The performance is in line with expectations. The company announced its results for the first half of 2022, with revenue of 943 million yuan in the first half of 2022, an increase of 9.3% over the same period last year; net profit of 83 million yuan, down 28.1% from the same period last year; and net profit of 80 million yuan attributable to shareholders of the parent company, an increase of 46.1% over the same period last year. Non-recurrent profit and loss changes are mainly measured by fair value and the financial assets whose changes are included in the current profit and loss decreased by 75 million yuan over the same period last year. The company's sales gross profit margin in the first half of 2022 was 22.6%, an increase of 3.9pcts over the same period last year; the net sales profit margin after deducting non-sales was 8.5%, an increase of 2.1pcts over the same period last year.

After deducting non-profit, the company's net profit grew steadily, the gross profit margin of its main business improved, a number of projects advanced in an orderly manner, and the buy rating was maintained.

Support the main points of rating

The amount of high-purity reagents was steadily increased, and the profitability was significantly improved. In the first half of 2022, the company's operating income from high-purity chemicals reached 216 million yuan, an increase of 53.73% over the same period last year, and the gross profit margin increased by 6.17pcts. Among them, the operating income of high purity hydrogen peroxide reached 105 million yuan, an increase of 84.42% over the same period last year, and sales increased by 75.35% over the same period last year. During the reporting period, the company's first phase 30,000 ton semiconductor grade high purity sulfuric acid production line was successfully opened to traffic, and the product reached G5 grade, which is currently under intensive cross-line testing among mainstream customers, and has been sold to Hefei Jinghe and other customers. at the same time, the 60,000 ton semiconductor grade high purity sulfuric acid second phase project is under active construction and is expected to be completed in the first half of 2023.

KrF photoresist is expected to be mass produced this year. In the first half of 2022, the company's operating income of photoresist and supporting materials reached 137 million yuan, an increase of 3.84% over the same period last year, of which the business income of positive and negative photoresist increased by 11.25% over the same period last year, and that of supporting materials increased by 42.18%. The company currently has a series of five lithography machines, in recent years purchased 2 ArF, KrF lithography machines and related supporting equipment. The company's I-line photoresist has been supplied to domestic well-known large-size semiconductor manufacturers such as Semiconductor Manufacturing International Corporation and Hefei Changxin; the production and test line of KrF photoresist has been basically completed and is expected to achieve batch supply within this year; the research and development of ArF photoresist is also being promoted in an orderly manner.

NMP prices hit bottom and rebounded. In the first half of 2022, the company's revenue on lithium battery materials reached 251 million yuan, down 17.14% from the same period last year. The year-on-year decline was mainly due to the decline in sales of lithium battery binders, and the revenue of NMP, the core product of lithium battery materials, reached 235 million yuan, an increase of 14.51% over the same period last year. According to Baichuan Yingfu data, the average price of NMP (Shandong) in the second quarter was 353,000 yuan / ton, down 19.0% from the previous quarter. The average price difference of NMPmuri BDO was 119,000 yuan / ton, down 28.1% from the previous quarter. Since the beginning of the third quarter, NMP prices have bottomed out and rebounded, closing at 26,000 yuan / ton as of August 15, up 23.8% from the low in early August. NMP BDO currently has a price difference of 1610,000 yuan / ton, and NMPmurBDO's profitability has improved significantly compared with the first half of the year.

Valuation

After deducting non-profit, the net profit of the company has increased steadily, the gross profit margin of the main business has improved, and a number of projects have been promoted in an orderly manner to maintain the profit forecast. it is estimated that the earnings per share from 2022 to 2024 will be 0.35,0.52,0.71 yuan respectively, and the corresponding PE will be 64.0,42.5,31.4 times respectively. Maintain the buy rating.

Main risks faced by rating

The project was not put into production as expected; the process of photoresist research and promotion was blocked; the epidemic situation was repeated and so on.