Cathay Biotech (SH:688065) Huachuang Securities·2024-08-19 01:09Investment Rating - The report maintains a "Strong Buy" rating for the company, with a target price of 46.50 CNY, compared to the current price of 35.99 CNY [2][3]. Core Insights - The company reported a revenue of 1.444 billion CNY for the first half of 2024, representing a year-on-year increase of 40.16%. The net profit attributable to shareholders was 247 million CNY, up 2.31% year-on-year [2]. - In Q2 2024, the company achieved a revenue of 760 million CNY, with year-on-year and quarter-on-quarter growth of 44.72% and 10.99%, respectively [2]. - The company is progressing steadily in its collaboration with China Merchants Group, focusing on the application of bio-based polyamide composite materials in various industries [2]. Financial Performance Summary - For H1 2024, the company's long-chain dicarboxylic acid series and bio-based polyamide series generated revenues of 1.314 billion CNY and 78.55 million CNY, respectively, with year-on-year growth rates of 39.9% and 12.6% [2]. - The gross margin for the long-chain dicarboxylic acid segment was 39.3%, while the bio-based polyamide segment had a negative gross margin of 18.8% [2]. - The company’s domestic and international revenues for H1 2024 were 960 million CNY and 481 million CNY, respectively, with gross margins of 25.5% and 42.4% [2]. Capacity and R&D - The company has a current production capacity of 115,000 tons for bio-based long-chain dicarboxylic acids, with a significant increase in the utilization rate of its bio-based caprylic acid production [2]. - R&D expenses for H1 2024 were 100 million CNY, reflecting a year-on-year increase of 16.12%, with an R&D expense ratio of 6.9% [2]. - The company employs 308 R&D personnel, accounting for 17.8% of its total workforce, with approximately 49% holding master's degrees or higher [2]. Strategic Partnerships - The collaboration with China Merchants Group is advancing, with plans for capital and business cooperation, including the development of bio-based polyamide applications in various sectors [2]. - A strategic cooperation agreement was signed with the Hefei municipal government and China Merchants Group to establish a long-term partnership for synthetic biology research and product development [2]. Investment Recommendations - Based on the latest performance, the profit forecasts for 2024-2026 have been adjusted to 543 million CNY, 722 million CNY, and 971 million CNY, respectively [2]. - The report anticipates a broad market space for the company's bio-based polyamide industry chain and recommends a target PE of 50x for 2024, corresponding to the target price of 46.50 CNY [2].