Core views

The company's fixed increase prospectus has been accepted by the Shanghai Stock Exchange, and the project continues to advance. This fixed increase is expected to supplement the company's cash flow. The company's bio-based polyamide products have now been deployed and contacted downstream in the fields of transportation, construction, photovoltaic frames, broken bridge aluminum, etc., and it is expected that promotion will be accelerated through the help of the China Merchants Bureau. Crude oil in the main business is stabilizing, prices are expected to pick up, and sebacic acid projects will continue to expand as overseas customers develop. The company also plans to lay out polypeptide APIs, use synthetic biology to reduce costs, and open up another super circuit.

occurrences

The company's fixed increase prospectus on December 13, 2023 has been accepted by the Shanghai Stock Exchange and can be issued after it has been reviewed by the Shanghai Stock Exchange and approved by the Securities Regulatory Commission.

Brief review

The fixed increase was accepted by the exchange, and the China Merchants Bureau empowered growth

The company's prospectus for a fixed increase has been accepted by the Shanghai Stock Exchange. The number of shares to be subscribed is no more than 153 million shares, not more than 26.3% of the total share capital before issuance. This fixed increase plans to raise no more than 6.6 billion yuan in cash, 1) supplement the company's cash flow; 2) the holding ratio of Liu Xiucai, the actual controller of the company, and his holding company increased from 30.8% to 45.2%, further consolidating control over the company; 3) China Merchants Bureau's friendly intervention, Shanghai Yaojian accounted for 49% of the shares in the new joint venture company Shanghai Yaojian did not seek control. In addition to participating in the fixed increase, the remaining capital will be used for investment in bioscience-related fields; 4) China Merchants Group's investment in Shanghai Yaoxiu is used as a platform for cooperation to invest in bioscience-related fields; 4) China Merchants has signed a separate bank with the Bank The “Business Cooperation Agreement” has been completed Make every effort to promote Kaisai bio-based polyamide products and achieve the “1-8-20” goal; 5) Shanghai Yaoxiu promised not to reduce the company's shares within 3 years after the fixed increase was completed, further stabilizing the equity structure.

The company has laid out a 1 million ton bio-based polyamide project and plans to promote “plastic instead of steel, plastic instead of plastic” in the fields of transportation, photovoltaic frames, construction, etc., and the China Merchants Bureau has added hope to accelerate the implementation of related applications.

The main business, long-chain binary acid, is expected to stabilize, and sebacic acid is gradually released

The company's main business, long-chain binary acid, covers DC11 to DC18, which is similar to the DC10 sebacic acid newly developed and put into production by the company. Since its raw materials are mainly alkanes, the price of long-chain binary acid is highly linked to crude oil prices. This year, due to weak crude oil prices and demand, the export price/quantity of sebacic acid has both declined. Considering the subsequent stabilization of crude oil prices and the recovery in international demand, the company's main business demand is expected to pick up; in addition, the sebacic acid project has already been put into production and release, and will continue to contribute to growth with the gradual development of overseas customers.

The plan is to lay out peptide APIs to give full play to the cost advantages of synthetic biology, and the company plans to lay out polypeptide drug synthesis. The goal is to use synthetic biology technology to make low-cost, high-value-added APIs; the global polypeptide drug market is expected to grow to 96 billion US dollars in 2025, and the company is expected to rely on cost advantages to expand the API field. Professor Liu Xiucai, the founder of the company, was employed by the Sandoz Pharmaceutical Research Institute in the US as early as 1991, and the main fields he studied during this period were protein structure and function, biomacromolecules (DNA, peptides, etc.), and solution conformation in combination with bioactive substances; the company also invested in Beijing Molecular Heart in February 2023. This is an AI protein design platform company, and its AI protein optimization and design capabilities can be applied to biopharmaceuticals, synthetic biology and other industries. We believe that the company will continue to deepen its cultivation and expand its circle of competencies, and it is hoped that it will make some gains in the field of polypeptide APIs.

Profit forecast and valuation: The fixed increase continues to advance, and the China Merchants Bureau is expected to accelerate the promotion process of bio-based polyamides. The company's net profit from 2023-2025 is estimated to be 4.13, 7.07, and 1,038 billion yuan. The corresponding PE is 77.0X, 44.9X, and 30.6X respectively, maintaining the “buy” rating.

Risk warning: raw material prices fluctuate; downstream demand falls short of expectations; project commissioning falls short of expectations, etc.