On March 28, Lianhong Xinke (003022) disclosed its 2024 annual report. In 2024, the company achieved a total operating revenue of 6.268 billion yuan, a year-on-year decrease of 7.52%; the net profit attributable to shareholders was 234 million yuan, a year-on-year decrease of 47.45%; the net profit excluding non-recurring gains and losses was 185 million yuan, a year-on-year increase of 2.00%; the net cash flow generated from operating activities was 594 million yuan, a year-on-year decrease of 32.18%; during the reporting period, Lianhong Xinke's basic earnings per share were 0.18 yuan, and the weighted average return on net assets was 3.27%. The company's distribution plan for 2024 is to propose a cash dividend of 0.6 yuan (including tax) for every 10 shares held by all shareholders.

Lianhong Xinke is a supplier of new material products and solutions, mainly engaged in the research, development, production, and sales of advanced polymer materials and specialty fine materials. Its business segments include new energy materials, biodegradable and bio-based materials, electronic materials, and other specialty materials.

The biodegradable materials that Lianhong Xinke has invested in include PLA and PPC, which are produced by its subsidiaries Jiangxi Institute of Biological New Materials Co., Ltd. and Lianhong Gerun (Shandong) New Materials Co., Ltd.

The PLA project adopts an independently developed "starch - high-purity lactic acid - high-purity polylactic acid - polylactic acid" complete industry chain technology. The 100,000 tons/year lactic acid facility and 40,000 tons/year PLA facility have been completed and put into operation in 2024, producing qualified PLA, which has begun to be marketed and is developing new application scenarios such as 3D printing.

The 50,000 tons/year PPC project under construction is planned to be completed and put into production in 2025. The main raw materials, PO and carbon dioxide, are all produced in-house, which not only shows a significant advantage in the industrial chain but also helps reduce carbon dioxide emissions. The project employs the latest generation of catalyst technology developed in collaboration with relevant institutes of the Chinese Academy of Sciences, which can be completely degraded under natural conditions and possesses advantages such as good toughness and rigidity balance, excellent barrier properties, and high transparency.

Financial information of subsidiaries related to biodegradable materials

Lianhong Xinke stated that in the future, it will continue to increase its business layout in the field of biomaterials, intensify investment in biodegradable and bio-based materials, and actively promote the development and industrialization of new bio-based sweeteners and other new biomaterial technologies.

About PLA

PLA is a type of artificially synthesized polymer material and is one of the important biodegradable materials, characterized by its bio-based and degradable properties. PLA has high heat resistance and mechanical strength, and it can be compatible with traditional plastic processing techniques. It can be processed through methods such as extrusion, injection molding, blow molding, spinning, and foaming. Its applications are increasingly widespread in 3D printing, food and pharmaceutical packaging, and fiber textiles. According to statistics, the domestic demand for PLA is expected to reach approximately 120,000 tons in 2024, with a year-on-year growth of 48.1%. Among these, 3D printing is currently the largest application field for PLA, accounting for about 35% in 2024. 3D printing materials based on PLA are widely used in fields such as cultural and creative products, complex structural components required by smart devices, and lightweight components due to their environmental friendliness, ease of use, good mechanical properties, safety, and cost advantages. In the future, with the rapid development of downstream industries and the promotion of national carbon neutrality policies, PLA, as a high-performance material, aligns with the concepts of green manufacturing and sustainable development. It is expected to achieve rapid growth in high-end manufacturing, intelligent equipment, toys, education, healthcare, green packaging, and eco-friendly clothing sectors.

PLA Material Application Scenarios

About PPC

PPC is a new generation of high-performance "environmentally friendly" biodegradable materials, made from carbon dioxide and PO, which can effectively utilize carbon dioxide, help address "white pollution," and reduce carbon emissions. Compared to other biodegradable materials, PPC has excellent toughness and rigidity balance, good barrier properties, high transparency, outstanding water retention and moisture preservation, and is biodegradable. It is an ideal disposable film material that can replace traditional non-biodegradable materials, especially showing great market development potential in replacing traditional film materials.

PPC material application scenarios