Event: The company released its 2022 annual report and 2023 quarterly report, 22 years of full-year revenue of 2.441 billion yuan, up 3.28 percent year-on-year, to achieve a net profit of 0.553 billion yuan, up -6.97 percent year-on-year. 23Q1 achieved revenue of 0.505 billion yuan, the same/month-on-month -23.56/-16.23%, to achieve a net profit of 0.057 billion yuan, the same/month-on-month -67.09%/-14.38%.

long chain dibasic acid stable base, bio-based polyamide demand is weak. Long-chain dibasic acid continued to contribute major revenue. In the third quarter, 40000 tons/year of sebacic acid was put into production. The company's long-chain dibasic acid production capacity reached 115000 tons/year. In 2022, a total of 59,324/ 58,716 tons of long-chain dibasic acid were produced/sold, +4.42%/-4.48 year-on-year, contributing revenue to 2.096 billion yuan, +5.02 year-on-year. Affected by rising costs, gross margin decreased to 40.69 per cent, down 1.64pct year-on-year. Bio-based polyamide downstream promotion continues to advance. Polyamide downstream demand is weak, according to Baichuan Yingfu, in 2022 PA66 apparent consumption of 419500 tons, year-on-year -9.35.

the company's bio-based polyamide was affected by downstream demand, and the production and sales rate decreased. in 2022, the total production/sales of bio-based polyamide was 20,210/11,036 tons, up -6.06/22.59 year on year, contributing revenue of 0.231 billion yuan, up -21.57 year on year, while the gross profit margin decreased by 3.49pct to -7.34.

R & D investment continues to grow, new production capacity will be released in 23 years. In 2022, the company's research and development costs were 0.188 billion yuan, up from 40.58 percent YoY, and the research and development cost rate was 7.69 percent, up from 1.61pct YoY. The company continues to promote the application and development of high-temperature polyamide and continuous fiber-reinforced bio-based polyamide composites to promote "plastic instead of steel and plastic instead of plastic". The company's annual production capacity of 40000 tons of biological sebacic acid project will climb in 2023 and continue to release production capacity. The annual production capacity of 30000 tons of long-chain dibasic acid and 20000 tons of long-chain polyamide project is planned to be put into production in December 2023. The annual production capacity of 900000 tons of bio-based polyamide project in Shanxi is expected to be partially put into production in 2023. The release of new production capacity will greatly promote the company's revenue.

investment advice: we expect the company's net profit for 2023-2025 to be 6.94 /7.84/1.112 billion yuan respectively. EPS is 1.19/ 1.34/ 1.91 yuan. Referring to historical PE and comparable company valuations, we give the company a 23-year PE valuation of 55 times, corresponding to the 2023 target price of 65.46 yuan, maintaining a "buy" rating, taking into account the potential of the company as a leader in synthetic biology and future bio-based polyamide release.

risk tips: project production is not expected, raw material cost fluctuations, demand is less than expected, exchange rate fluctuations.