Category of Investor Relations Activities

□ Specific Object Research          □ Analyst Meeting          □ Media Interview          ☑ Performance Presentation
□ Press Conference                      □ Roadshow                   □ On-site Visit                 □ Other 

Participating Institutions

Online Investors

Time

May 14, 2024 (Tuesday) 15:00-17:00

Venue

The company held the results presentation meeting remotely through the "Investor Relations Interactive Platform" of Panorama Network (https://ir.p5w.net)

Names of Personnel Receiving Investors from the Listed Company

Chairman: Wu Xian
Director and General Manager: He Zheng
Independent Director: Wang Wenguang
Board Secretary and Deputy General Manager: Zhang Liang
Financial Controller: Chen Yu
Sponsor Representative: Yao Zheng

 Main Contents of the Investor Relations Activities

Questions raised by investors and the company's responses

The company responded to the questions raised by investors during this roadshow:

1. What are the application prospects of the company's polyaryletherketone (PAEK) series materials?

Hello! The polyaryletherketone (PAEK) series materials, especially polyetheretherketone (PEEK) and polyetherketoneketone (PEKK), exhibit outstanding comprehensive performance in terms of strength, dielectric constant, and chemical resistance, and have broad market space in the fields of medical implant materials, aerospace, automotive and mechanical industrial seals, petrochemical, electronic information, rail transit, etc. in the future. Thank you.

2. At present, the application of PEEK in the communications, automotive, and robotics industries is accelerating. What strengths does the company have in PEEK materials?

Hello! The company is one of the few domestic enterprises with the independent R&D and production capabilities of PEEK materials. The company's PEEK material products have a complete range and reliable performance, occupying a place in the domestic market. At the same time, the company is also actively developing PEEK-based composite materials and focusing on expanding applications in the field of new energy. In the future, the company will continue to increase R&D investment to improve the cost performance of the products. Thank you.

3. What technical accumulation does the company have in the field of synthetic biological materials and what are the future product application plans?

Hello! The company currently has technical accumulation in the field of synthetic biological materials and has established a Joint Innovation Center for Synthetic Biochemical Applications with the Shenzhen Institute of Advanced Technology, Chinese Academy of Sciences. The team of the Joint Innovation Center has carried out the construction and engineering transformation of bio-based long-chain dicarboxylic acid engineering strains through technical means such as gene knockout and high-throughput screening, and has successively realized the milligram-level synthesis of bio-based long-chain dicarboxylic acid in shake flasks and the gram-level preparation in fermentation tanks. In the future, the Joint Innovation Center will continue to carry out research around bio-based polymer materials, animal and plant nutrition, and other aspects. Thank you.

4. What innovative R&D achievements does the company currently have in the field of synthetic biology?

Hello! The company has established a Joint Innovation Center for Synthetic Biochemical Applications with the Shenzhen Institute of Advanced Technology, Chinese Academy of Sciences. The team of the Joint Innovation Center has carried out the construction and engineering transformation of bio-based long-chain dicarboxylic acid engineering strains through technical means such as gene knockout and high-throughput screening, and has successively realized the milligram-level synthesis of bio-based long-chain dicarboxylic acid in shake flasks and the gram-level preparation in fermentation tanks. In the future, the Joint Innovation Center will continue to carry out research around bio-based polymer materials, animal and plant nutrition, and other aspects. Thank you.

5. What are the specific plans and development plans of the company in the field of robotics in the future?

Hello! In the future, the company will continue to increase investment and R&D efforts in the field of robotics, and continuously launch more high-performance, environmentally friendly and intelligent special polymer material solutions; at the same time, it will actively seek cooperation opportunities with more partners to jointly promote the innovation and development of the robotics industry. The company will continue to pay attention to the new technologies, new applications and new trends in the robotics industry, and constantly expand its own business scope and market space. Thank you.

6. What are the specific applications of the company's special polymer materials in the field of robotics?

Hello! Special polymer materials have a wide range of applications in the field of robotics. For example, LCP materials can be used to produce high-precision and high-reliability robot connectors and high-speed connectors; PPS and special nylons can be used in robot motor electronic control and connectors and other products. At present, Shenzhen Collaborative Innovation High-Tech Development Co., Ltd., in which the company holds a stake, has an authorized invention patent related to the "Artificial Muscle Bracket Model", and the material solutions for vehicle lightweight and home robots and robot dogs provided by the company for downstream and end customers have been recognized. Thank you.

7. What are the ideas and research directions of the company in the development of synthetic biology?

Hello! The company has established a Joint Innovation Center for Synthetic Biochemical Applications with the Shenzhen Institute of Advanced Technology, Chinese Academy of Sciences. This Joint Innovation Center is the only one established by the Shenzhen Institute of Advanced Technology for external cooperation named "Synthetic Biochemical Applications". This Joint Innovation Center mainly carries out research work around bio-based polymer materials, animal and plant nutrition, and other directions. Thank you.

8. How does the company view the future development prospects of the robotics industry?

Hello! The company's special polymer material series solutions can meet various requirements of customers in the robotics industry, such as lightweight, precise integration, and high-speed signal transmission. The development of the robotics industry will definitely significantly promote the market demand for special polymer materials, and the company, as a supplier in the material link of the robotics industry chain, will also seize the market opportunity in time to enhance the relevant layout and competitiveness. Thank you.

9. The company's R&D investment increased by 30.31% year-on-year in 2023. What are the main areas where the increased R&D investment was applied?

Hello! Due to the increasing demand for special polymer materials, the company has increased R&D investment in the directions of new technologies, new processes, and industrialization of special polymer materials, resulting in an increase in R&D investment in 2023. Thank you.

10. Hello! Does the company's PEEK project currently have customers?

Hello! The first phase of the company's Chongqing LCP project and the first phase of the PEEK project have completed the evaluation of the fire protection, environmental protection and trial production plans. The project has entered the trial production period from the construction period and is waiting to obtain the official production license in the future. The company's holding subsidiary, Zhejiang Kesai New Material Technology Co., Ltd., has the production and processing capacity of hundreds of tons of polyaryletherketone (PAEK) profiles, and supplies to customers in the fields of precision electronics, electronic information, industrial machinery, bearings, etc. Thank you.

11. Despite the increase in operating income, the company's net profit has declined. What are the main reasons for the decline in net profit? The company's gross margin has increased. What is the main reason for this increase?

Hello! As the company's income from special polymer materials continues to grow, its proportion in the total revenue has exceeded 50%, resulting in an increase in the company's gross margin. At the same time, the phased increase in management expenses brought about by the commissioning of new projects, the promotion of organizational reform, and the optimization of processes, the increase in R&D expenses brought about by R&D investment in new technologies and new processes, the decrease in exchange gains, and the increase in financial expenses brought about by project loan interest have led to a decline in the company's net profit. Thank you.

12. What is the market share of the company's main business?

Hello! The company's various polymer material solutions have been recognized and used by leading customers in different downstream industries. The company will continue to strengthen the promotion and development of products, customers, and markets, and continuously improve the market competitiveness and market share of different material products. Thank you.

13. Is it because the new project capacity is affected by the economic downturn, and the release of the capacity of new polymer products is affected? Can it be improved in the second quarter and later? Will this year's expected capacity and performance exceed last year's?

Hello! The company will continue to focus on high-tech special polymers and engineering polymer materials, take technological development and meeting customer needs as the starting point, and promote the value release of the ongoing projects by continuously strengthening R&D, production, service, internal control, etc., so as to drive the continuous improvement of the company's operating performance and strive to achieve high-quality development to repay the society and investors. Thank you.

14. The company plans to increase equipment capacity through the fundraising project. Can you reveal more about the progress of these projects? When is the expected new capacity to be put into operation, and how will this affect the company's overall business scale and profitability?

Hello! The company is advancing the construction of the fundraising project as planned and will disclose the progress of the fundraising project in a timely manner in accordance with relevant regulations. Please refer to the company's regular reports and relevant public disclosure documents. After the completion of the fundraising project and the full production of the new capacity, the company's overall revenue and profit scale will reach a new level, and the profitability will also be greatly improved. Thank you.

15. Facing many challenges inside and outside the industry, the company has proposed a number of risk response measures, including deepening the system construction. Can you elaborate on the company's specific response mechanism to fluctuations in raw material prices and supply shortages, and how to ensure the safety of core technologies and the stability of core technical personnel?

Hello! Over the years, the company has taken integrity as the primary policy and established cooperative relationships with many leading global raw material suppliers. It dynamically pays attention to the price trend of raw materials and timely judges the future trend. The company will continue to strengthen exchanges within the industry, pay attention to the development trend of the industry and the common needs of industry partners, provide technical support to industry partner enterprises, and grow together with industry partners. To ensure the safety of the company's core technologies, the company has taken a series of measures such as patent protection, confidentiality certificate protection, and signing confidentiality agreements with relevant personnel who master the technology. The company has always attached importance to the investment and protection of technology R&D, and ensured the stability of core personnel and introduced excellent talents in the industry through reasonable compensation, welfare, working environment, and corporate culture construction. In recent years, the company's core technical personnel and R&D team have remained stable as a whole. Thank you.

16. The company mentioned that it will deepen the cooperation with the Shenzhen Institute of Advanced Technology, Chinese Academy of Sciences to layout the field of synthetic biology. Can you share more about the considerations behind this strategic decision? Specifically, how does the company plan to use synthetic biology technology to enrich the product line or explore new markets?

Hello! Under the background of "dual carbon", new materials with green, low-carbon and environmental protection are facing significant development opportunities. As an important part of the development of the new materials industry, bio-based materials have developed rapidly in recent years, and products produced through biotechnological production based on synthetic biology are expected to have broad development space. The Shenzhen Institute of Advanced Technology, Chinese Academy of Sciences, as a world-class scientific research institution, has a leading advantage in the fields of biosynthesis and biomanufacturing. The company cooperates with the Shenzhen Institute of Advanced Technology to maximize the efficient use of scientific and technological resources, accelerate the transformation of scientific and technological achievements through the industry-university-research cooperation model, and promote the orderly development of the "Synthetic Biological Materials Innovation Center Construction Project" of the company's fixed increase fundraising project. This cooperation will continuously enrich and improve the layout of the company's special polymer materials industry chain platform, provide a guarantee for the continuous progress of the company's material products, and enhance the company's competitiveness in the industry. Thank you.

17. The operating income of special polymer materials exceeded 50% of the total revenue for the first time. In which segmented markets or application fields does the company see great growth potential? Are there specific market expansion strategies or target customer groups to continue to expand the market share of special polymer materials?

Hello! Special polymer materials, with their special superiority, are widely used in many key fields of emerging industries, such as high-frequency and high-speed communications, new energy vehicles, information electronics, medical devices, electronic and electrical, rail transit, precision instruments, robotics, AI servers, aerospace, etc. LCP is the main material for core components in the fields of precision electronics, high-frequency communication equipment, and AI server cooling systems; special nylons can be widely used in high-frequency and integrated electronic communication fields and the automotive industry; polyarylethersulfone is an interior material in the aerospace field and is widely used in the water treatment industry, medical devices, corrosion-resistant coatings and antirust paints, food packaging containers and other industries; PAEK is applied in the fields of electronic information, robotics, petrochemical, medical and health, and automotive; PPS is widely used as a structural polymer material and is widely used as a special polymer material after being filled and modified; at the same time, it can also be made into various functional films, coatings and composite materials, and is used in the fields of electronic and electrical, aerospace, automotive transportation, etc. With the advent of the era of 5G/6G communications, drones, robotics, AI servers, semiconductors, and material upgrades in the medical industry, the replacement speed of special polymer materials for traditional materials has further accelerated, and can be widely used in the fields of electronic and electrical, transportation, medical devices, machinery manufacturing, high-frequency and high-speed communications, and the future market demand is large. Thank you.

18. In the next few years, what are the specific focuses or breakthroughs in the company's R&D direction? How is it expected that these R&D investments will be transformed into products or services to further enhance the company's market competitiveness?

Hello! In addition to adhering to the tracks and categories it is good at, the company will also pay attention to a variety of new technologies in the frontier fields, and continuously transform the R&D advantages of frontier technologies into product technology advantages and service advantages that can be industrialized. In terms of technology R&D, vigorously carry out the research and development of special polymer materials with LCP, PPA, polysulfone, PAEK, PPS, and PTFE as the core; improve the preparation process and material properties of polymer/carbon material composites represented by graphene, carbon nanotubes, and carbon fibers; enrich the structure of elastomer materials and strengthen the stability of the process; strengthen the continuous optimization of the formulations of superior engineering plastics and general plastics. In terms of application development, closely around the future development trend of 5G/6G communications, robotics, AI servers, drones, automobiles, and the semiconductor industry, develop material solutions suitable for the special requirements of the industry; consolidate the original dominant positions in the electronic, electrical, water treatment, photovoltaic and other advantageous industries, and jointly develop personalized and cutting-edge materials with customers; expand the industries with huge growth space for polymer materials in the future, such as drones, new energy, medical devices, and robotics, and develop polymer material solutions for customers that can well solve the existing material problems. The company will improve the efficiency of operation and management through precise R&D investment, the establishment of a more market-oriented performance incentive mechanism and an internal market-oriented assessment system, and increase the intensity of market expansion, widely establish ecological partners, and achieve business growth. Thank you.

19. In the past three years, the company's total assets have grown steadily. After the fixed increase last year, the asset-liability ratio has decreased significantly, and the burden on the enterprise has also been reduced a lot. However, the company's revenue has basically remained unchanged, and the profit is even very small. Can you explain where the problem lies?

Hello! In 2023, the company's operating income increased slightly year-on-year, but the income structure continued to optimize. The proportion of the company's income from special polymer materials in the total revenue has exceeded 50%, resulting in an increase in the company's gross margin. At the same time, the phased increase in management expenses brought about by the commissioning of new projects, the promotion of organizational reform, and the optimization of processes, the increase in R&D expenses brought about by R&D investment in new technologies and new processes, the decrease in exchange gains, and the increase in financial expenses brought about by project loan interest have led to a decline in the company's net profit. Thank you.

List of Attachments (if any)

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May 14, 2024