Greens Biotech IPO: A Hidden Champion in the Flavor & Fragrance Sector—Core Products See Simultaneous Growth in Volume and Price; Anchoring Livelihood Necessities to Empower Autonomous, Controllable Daily Chemical Industry Chains

Breakthroughs in In-House Process Technology Drive Volume and Price Growth for Premium Products The synthesis of fragrance compounds is, at its core, a precision engineering endeavor aimed at replicating natural aroma molecules. Product purity, isomer ratios, and subtle olfactory differences directly determine fragrance quality and market value. For years, industry pain points—including impurity residues, inconsistent or muddled aromas, low yields, and mounting environmental pressures—have constrained sector development. Over many years, Greens Biotech has persistently advanced core technologies through independent R&D, successively overcoming process bottlenecks across three major product lines: turpentine oil, cypress oil, and fully synthetic fragrances. For turpentine and cypress oil synthesis, the company’s proprietary technologies effectively resolve longstanding industry challenges—such as high safety risks, inconsistent aromas, low yields, catalyst waste, excessive alkali consumption, and large volumes of wastewater discharge. These innovations significantly improve yield and aroma purity while reducing side reactions and wastewater output—aligning with green development imperatives while simultaneously enhancing both quality and efficiency. In the fully synthetic segment, chemical synthesis of ionone-series compounds faces unique hurdles: raw materials have low boiling points, making precise control of heat transfer efficiency, reaction rate, and selectivity difficult; numerous side reactions pose safety hazards and inflate production costs—hindering industrial-scale commercialization. Greens Biotech overcame the global ionone synthesis challenge via proprietary Grignard reaction technology, Diels–Alder (D-A) reactions, and continuous directional isomerization techniques. Its resulting products deliver highly realistic aromas and enjoy strong competitiveness in international markets. This breakthrough earned the company the First Prize of the China National Light Industry Council’s Science and Technology Invention Award, effectively filling a critical technological gap in China’s high-end fragrance sector. To date, Greens Biotech holds 23 invention patents, has led the drafting of 15 industry standards and 12 group standards, and secured EU REACH Lead Registrations for five of its products—earning authoritative international recognition of its technical capabilities. Backed by product quality rivaling that of global industry leaders, Greens Biotech has successfully entered the supply chains of the world’s top ten flavor & fragrance companies—including Givaudan, DSM-Firmenich, IFF, and Procter & Gamble. Over 85% of its revenue comes from overseas markets, reflecting steadily rising global acceptance. Its technological edge has translated into robust pricing power, fueling simultaneous volume and price growth for premium offerings. From 2023 to 2025, sales volume of its turpentine oil series rose from 2,876.02 tons to 3,150.59 tons, while average selling price climbed from ¥98,900/ton to ¥103,800/ton; cypress oil series volume increased from 1,362.05 tons to 1,689.48 tons, with average price rising from ¥112,900/ton to ¥128,800/ton; fully synthetic series volume surged from 2,571.05 tons to 3,751.26 tons, and average price jumped from ¥108,000/ton to ¥134,200/ton. Meanwhile, continuous optimization of product mix has steadily strengthened the company’s profitability. According to its prospectus, the gross margin of Greens Biotech’s fully synthetic series improved from 32.58% to 41.67%, while its share of total sales rose from 37.97% to 47.09%—directly lifting overall profitability. From 2023 to 2025, the company’s gross margin on core operations stood at 26.22%, 29.71%, and 31.78%, respectively; net profit totaled ¥0.93 billion, ¥1.50 billion, and ¥1.79 billion—representing a compound annual growth rate of 38.78%; operating cash flow amounted to ¥1.41 billion, ¥2.06 billion, and ¥1.59 billion, underscoring strong internal cash generation and continuously improving operational quality.

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Overall, the current decline in operating profit reflects short-term growth deceleration amid the company’s proactive strategic transformation. As its Indonesian production base commences operations and overseas customer orders ramp up, previously incurred expenditures are expected to gradually convert into revenue growth—and operating margins possess clear room for recovery. The underlying trend remains positive. By business segment, in 2025, revenues from Flavor & Food Ingredients, Tobacco Raw Materials, Fragrance Raw Materials, and Seasonings amounted to ¥1.318 billion, ¥0.529 billion, ¥0.807 billion, and ¥0.831 billion, respectively—representing year-on-year changes of –1.6%, +13.0%, +1.9%, and +7.2%. Their respective shares of total revenue were 37.8%, 15.2%, 23.2%, and 23.8%. The declining profitability of the Flavor & Food Ingredients segment stems primarily from the shrinking share of high-margin tobacco flavorings. As demand in the tobacco industry gradually recovers and product mix continues optimizing, this trend is expected to reverse. Profitability in the Tobacco Raw Materials segment was previously pressured by losses in the reconstituted tobacco leaf (RTL) sheet business, impairment provisions, capacity adjustments, and declining order volumes. It is poised for sustained improvement, driven by increasing volumes of high-margin products such as capsule beads (“burst beads”) and expanded overseas operations. The Seasonings segment’s margin erosion mainly reflects higher sales expenses incurred during recent expansion into direct-to-consumer (ToC) channels. As earlier marketing investments begin translating into revenue growth and operational efficiency improves, profitability is projected to rebound progressively from 2026 onward. Strong cash flow and an exceptionally resilient dividend policy. For the past decade, the company’s operating cash flow has remained consistently high. Moreover, its combined cash and cash equivalents, trading financial assets, and other short-term investments have exceeded ¥6 billion annually for multiple consecutive years. This ample liquidity provides a solid foundation for shareholder returns. Despite fluctuations in net profit attributable to shareholders—driven by industry cycles—the company has maintained an active shareholder return policy: it implemented cash dividends every year except 2016. Its dividend payout ratios reached 142.4% in 2018 and 114.3% in 2023. Notably, even in loss-making years—2022, 2024, and 2025—the company continued paying dividends. In February, May, and June 2026, the company repurchased 1.495 million, 0.895 million, and 3.776 million shares—representing 0.0463%, 0.0277%, and 0.117% of its total share capital, respectively—providing long-term investors with clear, predictable return expectations. Management possesses deep industry experience; internationalization has become the core growth engine. Founder Zhu Linyao and the core management team have decades of expertise across the flavor & fragrance and tobacco value chains, building extensive capabilities in industrial consolidation, M&A-driven expansion, and resource synergy—propelling the company’s evolution from a single-focus tobacco flavorings supplier into diversified businesses spanning fragrance raw materials, tobacco raw materials, and seasonings. Starting in 2025, under the leadership of President Xia Liqun, the new management team elevated internationalization to a Group-wide core strategy—shifting the company’s growth driver from domestic industrial consolidation to global operational integration. Domestically, the Flavor, Fragrance Raw Materials, and Seasonings businesses continue delivering stable cash flow and R&D support. Overseas, the company has completed construction of its Indonesian production base and German R&D center, and is actively expanding into emerging markets including Africa and the Middle East. Revenue composition has evolved from early heavy reliance on tobacco flavorings toward diversification: the shares of Seasonings, Fragrance Raw Materials, and RTL sheet businesses continue rising—providing a solid platform for international expansion.

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