Event: the company released its semi-annual report of 2022. In the first half of 2022, the company realized operating income of 4.995 billion yuan, an increase of 112.46% over the same period last year. The net profit belonging to shareholders of listed companies was 388 million yuan, down 14.65% from the same period last year. The net profit after deducting non-recurring profits and losses belonging to shareholders of listed companies was 364 million yuan, down 15.05% from the same period last year.

The double arrows of materials and equipment have resulted in a substantial increase in revenue. In recent years, the company mainly focuses on the wafer industry. At present, the wafer production capacity has exceeded 20GW. During the reporting period, the company's silicon wafer shipments were smooth, with 182mm and 210mm large-size wafer shipments accounting for more than 90% of total wafer shipments. Thanks to the gradual production and production expansion of the company's Sichuan Leshan Phase I 12GW pull bar and cutting project, the business achieved an operating income of 4.074 billion yuan during the reporting period, a sharp increase of 172.64% over the same period last year, driving a substantial increase in the company's operating income compared with the same period last year. In addition, although the proportion of self-supply of high-end equipment business has increased, affected by the expansion of domestic and foreign demand in the photovoltaic industry, the company continued to produce, deliver, deliver and confirm revenue for crystal furnaces and other equipment in the reporting period, realizing an operating income of about 240 million yuan, a substantial increase of 1107.06% over the same period last year.

Competition intensifies, costs rise, and some sectors are under pressure on profits and revenue. The profit growth of the company's four major business sectors during the reporting period was affected by unfavorable factors such as industry competition and rising costs in the short term. In terms of new materials business, due to the superimposed influence of internal and external factors such as the rise in the price of raw materials, the climbing production of Leshan Phase I and the overhaul of Wuhai base in the first quarter of 2022, the gross profit margin of this business decreased during the reporting period compared with the same period last year. The gross profit margin of the new energy power generation business and the energy saving and environmental protection business dominated by the denitrification catalyst business is basically stable, but the industry competition is fierce, with revenue of 644 million yuan and 37 million yuan respectively during the reporting period, down 14.49% and 47.81% from the same period last year. Taking into account the company's latest crystal drawing equipment JD-1600 furnace has reserved CCZ continuous feeding interface, the subsequent large-scale use of continuous feeding method for rod production, new materials business production bases are also comprehensively promoting centralized monitoring and other advanced production management methods, further reduce costs and efficiency, coupled with the further release of follow-up capacity and raw material costs to stabilize expectations, the profit level of the corresponding sector still has room to improve.

In-depth layout of the industrial chain, stable operating capacity and cash flow. The company ploughs the solar photovoltaic field, gives full play to the linkage advantages of high-end equipment business and new materials business, and has a layout in the upper and lower reaches of the industrial chain to build a moat of operational capacity and cash flow. The company insists on using technology to promote production, and continues to be in the leading position of photovoltaic production equipment technology. in the pull rod business with high capital barriers, the company uses self-produced equipment for production, and the cost advantage is significant. The new energy power generation business is advancing steadily. At present, the total installed capacity of the new energy power stations connected to the grid is 1.402.97MW, of which the cumulative installed capacity of photovoltaic power stations (including ground power stations and distributed power stations) is 1254.47MW, and the cumulative installed capacity of wind power stations is 148.50m. The operation and maintenance management of existing photovoltaic and wind power stations continue to provide stable cash flow. While expanding the business, we should reasonably control the operating risk. As of June 30, 2022, the asset-liability ratio of the company is 49.12%, which belongs to the lower level of the industry and has strong anti-risk ability.

Investment rating and valuation: the company is an operator of photovoltaic wafers and new energy power stations. With the gradual release of wafer production capacity and equity silicon production capacity, high performance growth is expected. It is estimated that the return net profit of the company from 2022 to 2024 is 10.91,18.76 and 2.668 billion yuan respectively, the EPS is 0.45,0.78 and 1.10 yuan respectively, and the corresponding PE is 21,12 and 9 times respectively.

Risk hint: the demand for installed capacity in the terminal market is lower than expected, the competition in the industry is becoming increasingly fierce, and the policies related to "double control of energy consumption" are becoming stricter as a whole.