Domestic color masterbatch and cyanuric chloride leading enterprises, 2022H1 performance greatly improved. The company mainly engages in R & D, production and sales of color masterbatch, cyanuric chloride, battery wet diaphragm (base membrane and coated film) and melt blown nonwovens. As of 2022H1, the company has a production capacity of 20,000 tons of high concentration color masterbatch, 36300 tons of functional masterbatch and biodegradable masterbatch under construction, and an annual production capacity of 90,000 tons of cyanuric chloride. It has a wet diaphragm production capacity of 150 million tons, and another 150 million tons of wet diaphragm capacity is about to be completed and put into production, and about 1 billion tons of capacity is being built one after another. 2022H1 is driven by the strong demand for melamine downstream and other factors, the company's product sales revenue and gross profit margin increased significantly. 2022H1 achieved revenue of 1.251 billion yuan, up 50.28% over the same period last year; net profit belonging to shareholders of listed companies was 193 million yuan, up 751.59% over the same period last year; and net profit after deducting 189 million yuan, up 873.24% over the same period last year.

Color masterbatch is expected to benefit from the decline in the price of raw materials, cyanuric chloride and wet diaphragm prices are expected to remain high. The main results are as follows: 1) one of the main raw materials of the company's color masterbatch products is titanium dioxide, and the price of 2022H1 titanium dioxide remains high, which leads to an increase in the cost of the company's color masterbatch products and a substantial decrease in gross profit margin. Entering the second half of the year, due to the sharp decline in sulfuric acid prices, titanium dioxide cost support weak price decline. 2) under the influence of overseas epidemic situation and extreme weather, the price of cyanuric chloride raw material is tight, which promotes the market price of cyanuric chloride to rise. According to Baichuan Information, as of September 27, 2022, cyanuric chloride was quoted at 23500 yuan per ton, up 46.88% from the same period last year. 3) under the influence of tight supply, the price of wet diaphragm increases. According to Baichuan Information, as of September 27, 2022, the price of Shenzhen 16um/ wet diaphragm was 1.35 yuan per square meter, up 8 percent from the same period last year.

It is planned to invest 180000 tons of battery-grade Prussian blue (white) project to further expand new energy business. The company announced that on September 17, 2022, the company and Qicai Chemical signed a "Strategic Cooperation Agreement". The two sides intend to jointly invest 2.5 billion yuan in a joint venture company (50% each) to build an annual production capacity of 180000 tons of battery-grade Prussian blue (white) industrialization project. The project is to be built in three phases, including: the first phase is to build a 10,000-ton production plant, which is expected to be completed and put into operation by the end of the 23rd; the second phase is proposed to build a 50,000-ton production plant; and the third phase is proposed to build a 120000-ton production plant. In this cooperation, the subsidiary Yingchuang Sanzheng and the shareholding company Yingxin Chemical will provide sodium cyanide, the source material needed for the production of Prussian Blue (White), and colorful Chemistry will provide manufacturing technology and experience support. According to the company announcement, this cooperation will help the company to give full play to its advantages in sodium cyanide production capacity, cost and technology, and further implement the strategic layout of the new energy industry.

Set up a joint venture company Meinan New Materials to promote the development and growth of battery diaphragm business. The company announced that Anhui Meixin, a holding subsidiary of the company, signed an Investment Agreement with Meyatt Technology on August 23, 2022, agreeing to jointly contribute to the establishment of Meinan New material, with a registered capital of 15 million yuan, of which Anhui Meishi contributed 13.2 million yuan, accounting for 88% of the registered capital of the underlying company. The joint venture company will focus on the application of new diaphragm materials for sodium ion batteries, semi-solid diaphragm materials for lithium ion batteries, diaphragm coating materials for lithium ion batteries and conductive carbon black in lithium / sodium ion batteries. According to the company announcement, the establishment of the joint venture company will help to enhance Anhui Meixin's sustainable development ability and battery diaphragm project operation ability, further promote the development and growth of the company's battery diaphragm business, and speed up the large-scale development of the company. promote the transformation and upgrading of the company and enhance the comprehensive strength of the company.

Risk tips: the progress of project construction is not as expected, the prices of raw materials and products fluctuate greatly, and the macro-economy goes down.