# Cathay Biotech (688065.SHG)

Canonical: https://gigainvestors.com/s/688065.SHG

Analysis as of: 2026-10-16T07:38:21.166Z. Financial observations: FY2016–FY2025.

Listing currency: CNY. Reporting currency: CNY.

## Verdict

Not a wonderful business

Quality tests for Buy: not passed (profit record: pass; earnings resilience is evidence only). Published buy qualification: no.

Share price: CNY 35.73 per share; close as of 2026-10-15.

Estimated value: low CNY 19.36 per share, central CNY 20.57 per share, high CNY 22.19 per share. Buy at or below the central value CNY 20.57 per share. Valuation as of 2026-10-16T07:38:21.166Z; scenarios are not confidence intervals.

Expected annual return: 5.7% at the stated quote. About 5.7% a year at today's price (required return 10.0%). required return 10.0% a year (10% floor; CN 10-year bond 1.7% + 4 points).

## Checklist

### understandable: pass

- 2 revenue declines in the last 10 years (informational)

- Financial history: 10 years

- Years with declining revenue: 2

- Years with a net loss: 0

- Operating margin variation: 0.20×

Chart: Operating margin; fiscal year observations.

- FY2016: 0.22×

- FY2017: 0.30×

- FY2018: 0.31×

- FY2019: 0.31×

- FY2020: 0.35×

- FY2021: 0.31×

- FY2022: 0.29×

- FY2023: 0.21×

- FY2024: 0.19×

- FY2025: 0.19×

### moat: fail

- ROIC median below threshold

- ROIC worst years below threshold (more than 1 bad year allowed)

- Recent gross margin fell 16.4pp below the typical margin (limit 4pp)

- ROIC, median of available years: 13.7%

- ROIC, second-lowest year: 5.5%

- Typical minus recent gross margin: 16.4 pp

- Typical gross margin (annual median): 35.7%

- Recent gross margin (lower of latest and 3-year median): 19.3%

- Years with nonpositive capital: 0

- Capital spending / revenue: 42.9%

- ROIC including acquisitions, ten-year median: -0.5%

Chart: ROIC excluding acquisitions; fiscal year observations.

- FY2016: 17.4%

- FY2017: 16.1%

- FY2018: 15.3%

- FY2019: 13.7%

- FY2020: 13.7%

- FY2021: 35.5%

- FY2022: 10.8%

- FY2023: 5.5%

- FY2024: 6.0%

- FY2025: 4.5%

### economics: fail

- owner earnings cash conversion below threshold

- incremental invested capital return below threshold

- Owner earnings / net income, 5-yr: -0.78×

- Cash conversion uses consolidated totals: No

- Owner earnings, five-year total: CNY -2.0B

- Net income, five-year total: CNY 2.6B

- Return on incremental invested capital: 4.2%

- Working capital / revenue, annual change: 0.4 pp

- Working capital / revenue, change between three-year averages: 2.4 pp

- Working capital / revenue, final three-year average: 8.9%

Chart: Annual owner cash / profit; fiscal year observations.

- FY2021: 1.00×

- FY2022: -5.19×

- FY2023: -2.14×

- FY2024: 1.00×

- FY2025: 1.00×

### management: fail

- buybacks leaned toward cheaper years (informational)

- ROIC first 3 years vs last 3 years: 16.1% vs 5.5%

- Per-share earnings: 0.92 to 0.83 (three-year endpoint medians)

- per-share value declined or ends nonpositive

- Management verdict uses per-share economic progress: Yes

- Ordinary dilution, 5-year annual growth: 3.2%

- Diluted shares, 5-year annual growth: 3.2%

- Per-share value growth: -1.5%

- Per-share value change: CNY -0.09

- Per-share value, starting three-year median: CNY 0.92

- Per-share value, ending three-year median: CNY 0.83

- Buybacks concentrated in cheaper years (correlation): 0.50

- Average buyback yield: 0.2%

- Buyback history: 3 years

- Debt-funded buybacks: No

- Cumulative net income, 10 years: CNY 4.5B

- ROIC, first three-year median: 16.1%

- ROIC, last three-year median: 5.5%

Chart: Earnings per share; fiscal year observations.

- FY2016: CNY 0.40

- FY2017: CNY 0.92

- FY2018: CNY 0.93

- FY2019: CNY 0.91

- FY2020: CNY 0.78

- FY2021: CNY 1.01

- FY2022: CNY 0.95

- FY2023: CNY 0.63

- FY2024: CNY 0.84

- FY2025: CNY 0.83

### accounting: pass

- Sloan accruals: 0.7%

- Receivables to sales index (DSRI): 0.57×

- Restructuring years, last five: 0

- Earnings backed by cash: Yes

- Operating cash / earnings: 0.71×

- Accounting red flags: 0

- Goodwill and intangibles / equity: 0.03×

Chart: Sloan accruals; fiscal year observations.

- FY2016: 16.5%

- FY2017: 8.9%

- FY2018: 9.8%

- FY2019: 2.0%

- FY2020: -0.5%

- FY2021: 0.0%

- FY2022: -1.4%

- FY2023: -1.1%

- FY2024: -1.7%

- FY2025: 0.7%

## Holders

## Price story

Down 73% since Dec 2021 · sales +11.4%

Story as of 2026-10-16T10:00:09.881Z; price observation 2026-10-15.

Price needs cash profits to grow 12.5% a year for ten years

### Sales · FY2024–2025

sales +11.4%; source https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/; observed 2026-10-16.

- FY2016: CNY 929M 

- FY2017: CNY 1.4B 

- FY2018: CNY 1.8B 

- FY2019: CNY 1.9B 

- FY2020: CNY 1.5B 

- FY2021: CNY 2.4B 

- FY2022: CNY 2.4B 

- FY2023: CNY 2.1B 

- FY2024: CNY 3.0B 

- FY2025: CNY 3.3B 

### Gross margin · FY2025

gross margin 19.3%; source https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/; observed 2026-10-16.

- FY2016: 36.0% 

- FY2017: 43.3% 

- FY2018: 43.4% 

- FY2019: 44.4% 

- FY2020: 46.0% 

- FY2021: 35.4% 

- FY2022: 34.0% 

- FY2023: 27.4% 

- FY2024: 28.3% 

- FY2025: 19.3% 

## Owner memo

Memo as of 2026-10-16T08:06:05.509Z.

### How it makes money

Operates in chemicals; annual sales are CNY 3.3 billion.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:38:21.166Z); FY2025: revenue 3295448900; grossProfit 635091800; margin = grossProfit / revenue.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); 688065.SHG: Cathay Biotech Inc., together with its subsidiaries, engages in the research, development, production, and sale of bio-based materials in China and internationally. The company offers biological long-chain diacids, including sebacic acid and octadecanedioic acid; bio-based polyamides; and bio-based pentamethylene diamine under the TERRYL and ECOPENT brands. It also provides digital solutions for electrification, automation, and digitization for biological manufacturing. The company's products are used in textiles, pharmaceuticals, automobiles, electronic appliances, consumer goods, engineering materials, and other industries. It exports its products. The company was incorporated in 2000 and is headquartered in Shanghai, China.

### Why customers stay

Margins ranged from 19.3% to 28.3% during 2023–25; it earns 13.7% on its capital.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:38:21.166Z); FY2023: grossProfit / revenue = 27.4%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:38:21.166Z); FY2024: grossProfit / revenue = 28.3%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:38:21.166Z); FY2025: grossProfit / revenue = 19.3%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:38:21.166Z); 10-year return on capital observations [[2016,0.17377041197916251],[2017,0.1607470690164964],[2018,0.15329927068869217],[2019,0.13654570309207262],[2020,0.13710904658910564],[2021,0.35544723437308307],[2022,0.10784467350213126],[2023,0.054762023365854846],[2024,0.059559240412165676],[2025,0.044801978897218195]]; median 0.13682737484058913. ROIC follows the displayed moat series; financial companies use return on tangible equity.

### Where the cash goes

Spends 75.6% of cash earnings on expansion; earns 4.2% on new investment.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:38:21.166Z); FY2018: growth capex 337841355.47; upkeep 72243310; owner earnings 466292874. Growth capex / owner earnings = 0.7245260957387053.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:38:21.166Z); FY2019: growth capex 212834808.02438134; upkeep 298304872.60561866; owner earnings 296850253.39438134. Growth capex / owner earnings = 0.7169770131259379.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:38:21.166Z); FY2021: growth capex 1306139218.26; upkeep 168535329; owner earnings 594719108. Growth capex / owner earnings = 2.1962287753834873.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:38:21.166Z); FY2024: growth capex 527393446; upkeep 315919724; owner earnings 488961919. Growth capex / owner earnings = 1.0785982006095653.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:38:21.166Z); FY2025: growth capex 427539468.80999994; upkeep 315919724; owner earnings 565720400. Growth capex / owner earnings = 0.7557434181443694.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:38:21.166Z); Incremental return on capital 0.04205364464300837, from the economics test's unchanged annual inputs.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:38:21.166Z); Dividend observations: [[2016,0],[2017,95000.04],[2018,178823482.33],[2019,121339982.87],[2020,3871581.34],[2021,333345580],[2022,187299470],[2023,104786128],[2024,140834553],[2025,313131536.23]]. Zero only counted when supported by a complete cash-flow statement.

### Are managers owners

Insiders own 67.4% of the company.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); 688065.SHG SharesStats.PercentInsiders = 67.351 percentage points; cache date 2026-10-16.

### What the price says

The price assumes cash profits grow 12.5% yearly over ten years.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:38:21.166Z); Ten-year compound average after fade. Initial solved rate 0.16728985273023989. Price 35.73; FX 1; discount 0.1; same standard ten-year fade to terminal 0.03.  Closing-price date 2026-10-15.

## Monthly share-price history (CNY per share)

- 2020-09: CNY 69.75 per share

- 2020-10: CNY 64.36 per share

- 2020-11: CNY 68.69 per share

- 2020-12: CNY 60.75 per share

- 2021-01: CNY 56.43 per share

- 2021-02: CNY 60.00 per share

- 2021-03: CNY 57.11 per share

- 2021-04: CNY 56.86 per share

- 2021-05: CNY 68.13 per share

- 2021-06: CNY 74.92 per share

- 2021-07: CNY 73.79 per share

- 2021-08: CNY 98.25 per share

- 2021-09: CNY 111.39 per share

- 2021-10: CNY 111.83 per share

- 2021-11: CNY 116.43 per share

- 2021-12: CNY 131.63 per share

- 2022-01: CNY 112.86 per share

- 2022-02: CNY 102.25 per share

- 2022-03: CNY 77.86 per share

- 2022-04: CNY 65.49 per share

- 2022-05: CNY 63.00 per share

- 2022-06: CNY 79.86 per share

- 2022-07: CNY 81.40 per share

- 2022-08: CNY 69.46 per share

- 2022-09: CNY 60.20 per share

- 2022-10: CNY 64.07 per share

- 2022-11: CNY 62.72 per share

- 2022-12: CNY 61.29 per share

- 2023-01: CNY 65.32 per share

- 2023-02: CNY 65.31 per share

- 2023-03: CNY 61.71 per share

- 2023-04: CNY 53.15 per share

- 2023-05: CNY 52.40 per share

- 2023-06: CNY 62.26 per share

- 2023-07: CNY 64.28 per share

- 2023-08: CNY 59.96 per share

- 2023-09: CNY 55.52 per share

- 2023-10: CNY 53.11 per share

- 2023-11: CNY 54.36 per share

- 2023-12: CNY 54.98 per share

- 2024-01: CNY 43.87 per share

- 2024-02: CNY 48.29 per share

- 2024-03: CNY 44.14 per share

- 2024-04: CNY 51.30 per share

- 2024-05: CNY 48.64 per share

- 2024-06: CNY 45.39 per share

- 2024-07: CNY 39.24 per share

- 2024-08: CNY 36.09 per share

- 2024-09: CNY 47.54 per share

- 2024-10: CNY 47.00 per share

- 2024-11: CNY 44.67 per share

- 2024-12: CNY 38.80 per share

- 2025-01: CNY 44.17 per share

- 2025-02: CNY 47.44 per share

- 2025-03: CNY 50.32 per share

- 2025-04: CNY 51.98 per share

- 2025-05: CNY 47.20 per share

- 2025-06: CNY 47.10 per share

- 2025-07: CNY 48.10 per share

- 2025-08: CNY 53.03 per share

- 2025-09: CNY 52.04 per share

- 2025-10: CNY 50.80 per share

- 2025-11: CNY 47.49 per share

- 2025-12: CNY 49.80 per share

- 2026-01: CNY 58.15 per share

- 2026-02: CNY 54.68 per share

- 2026-03: CNY 49.45 per share

- 2026-04: CNY 48.11 per share

- 2026-05: CNY 40.22 per share

- 2026-06: CNY 47.85 per share

- 2026-07: CNY 45.51 per share

- 2026-08: CNY 42.14 per share

- 2026-09: CNY 38.64 per share

- 2026-10: CNY 37.28 per share

## Annual estimated value (CNY per share)

- FY2021: low CNY 22.98 per share, central CNY 23.92 per share, high CNY 25.16 per share

- FY2022: low CNY 16.78 per share, central CNY 17.76 per share, high CNY 19.06 per share

- FY2025: low CNY 19.88 per share, central CNY 21.08 per share, high CNY 22.68 per share

Historical values use today's bond yield for every fiscal year

Historical values use today's FX rate into trading currency for every fiscal year

Historical values use current restated fundamentals and current commodity classification; they are not point-in-time estimates

Prior published observations retained from 2026-10-15T06:43:59.276Z where newer inputs omit a numeric field or fiscal period.

## Sources

Estimates depend on assumptions and are not guarantees or investment advice. Underlying data remains subject to its source licenses; public reading does not grant bulk redistribution rights.