Event: the company disclosed its semi-annual report of 2022, with revenue of 3.677 billion yuan in the first half of 2022, + 18.72% year-on-year, net profit of 75.34 million yuan, + 25.77%, and non-return net profit of 71.62 million yuan, + 25.41% over the same period last year.

The rise of volume and price contributes to the growth of the company's performance, and the annual climbing performance of the production project is worth looking forward to. 1) the growth of the company's performance in the first half of the year is due to the rise in both volume and price. Quantity: there is a strong demand in new energy, new infrastructure and other areas in the first half of 2022. The company's production and sales of copper plate and strip reached 538 million tons respectively, which was 4.4% of the same period last year. In addition, the company's 30,000 tons / annual Calendering copper foil production line was put into production in 2021 and is still in the climbing stage, with production and sales reaching 1100 tons in the first half of the year. Production and sales are expected to gradually increase in the second half of the year. Price: the company continues to optimize the product structure, the proportion of high value-added products increases, and the company optimizes the customer structure, the limited choice of high-end customer orders, the overall product added value has been improved. As the company's new projects are gradually put into production, the added value of the products may continue to grow. 2) the production capacity of new projects is climbing in the second half of the year, and the company's annual performance is worth looking forward to. The 30,000 t / a Calendering copper foil production line began to gradually release its production capacity in the second quarter, and the overall output is expected to increase greatly in the second half of the year; the 100,000 pieces / year battery tray project was put into production in April and is expected to gradually contribute profits in the second half of the year, and the annual performance is expected.

New energy business plate multi-point promotion, battery tray + battery aluminum foil to build the second growth curve. Under the background of the rapid development of new energy vehicles, energy storage and other fields, the company lays out the new energy business to create the second growth curve. 1) the capacity of battery trays will be expanded to 500,000 pieces / year: Zhongyuan New Energy 100,000 pieces / year new energy vehicle battery tray project has been put into production in April 2022, and the production capacity is planned to expand to 500,000 pieces / year in July; 2) 50,000 tons / year battery aluminum foil project is actively promoted: the company invests in the construction of 50,000 tons / year battery aluminum foil project, of which the first phase of 25000 tons is expected to be put into production in 2024. In addition, the company has also set up Zhongyuan Xineng Technology to develop the energy storage system integration solution business and jointly build the second growth curve.

New materials business actively expand production in order to expand the profit base. At present, 30,000 tons / year Calendering copper foil production line has been put into production, and the output is expected to increase in the second half of the year; copper plate and strip business will reinvest on the basis of the existing business to build an annual production line project with an annual output of 100000 tons of high-precision copper alloy strip and 50,000 tons of copper strip billet. After completion, the company's copper strip production capacity will double to 200000 tons, profitability will be enhanced.

Profit forecast and investment suggestion: it is estimated that the net profit from 2022 to 2024 is 1.76 million RMB. Taking into account capacity expansion, product structure optimization, for the first time to cover the company's "overweight" rating.

Risk tips: downstream demand is lower than expected, product prices fluctuate, and projects under construction are not as expected.