Kaiser Bio releases its semi-annual report for 2023. Company 23H1 realized total operating income of 1.03 billion yuan, YoY -20.05%, realized net profit of 0.242 billion yuan, YoY -28.12%;23Q2 realized total operating income of 0.525 billion yuan, YoY -16.35%, YoY -3.87%, realized net profit of 0.184 billion yuan, YoY -13.91%, YoY -221.06%.

23H1 performance decreased year-on-year, 23Q2 performance improved month-on-month. 23H1 Company's main products long-chain dibasic acid series products were affected by weak downstream demand, sales decline led to a year-on-year decline in net profit. 23Q2 Company's revenue increased month-on-month, gross margin-8.43pct to 25.60 percent month-on-month, which we believe is due to the increase in sales of the company's bio-based polyamide; 23Q2 financial expenses were -0.142 billion yuan, month-on-month -0.115 billion yuan. The company's annual output of 40000 tons of biological sebacic acid project has been 22Q3 in Taiyuan base completed trial production. In addition, the company completed the AI protein design platform company molecular heart of the strategic investment, in Shanxi synthetic biological industrial park to build an annual output of 10000 tons of straw lactic acid test project, is expected to solve the long-term supply of biological manufacturing raw materials and biological waste reuse problems.

China Merchants to promote the release of bio-based polyamide. On June 25, 23, the Company signed a Business Cooperation Agreement with China Merchants Group, which selected the procurement of bio-based polyamide resins and bio-based polyamide fiber composites from Kaiser Bio. The amount of bio-based polyamide resin purchased and used by China Merchants will not be less than 10000 tons, 80000 tons and 200000 tons in 2023, 2024 and 2025, respectively.

Taiyuan production base continues to advance, long-term growth is guaranteed. The project under construction to produce 30000 tons of long-chain dibasic acid and 20000 tons of long-chain polyamide is expected to be put into operation in December 23, and the project to produce 500000 tons of bio-based pentanediamine and 900000 tons of bio-based polyamide is expected to be put into operation in December 24.

earnings forecasts and investment recommendations. The company's 23-25 EPS is expected to be 1.15/1.49/2.03 yuan/share, respectively. Based on the future development potential of the synthetic biology industry and the company's leading position in the bio-based long-chain dibasic acid and bio-based polyamide industry, the company's 23-year performance of 60 times PE valuation level, the corresponding reasonable value of 68.98 yuan/share, to maintain the company's "buy" rating.

risk tips. Risk of fluctuations in raw material and energy prices; less than expected progress in reaching production; safety risk; environmental compliance risk.