of 0.37 percentage points; At the same time, the company’s R & D expenses were 39 million, with a R & D expense rate of 5.86%, an increase of 0.23 percentage points year-on-year and a decrease of 2.80 percentage points month on month.
Wusu project has a large volume, and the downstream market of bio based polyamide products is broad
Kaisai (Wusu) production line with an annual output of 50000 tons of bio based glutamine and 100000 tons of bio based polyamide has been put into operation as scheduled at the end of the first half of 2021. With the smooth operation of the production line, the production capacity has been gradually increased, bringing continuous increment to the company’s profits. Bio based polyamide products have a wide range of applications in the fields of civil silk, industrial silk and engineering materials, and the company’s sales and promotion work has achieved initial results.
It is expected that new projects will be put into operation and contribute to the profit increment
The company’s fund-raising project “40000 t / a biological sebacic acid project in Taiyuan, Shanxi” is planned to be put into trial operation in the first half of 2022, and the “500000 t biological glutaric diamine and 900000 t biological polyamide project” is expected to be put into operation in 2023. At the same time, the company will promote other Shanxi industrial park projects as planned, including deep processing of crops such as long-chain diamine, long-chain dicarboxylic acid and corn, polyester amide, lactic acid, polylactic acid and spinning Weaving and other downstream supporting projects, and the commissioning of new projects is expected to contribute to the continuous increment of profits.
Continuously improve R & D capability and build core competitiveness
R & D and innovation are the basis of the company’s business development. Several products of the company’s industrialization are based on the results of the company’s independent R & D. 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. Since 2017, the company’s R & D expense rate has remained above 4.5%, and the company has continued to improve its R & D capability.
The profit forecast and investment rating predict that the company’s net profit attributable to the parent company from 2022 to 2024 will be 865 million yuan, 1333 million yuan and 1755 million yuan respectively, and the PE will be 38, 25 and 19 respectively, giving a “buy” rating.
Risk tips: the project fails to meet the expected risk, 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 of sales failing to meet the expected risk, etc.
