Event: on August 22, the company released its 2022 semi-annual report. In the first half of 2022, the company achieved revenue of 807 million yuan, an increase of 6.48% over the same period last year, a net profit of 92.38 million yuan, an increase of 14.63% over the same period last year, and a net profit of 86.83 million yuan, an increase of 9.64%. In Q2 in 2022, the company achieved revenue of 412 million yuan in a single quarter, an increase of 3.94% over the same period last year and 4.21% compared with the same period last year. The net profit returned to the home was 50.3 million yuan, an increase of 18.46% over the same period last year and 19.51% from the previous year.

Comments:

2022H1's performance is growing steadily, and the business of pharmaceutical and pesticide intermediates is growing significantly. In the first half of 2022, the company's performance growth was relatively robust, of which pharmaceutical intermediates and pesticide intermediates business contributed the main performance increments.

2022H1, the company's pharmaceutical intermediates business achieved revenue of 148 million yuan, an increase of 26.7% over the same period last year, while pesticide intermediates business achieved revenue of 322 million yuan, an increase of 33.2% over the same period last year. The growth of revenue of pesticide intermediates mainly depends on the growth of overseas demand for 2pens, 3pens, 5je, 6-series products, and the recovery of 2pens 6-difluorobenzamide market. In addition, in the case of large fluctuations in the prices of raw materials in the upper reaches of 2022H1, the gross profit margin of the company's pharmaceutical and pesticide intermediates business remained relatively stable, year-on-year changes-1.64pct and + 1.27pct respectively. Basic chemical materials business, 2022H1 revenue fell slightly 0.92% year-on-year, but due to the rise in upstream raw material prices, basic chemical business gross margin fell 3.83pct. In terms of new materials business, due to the reduction in demand for BPEF series business terminals, the company's revenue from new materials and electronic chemicals business fell by 80.0%, and gross profit margin fell by 44.70pct. 2022H1's new materials and electronic chemicals business accounts for only about 1.01% of revenue, which will not adversely affect the company's performance. At the same time, although the company's 2022H1 revenue growth has slowed, the company continues to increase investment in research and development. 2022H1 invested 20.46 million yuan in R & D, an increase of 29.7% over the same period last year, and the proportion of R & D investment in revenue increased by 0.45pct.

The acquisition of Jiangxi Exxon, the extended layout of the fourth generation refrigerant. In June 2022, the company announced that it would acquire 51% of Jiangxi Exxon Chemical Materials Co., Ltd. for 357 million yuan through equity transfer and cash capital increase. The equity transfer and capital increase involved in this acquisition have been completed in July 2022, and the company has acquired 51% of Exxon in Jiangxi Province. Exxon in Jiangxi mainly produces fluorine-containing refrigerants. At present, it has completed two projects, namely, 1meme, 1meme, 2-tetrafluoroethane (HFC-134a) and 1mem1mine3-pentafluoropropane (HFC-245fa).

In May 2022, Jiangxi Exxon has an annual production capacity of 5000 tons of R1234ze, 10,000 tons of R134a and 10,000 tons of R1233zd, among which R1234ze and R1233zd belong to the fourth generation refrigerants. The acquisition of Jiangxi Exxon, on the one hand, expands the range of fluorine-containing products of the company, prompts the company to enter the new environment-friendly refrigerant industry, on the other hand, it also further strengthens the synergy between the upstream and downstream of the company's industrial chain. In addition, some refrigerant products are also raw materials for downstream high-performance fluorinated polymers, and the acquisition of Jiangxi Exxon has laid a good foundation for the company to quickly enter the business of fluorinated polymer materials in the future.

Actively expand the production capacity of fluorine chemical products, broaden the business line and open up the space for growth. At the end of fluorine fine chemicals, the company's "annual output of 5000 tons of 4helium-difluorobenzophenone project" and its subsidiary Gaobao Technology "fluorine fine chemicals series expansion project" are expected to be put into production before the end of 2022. Gaobao Technology "fluorine fine chemicals series expansion project" can add 20,000 tons / year fluorobenzene, 3000 tons / year 4-fluorobenzoyl chloride, 53,000 tons / year high purity potassium fluoride, 14000 tons / year high purity sodium fluoride and 30,000 tons / year anhydrous hydrofluoric acid production capacity. The company also actively distributes production capacity in new energy businesses such as sodium ion battery electrolytes and new lithium salts. Among them, Gaobao Technology, a subsidiary of Gaobao Technology, plans to produce 10000 tons of sodium hexafluorophosphate and 5000 tons of lithium difluorosulfonimide and other fluorine electrolyte materials in Qingliu Economic Development Zone of Fujian Province. In addition, the company has participated in the sodium ion battery electrolyte project jointly with sodium innovative energy, Zhejiang medicine and HTC, and will make use of the patented technology advantages of sodium innovative energy in the field of sodium ion battery electrolyte. build a sodium electrolyte industry project in Hangzhou Bay Fine Chemical Park. The company's forward-looking capacity layout in the field of new energy batteries, such as sodium hexafluorophosphate and LiFSI, is expected to open up room for future development and further enhance the competitiveness of the company.

Earnings forecast, valuation and rating: 2022H1's performance is growing steadily, in line with expectations. We maintain the company's profit forecast for 2022-2024, and estimate that the company's net profit from 2022 to 2024 will be 2.01,2.33 and 272 million yuan respectively. With fluorite, hydrofluoric acid and other upstream raw materials as the starting point, the company continues to distribute fluorine-containing fine chemicals downstream. On the one hand, it promotes the development of the company's business to high value-added areas and brings more performance increments to the company. On the other hand, it also enhances the cooperation between the upstream and downstream of the company's industrial chain and maintains the company's "overweight" rating.

Risk tips: product and raw material price fluctuations, capacity construction risk, downstream demand is lower than expected.