Description of the event
On April 29, 2024, Kaiser Biotech released its 2023 Annual Report and 2024 Quarterly Report. In 2023, the company achieved revenue of 2.114 billion yuan, a year-on-year decrease of 13.39%; net profit to mother was 367 million yuan, a year-on-year decrease of 33.75%. In the first quarter of 2024, the company achieved revenue of 685 million yuan, an increase of 35.43% over the previous year, and achieved net profit of 105 million yuan to mother, an increase of 83.25% over the previous year.
Incident reviews
Market demand was pressurized by the release of production capacity in 2023. The price decline of long-chain binary acid increased, and the boom picked up in the first quarter of '24. Prices of long-chain binary acids are under pressure due to domestic and overseas demand falling short of expectations. We estimate that in 2023, the average price of the company's long-chain binary acid was about 31,800 yuan/ton, down 10.95% year on year; gross margin was 37.86%, down 2.83% from 2022. In 2023, the company's long-chain binary acid sales volume was about 60,000 tons, an increase of 2.22% over the previous year. It mainly benefited from the successful commissioning of the company's 40,000 ton sebacic acid production line in Taiyuan in September 2022, and market development achieved certain results. Demand for long-chain binary acids has improved since the first quarter of '24. The company has increased its product sales efforts, and the customer share of sebacic acid products has increased. In the first quarter, revenue increased 24.76% month-on-month, and net profit to mother increased 99.96% month-on-month.
Bio-based polyamide has significant energy saving and emission reduction advantages. The bio-based polyamide market potential is expected to exceed 20 billion yuan in 25 years. The company is forward-looking for hydrogen energy and air traffic applications. According to the company's disclosure, each ton of bio-based polyamide can reduce carbon emissions by more than 50% compared to petrochemicals. Currently, downstream applications of bio-based polyamide include fields such as textiles, clothing and engineering plastics. The thermoplastic composites developed by the company can be used in fields such as new energy, transportation and logistics. According to the company's disclosure, the global bio-based polyamide market is expected to reach 21,591 billion yuan by 2025. At present, the company has sold 100,000 tons of bio-based polyamide, with a production capacity of 900,000 tons under construction. In 2023, the company eliminated the proposed increase of no more than 6.6 billion yuan and introduced a fixed increase plan for China Merchants Group as an indirect shareholder, which is expected to strongly promote the industrialization of bio-based polyamide. According to the company's public account, in January 2024, the company signed an agreement with Korea's 3P.COM to establish a joint venture to jointly develop the application of thermoplastic bio-based polyamide composites in the fields of hydrogen storage and transportation, urban air traffic, and wind power blades.
Investment advice
We predict that from 2024 to 2026, the company will achieve revenue of 29.58/47.19/7.318 billion yuan, respectively, an increase of 39.90%/59.55%/55.06%; net profit to mother of 4.73/6.58/ 832 million yuan, an increase of 29.04%/39.06%/26.50%, corresponding EPS of 0.81/1.13/1.43 yuan, PE 63.28/45.50/35.97 times, maintaining the “+B” rating.
Risk warning
The risk of fluctuations in raw materials and energy prices; the risk that the progress of fund-raising capacity construction does not meet expectations; the risk of product development and sales falling short of expectations; the risk of market competition.