the company released the 2023 performance bulletin: during the reporting period, the company realized revenue of 2.114 billion yuan (YoY-13.39), net profit of 0.367 billion yuan (YoY-33.66) and net profit of 0.29 billion yuan (YoY-45.39), which was less than expected. Among them, 23Q4 single quarter revenue of 0.549 billion yuan (YoY-9.07, QoQ plus 2.55%), to achieve the return of net profit of 0.053 billion yuan (YoY-20.77, QoQ-26.21), to achieve non-return net profit of 0.034 billion yuan (YoY-40.49, QoQ-35.30), the performance fell short of expectations. In 2023, the company's performance decreased significantly year-on-year, mainly due to: 1) due to the influence of international market environment, industry and other factors, the sales volume of the company's long-chain dibasic acid series products declined; 2) sebacic acid was lower than expected in overseas market promotion after it was put into production; 3) The commercial promotion stage of bio-based polyamide series has not yet increased, while research and development investment has dragged down the performance.

long-chain dibasic acid series sales decline, sebacic acid replacement in progress, polyamide commercialization still need time, resulting in the company's performance continued pressure. According to the company's announcement, Kaiser is a pioneer in the field of domestic biological manufacturing. In 2003, it realized the industrialization of biological long-chain dibasic acid, and gradually completed the market substitution of similar chemical products, with a leading market share in the world.

Since 2023, affected by the international market environment, industry and other factors, especially the decline in sales in the European market, the company's long-chain binary acid revenue and gross profit have declined significantly year-on-year. At the same time, the company's new 40000 tons of sebacic acid production capacity gradually released, the product has been recognized by domestic customers, but international customer certification still needs time, it is expected that the product is expected to gradually replicate the company's lauric acid on the chemical method of the replacement process. Bio-based polyamide, related products in the early application scenario development, verification stage, has not yet been formally released, superimposed on the bio-based new material application process, processing equipment, molding technology and other aspects of continuous research and development investment, dragging down the company's performance.

Continuously promote the application and development of bio-based polyamide, join hands with China Merchants Group to strengthen market promotion, and open up new growth space for collaborative development. The company continues to increase the application, development and promotion of biological and polyamide products, and has made positive progress in textiles and clothing, cord fabrics, and composite materials with the advantages of "renewable raw materials, recyclable products, and competitive costs. During the reporting period, the company issued a fixed increase plan, to Shanghai Yaoqin (to be established) to issue shares to raise no more than 6.6 billion yuan, China Merchants Group will indirectly hold the company's shares through Shanghai Yaoqin is expected to exceed 5%. At the same time, the company and China Merchants Bureau Group signed a "business cooperation agreement", according to the agreement 2023-2025 China Merchants Bureau procurement and use of Kesai biological products in the amount of bio-based polyamide resin is not less than 1, 8, 200000 tons. China Merchants Group's main business involves shipping, ports, shipping, finance, real estate, energy and many other fields, combined with the company's bio-based materials and China Merchants's resource endowment, jointly develop bio-based polyamide fiber composite, pultrusion process and container, construction, photovoltaic, logistics and other fields of application technology, providing a broad application scenario for synthetic biological manufacturing.

investment analysis opinion: according to the 2023 performance bulletin, the net profit attributable to the parent company in 2023 will be lowered to 0.367 billion yuan (the original value is 0.421 billion yuan). considering the time still needed to promote the application of bio-based polyamide, the net profit forecast for 2024-2025 will be lowered to 5.92 yuan and 0.917 billion yuan (the original value is 7.19 yuan and 1.058 billion yuan). the current market value corresponds to PE of 78, 48 and 31X. with China merchants, the company's future performance growth is expected to be 58% in 2023-2025, maintaining an "overweight" rating.

risk tips: 1) the construction progress of new projects, the progress of product production and the risk of sales uncertainty; 2) the risk of core technology leakage, the loss of technical personnel and the lag of technology research and development; 3) the risk of large fluctuations in raw materials and energy prices.