Key takeaway

During the reporting period, the company's anti-aging agent business grew steadily, the integration of the lubricant additive business showed results and continued to recover, and the GPM of both segments was on an upward trajectory. Looking ahead, the growth of lubricant additives is expected to accelerate and ramp up with the API certification and the support of the Infineum distribution agreement, while the anti-aging agent business will also gradually restore profitability amid the antiinvolution backdrop. In the future, the Malaysian plant will help the company open up overseas markets and accelerate its pace of globalization. The PI materials and life sciences businesses boost the company's long-term development potential.

Event

The company released its 3Q26 report. For 1Q-3Q26, it achieved operating revenue of RMB5.050bn, up 11.99% YoY; net profit attributable to the parent company of RMB475mn, up 21.06% YoY; and net cash flow from operating activities of RMB351mn, up 24.20% YoY. In 3Q alone, it achieved operating revenue of RMB1.660bn, up 9.66% YoY and down 7.62% QoQ; net profit attributable to the parent company of RMB177mn, up 17.58% YoY and 7.33% QoQ; and net cash flow from operating activities of RMB189mn, down 44.17% YoY and up 22.51% QoQ.

Quick Take

During the reporting period, the company's anti-aging agent business grew steadily, the integration of the lubricant additive business showed results and continued to recover, and the GPM of both segments was on an upward trajectory.

Looking at the single quarter alone, the company's QoQ revenue decline may be due to the impact of the anti - aging agent business, but revenue still achieved nearly double-digit YoY growth, while the GPM rose slightly QoQ. In 3Q alone, the company recorded a GPM of 24.69%, up 0.11 pct QoQ and up 2.72 pcts YoY.

Profitability of the core business continued to recover, and the company's fundamentals remained solid. In March 2026, driven by price increases by BASF and Songwon overseas, the anti-aging agent industry ushered in price and profit recovery. Currently, the company's anti-aging agent materials have firmly established their position as the world's No.2 industry leader, while the construction of the Malaysian base is proceeding in an orderly manner and is planned to be put into production in 2027, which will help the company further improve its product mix and expand overseas markets.

The company signed a distribution agreement with Infineum; lubricant additives are expected to embrace volume ramp-up. Rianlon launched a strategic cooperation with Infineum in 2025. In early 2026, the company obtained industrial oil API certification, laying the groundwork for its lubricant additives to enter the mainstream market. In July, the company signed a distribution agreement with Infineum, appointing Infineum as the exclusive distributor of Jinzhou Kangtai's lubricant additives in Pan-Southeast Asia, Australia, New Zealand, and Hong Kong, Macao and Taiwan, opening up overseas channels. As API certification for more types of composite agents is rolled out, the segment's profit and sales are expected to improve further..

PI material capacity is about to come on stream; the life sciences segment is entering a phase of intensive market development. On PI materials, the company's 3,600-ton capacity under construction at its Yixing base is progressing on schedule and is planned to come on stream in 2027. The company has already established cooperation with leading domestic flexible circuit board and flexible display companies and has initiated the qualification process for import substitution. On life sciences, the company has ventured into areas such as biosynthesis and nucleic acid drug monomers. Its flagship products have been introduced to well-known downstream pharmaceutical and CDMO companies and are now in a phase of intensive market development.

Investment Recommendation: Rianlon's core anti-aging agent business continues to restore profitability, lubricant additives are developing rapidly, and the PI materials and life sciences businesses are expected to open up growth space for the company. We expect the company to achieve net profit attributable to the parent company of RMB646mn, RMB778mn, and RMB887mn in 2026-2028, implying PE of 13.0x, 10.8x, and 9.5x, respectively. Maintain a "Buy" rating.

Risks:

I. Raw material price volatility and cost pass-through risk

The company's raw material costs are significantly affected by crude oil price fluctuations. If crude oil prices rise sharply or international trade frictions intensify, production costs will be pushed up directly; if demand from downstream sectors such as plastics, rubber and PV is weak, product price increases will be hard-pressed to cover rising costs, squeezing GPM, and the risk of a breakdown in the cost pass-through chain should be watched.

II. Weak downstream demand and industry competition

Demand for anti-aging additives is highly tied to the polymer materials industry, and a slower-than-expected recovery in downstream sectors such as real estate, automobiles and textiles will drag on product demand. In addition, the domestic industry is under "involution-style" competition, with small and medium-sized enterprises seizing market share through low prices, which may trigger price wars and compress the industry's overall profit space. In the high-end product segment, the company also faces competition from international giants such as BASF, and the pace of import substitution may fall short of expectations.

III. Project construction and transformation risks

The company is advancing projects including the capacity expansion at its Malaysian plant and the API certification of Jinzhou Kangtai. If construction progress, technological breakthroughs or certification timelines fall short of expectations, capacity growth and earnings delivery will be affected. Under the dual-carbon policy, environmental protection and energy consumption controls are tightening, requiring the company to continuously increase spending on low-carbon transformation, with compliance costs rising; safety production risks are prominent, and accidents may lead to suspension or curtailment of production and major losses. At the same time, as technological iteration is accelerating, if the company fails to promptly set foot in green synthesis or new anti-aging systems, it will face the risk of being eliminated from the market.