Cathay Biotech H1 2026 Revenue and Profit Rise; Wusu Polyamide Line Runs Below 10% Capacity

In the first half of 2026, Cathay Biotech achieved growth in both operating revenue and net profit. The company focuses mainly on the polyamide industry chain, with products including a series of bio-based long-chain dicarboxylic acids and bio-based pentamethylenediamine used as monomer raw materials for bio-based polyamide production, as well as a series of bio-based polyamide and related products. The long-chain dicarboxylic acid business has achieved stable profitability.

The production lines at the Wusu base with an annual capacity of 50,000 tonnes of bio-based pentamethylenediamine and 100,000 tonnes of bio-based polyamide were officially put into operation at the end of the first half of 2021. Financial report data show that in 2021, bio-based polyamide output was 16,800 tonnes and sales were 7,400 tonnes; in 2022, output was 20,200 tonnes and sales were 11,000 tonnes. In 2025, sales of the product were 6,400 tonnes and output was 9,200 tonnes, corresponding to a designed capacity of 100,000 tonnes, with capacity utilization below 10%. As of the end of 2025, inventory of the bio-based polyamide series products stood at 28,300 tonnes. From 2022 to 2025, the business was in a state of negative gross margin. In the first half of 2026, the bio-based polyamide business generated revenue of RMB 108 million, up 63% year on year, with gross margin recovering to 0.57%.

In October 2020, Cathay Biotech signed an agreement with the Shanxi Transformation and Comprehensive Reform Demonstration Zone Management Committee to cooperate in building an industrial park. The park has a total planned investment of RMB 80 billion, with the first phase planned at RMB 45 billion, aiming to build an industry chain from corn feedstock, bio-fermentation and pentamethylenediamine to finished polyamide products. Core first-phase projects include an annual 2.4 million tonne corn deep-processing project, an annual 500,000 tonne bio-based pentamethylenediamine project and an annual 900,000 tonne bio-based polyamide project, jointly funded by the company and the management committee. The corn deep-processing project is an upstream supporting facility for the polyamide project, supplying glucose feedstock for pentamethylenediamine production. The core first-phase projects officially began construction in 2021, initially planned to be completed within three years of commencement and put into production in 2023. The completion date was subsequently postponed to the end of 2024, then to the end of 2025, and again to December 31, 2027. The company's announcements cited mainly incomplete supporting infrastructure in the park and consideration of the pace of downstream customer demand release, noting that phased commissioning would yield better returns.

Among these, the projects with an annual capacity of 500,000 tonnes of bio-based pentamethylenediamine, 900,000 tonnes of bio-based polyamide and 300,000 tonnes of bio-fermentation sulfate have a budget of RMB 13.4 billion, with a cumulative investment of RMB 3.652 billion as of June 30, 2026, and a disclosed engineering progress of 27.67%. The projects with an annual capacity of 2.4 million tonnes of corn deep processing and 5 million tonnes of bio-fermentation liquid have a budget of RMB 7.369 billion, with a cumulative investment of RMB 2.732 billion by mid-2026 and engineering progress of 37.47%. The Shanxi polyamide project involves a change in initial public offering proceeds, with a total of RMB 1.27 billion in raised funds invested in the project's construction. Since 2023, the construction pace of the two projects has slowed.

As of the end of June 2026, apart from a small portion transferred to fixed assets, the book balance of the two major Shanxi projects under construction totaled RMB 6.263 billion. The 100,000 tonne polyamide project at the Wusu base has a total budget of RMB 2.06 billion, of which RMB 1.733 billion has been transferred to fixed assets. As of the 2026 interim report, no impairment provisions had been recognized for the above projects under construction, nor for the related fixed assets at the Wusu base.

On an investor interaction platform, an investor asked whether large-scale capacity expansion amid low polyamide capacity utilization posed an asset impairment risk. Cathay Biotech replied that bio-based polyamide is still in the commercialization promotion stage, and the company is expanding application scenarios to advance capacity absorption; the Shanxi project is a medium- and long-term strategic layout, and the company will continuously assess the match between capacity utilization and market demand. Regarding whether impairment provisions are needed for the relevant assets, a staff member of the company's securities department did not give a clear answer.