Core ideas:

1. Event

The company disclosed its interim performance report in 2017. during the reporting period, the company realized operating income of 946 million yuan, an increase of 36.38% over the same period last year, net profit of 49.7633 million yuan, an increase of 68.33% over the same period last year, and earnings per share of 0.13 yuan.

two。 Our analysis and judgment

(1) the sales of the products are good, and the performance of the first half of the year has greatly increased. The sales of the company's main products reached a new high in the first half of the year. The sales of color photographic paper reached 3895.04 square meters, an increase of 19.33 percent over the same period last year. The sales volume of solar cell backpanels reached 1755.94 square meters, an increase of 44.83 percent over the same period last year. The company's gross profit margin reached 17.78%, up 65 basis points from the same period last year. Thanks to the good sales of the company's products and the improvement of gross profit margin, the performance increased significantly in the first half of the year. It is expected that the company's business performance will maintain a good momentum in the second half of the year, and its annual performance is expected to achieve substantial growth.

(2) Lithium diaphragm business will become another growth pole

The high-performance lithium-ion battery PE diaphragm industrialization construction project and lithium diaphragm coating phase I project, one of the previous investment projects, have achieved small batch trial production and are about to enter the normal production state. The company also disclosed in July this year that it intends to acquire the diaphragm company, China Science and Technology. If the acquisition is completed, China Science and Technology will become a controlling subsidiary of the company, which will further enhance the market competitiveness of Lucky Film Lithium diaphragm business. The company's lithium battery continues to grow through endogenous and epitaxial methods, and it is expected that the business will become the company's new growth pole in the future.

(3) the transformation is smooth and will benefit from the reform of the military Aerospace Science and Technology Group

The company is the flagship enterprise of Lucky Group. In recent years, its main business has expanded to the field of membrane and coated membrane processing products. The sustained high growth of performance shows that the transition is smooth. Lucky Group is an important sub-group of Aerospace Science and Technology Group, which is expected to benefit deeply from the development of civil-military integration in our country. The actual controller of the company is Aerospace Science and Technology Group, Aerospace Science and Technology Group "13th five-year Plan".

During this period, the asset securitization rate is expected to increase from 15% to 45%. The external profit scale of the listed companies of the Lucky Group is still quite large, and the company, as the core platform of the Lucky Group, is expected to benefit significantly from the expected increase in asset securitization of the Aerospace Science and Technology Group.

3. Investment suggestion

Assuming the successful acquisition of China Science and Technology, we expect the company to make a net profit of 100 million yuan and 130 million yuan in 2017 and 2018, corresponding to 0.27 yuan and 0.35 yuan in EPS. As an important platform of Aerospace Science and Technology Group, the company has a clear direction for the transformation of new energy and is expected to benefit from civil-military integration and the reform of Aerospace Science and Technology Group, so that the investment value can be greatly improved and the "recommended" rating can be maintained.

Risk Tip: the risk that the progress of the company's lithium power project is lower than expected.