Cathay Biotech (688065) H1 2024 earnings summary

Executive summary

• Revenue for H1 2024 reached ¥1.44 billion, up 40.16% year-over-year, driven by increased sales and new product capacity ramp-up, especially for DC10 (sebacic acid).

• Net profit attributable to shareholders was ¥247 million, up 2.31% year-over-year; adjusted net profit (excluding non-recurring items) was ¥239.7 million, up 11.34%.

• Operating cash flow increased 34.33% year-over-year to ¥435 million, reflecting higher revenue and collection of note deposits.

• No interim dividend or capital increase from reserves was proposed for the period.

Financial highlights

• Gross margin improved as cost increases lagged revenue growth; operating costs rose 37.19% versus 40.16% revenue growth.

• Basic and diluted EPS were both ¥0.42, up 2.44% year-over-year; adjusted EPS (excluding non-recurring items) was ¥0.41, up 10.81%.

• Weighted average ROE was 2.19%; adjusted ROE (excluding non-recurring items) was 2.12%.

• R&D expenses rose 16.12% to ¥100 million, representing 6.93% of revenue.

• Total assets at June 30, 2024, were ¥18.32 billion, down 2.71% from year-end 2023; net assets attributable to shareholders were ¥11.28 billion, up 1.08%.

Outlook and guidance

• The company continues to expand capacity, with new projects in bio-based polyamides and monomers under construction and phased commissioning planned through 2025.

• Management expects further market expansion for long-chain dicarboxylic acids and bio-based polyamides, leveraging green manufacturing and carbon reduction trends.

• Strategic partnership with China Merchants Group and ongoing capital raise (up to ¥6.6 billion) to support business growth and R&D.