\u3000\u3 Guocheng Mining Co.Ltd(000688) 065 Cathay Biotech Inc(688065) )
Performance review
The company released the first quarterly report of 2022 on April 26. In the first quarter of 2022, the operating revenue was 661 million yuan, an increase of 35.77% year-on-year and 17.10% month on month; 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%.
Business analysis
Performance improved month on month, revenue increased rapidly and profit margin improved. In the first quarter, thanks to the continuous penetration of bio based polyamide products and the obvious improvement of long-chain dicarboxylic acid business, the company’s revenue achieved rapid growth, and the overall revenue level was a new high in recent years. On the cost side, in the first quarter, the market prices of the company’s main raw materials mixed alkanes and corn increased by 34.0% / – 7.0% year-on-year and 13.9% / 2.2% month on month respectively, and the overall gross profit margin was flat month on month. The overall cost rate control of the company is relatively good. During the period, the cost rate decreased month on month, driving the net interest rate of the company to increase by 5.5% month on month.
Sebacic acid business will contribute to the performance increment, and Shanxi project will advance steadily. In the past 22 years, the construction of new projects of the company has made steady progress. In the first quarter, the construction in progress increased by 142% month on month, and the ratio of construction in progress / fixed assets reached 87%. The 40000 ton sebacic acid project built by the company in Shanxi is expected to be put into trial operation in the first half of 22 years, which is expected to replicate the substitution process of the company’s original biological long-chain dicarboxylic acid products for chemical method. The annual output of 500000 tons of bio based glutamine and 900000 tons of bio based polyamide in Shanxi base of the company will be planned together with the supporting projects of downstream industrial chain, and it is expected to be gradually put into operation in 23 years.
The pilot test process of straw project is progressing smoothly, and the lactic acid demonstration park will open up a new growth path for the company. The pilot experiment of straw treatment and application in lactic acid production carried out by the company is progressing smoothly. With the effective treatment of straw and the connection of equipment and industrial control process, the subsequent straw lactic acid demonstration park project built by the company in Shanxi is expected to open up a new growth path for the company.
Investment advice
The company’s profit improved significantly in the first quarter, and the cost control was further strengthened. The commissioning of sebacic acid project will contribute to the company’s performance increment, and the breakthrough of straw process will open up a new growth path for the company. It is predicted that the company’s net profit attributable to the parent company from 2022 to 2024 will be 711, 881 and 1135 million yuan respectively, EPS will be 171, 2.11 and 2.72 yuan respectively, and the corresponding PE will be 46.3, 37.4 and 29.0 times respectively, maintaining the “overweight” rating.
Risk tips
The epidemic affected the sales of products in the second quarter, the industrialization progress of new businesses was less than expected, and the rise of oil prices affected the company’s profits
