Event Description

On February 28, the company released its 2024 performance report. In 2024, the company is expected to achieve operating income of 2.956 billion yuan, total profit of 546 million yuan, net profit attributable to the parent company of 487 million yuan, net profit of 462 million yuan, and basic earnings per share of 0.84 yuan/share. Among them, in the fourth quarter of 2024, it is expected to achieve revenue of 741 million yuan, net profit attributable to the parent company of 142 million yuan, and net profit not attributable to the parent company of 127 million yuan.

Significant improvement in performance margin, highlighting the synergy effect of the industrial chain The

performance growth in 2024 is mainly due to the recovery of demand for long-chain diacids and the increase in the production capacity of new varieties of sebacic acid, which drives the year-on-year increase in production and sales. In 2024, the company expects to achieve operating income of 2.956 billion yuan, an increase of 39.84% year-on-year; the total profit was 546 million yuan, an increase of 21.57% year-on-year; net profit attributable to the parent company was 487 million yuan, an increase of 32.80% year-on-year; net profit after deducting non-attributable to the parent company was 462 million yuan, an increase of 50.87% year-on-year. Thanks to the increase in the penetration rate of new energy vehicles and the growth of demand, long-chain diacids have increased significantly, and sebacic acid, DC12 and DC13 have all performed well. In a single quarter, the fourth quarter is expected to achieve revenue of 741 million yuan, an increase of 35.12% year-on-year and a decrease of 3.81% quarter-on-quarter; net profit attributable to the parent company was 142 million yuan, an increase of 168.91% year-on-year and 44.84% month-on-month; net profit after deducting non-attributable to the parent company was 127 million yuan, an increase of 151.01% year-on-year and 33.14% month-on-month. The release of profit elasticity in the fourth quarter was due to the narrowing of foreign exchange losses and the optimization of the superimposed expense side. In terms of business, the domestic market benefited from the acceleration of the substitution of sebacic acid for chemical methods, while overseas demand was driven by other diacid products.

Overall, there is a gradual recovery trend on the demand side, and new products are expected to be further expanded.

The vertical integration of the industrial chain accelerates the commercialization process of bio-based polyamide composites, and the joint venture between Cathay Biotech and CATL is a key step for both parties in the field of new energy materials from construction technology to scenario closed-loop, and is also an important milestone for Cathay Biotech to promote the commercialization of bio-based polyamide composites. In February 2025, the company established a joint venture with CATL (34.9%) and Kalai Composites (20%), Anhui Kaiyan Times Composite Materials Co., Ltd. (registered capital of 150 million yuan), focusing on the R&D and production of bio-based composite materials in the fields of battery shells, energy storage boxes and transportation, marking that the application of new energy scenarios has entered a substantive stage. In terms of industrial chain synergy, the two parties have integrated Cathay's bio-based monomer technology, Kalai composites' engineering mass production capabilities and CATL's intelligent manufacturing experience through the joint venture to form a vertical chain from biomass raw materials → resins → composites → end products. From the perspective of market expansion, this cooperation will greatly enhance Cathay's market penetration in the field of new energy. With CATL's global market channels and customer resources, Cathay is able to quickly enter high-growth markets such as new energy vehicles and energy storage systems, promote the iteration of material properties, and accelerate the commercialization of bio-based materials.

The long-term growth path is clear, the technical barriers and policy dividends resonate, the company's long-term advantages are significant, and the advantages of the synthetic biology technology platform will release structural dividends driven by the goal of carbon neutrality. As the global leader in long-chain diacids in biological methods, the company has a high market share, a stable cost advantage in biological methods, and the substitution logic of sebacic acid has been verified. Relying on the self-built technical system of "strain design-metabolic regulation-separation and purification", the company forms the underlying support for the industrialization of bio-based materials, and superimposes the empowerment of the AI protein design platform (molecular heart) to improve the efficiency of product iteration.

On the policy side, globally, the EU carbon tariff (CBAM) will be fully implemented in 2026, and the company's bio-based materials have significant substitution advantages in export-oriented industries such as automobiles and electronics. China's "Demonstration Catalogue for the First Batch of Applications of Key New Materials" lists bio-based polyamide as a strategic material to promote its substitution in new energy, automotive and other fields, and the market space for bio-based polyamide is expected to continue to expand in 2025. In the long run, the increase in the penetration rate of bio-based materials in energy storage, hydrogen energy, rail transit and other fields will open the second growth curve, and the policy dividend and technological disruption in the context of carbon neutrality form a double double.

Investment Suggestions

Due to the fluctuation of expenses in the second half of the year, we expect the company's net profit attributable to the parent company from 2024 to 2026 to be 4.73, 6.55 and 857 million yuan respectively, with a year-on-year growth rate of 29.1%, 38.4% and 30.8%. The corresponding PE is 60, 43 and 33 times, respectively. Maintain "Buy" rating.



Risk Warning (1) Macroeconomic and industrial policy fluctuation risk;

(2) the risk of uncertainty in the construction progress of new projects, the progress of products reaching production and sales; (3) import and export policies such as tariffs and risks of changes in the international trade environment; (4) Exchange rate fluctuation risk.