The company's performance is in line with expectations. In the first half of 2018, the company's revenue was 16.654 billion yuan, up 2.86% from the same period last year; operating profit was 1.064 billion yuan, up 50.33% from the same period last year; net profit was 433 million yuan, up 17.29% from the same period last year; net profit after deduction was 184 million yuan, down 47.28% from the same period last year, and basic earnings per share was 0.27 yuan. The company's performance is basically in line with expectations. In the first half of 18 years, the company's non-recurrent profit and loss totaled 249 million yuan, mainly due to the investment income generated by the transfer of 19.889% equity held by Zhangjiagang Cathay Pacific Investment Co., Ltd. At the same time, the company expects the net profit from January to September in 18 years to be 6.58-837 million yuan, an increase of 10-40% over the same period last year, mainly due to the growth of export business and investment income. At present, the company's main business is supply chain services and chemical new energy.

The growth rate of the trade industry performance has slowed down, focusing on the progress of trade frictions. The company's supply chain services are mainly related to the import and export of consumer goods and e-commerce platform, committed to providing one-stop value-added services in the whole supply chain. In the first half of 2018, the company's trading industry revenue was 16.088 billion yuan, an increase of 4.42% over the same period last year, which was significantly lower than the 16.06% in 17 years, accounting for 96.79% of the company's revenue. Specific to the breakdown: export trade revenue of 12.018 billion yuan, an increase of 6.72% over the same period last year, accounting for 72.30% of revenue; import and domestic trade revenue of 4.071 billion yuan, down 1.82% from the same period last year, accounting for 24.49%. The growth of the company's trading industry mainly benefits from the company's advantages in supply chain management, as well as the overall growth of China's import and export trade industry. From January to July 2018, China's exports and imports totaled US $13873 and US $1.2206 trillion respectively, an increase of 12.64% and 20.96% respectively over the same period last year.

As the company's exports are mainly textile and clothing, and the US market accounts for a relatively high share, affected by the background of Sino-US trade friction, the growth rate of the company's trade business is lower than that of China's import and export trade. The global economy is expected to continue to recover, and the overall demand in the international market continues to grow, but trade protectionism still tends to intensify, and there is still some uncertainty about the impact of Sino-US trade frictions. at the same time, combined with the company's import and export industry status, the overall performance of the trade industry is expected to increase slightly in the second half of the year.

The negative growth of chemical new energy revenue is expected to improve month-on-month in the second half of the year. The company's chemical new energy business takes Ruitai New Energy as the development platform, and its holding subsidiaries mainly include Huarong Chemical and Chaowei New Materials, including lithium battery electrolytes, silane coupling agents and electronic chemicals. In the first half of 18 years, the company's chemical industry revenue was 446 million yuan, down 34.98% from the same period last year, the first negative growth in 14 years, accounting for 2.68% of the company's revenue. Among them, Huarong Chemical's revenue was 402 million yuan, down 39.35% from the same period last year, mainly due to the decline in lithium battery electrolyte sales; Chaowei New Materials' revenue was 46.28 million yuan, a sharp increase of 95.67% over the same period last year. The overall good pattern of new energy vehicles in China remains unchanged. From January to July of 18 years, a total of 49.26 vehicles were sold, an increase of 98.01% over the same period last year, accounting for 3.07% of the total. The second half of the year is the peak sales season, and the company has certain advantages in the field of electrolytes. Overall, it is expected that the company's chemical new energy performance will improve month-on-month in the second half of the year. In addition, by the end of June, the company's 40,000 tons / year lithium-ion battery electrolyte project in Poland had raised 6.326 million yuan, with an investment schedule of 4.22%. The project has a total investment of 300 million yuan and is scheduled to be completed by the end of June 2020.

The decline in profitability is expected to improve month-on-month in the second half of the year. In the first half of 2018, the company's sales gross profit margin was 9.41%, down 2.12% from a year earlier, of which 10.55% was in the second quarter, up 2.88% from the first quarter. The gross profit margin of the trade sector is 8.64%, down 0.25% from the same period last year, including 9.61% for exports and 5.76% for imports and domestic trade. The company's overall sound operation, while increasing the self-built source base, combined with the profit trend in the second quarter, the overall profit is expected to improve in the second half of the year.

The decline in the rate of three items of expenses is expected to fall for the whole year. In the first half of 18 years, the total expenditure of the company's three fees was 1.06 billion yuan, down 8.20% from the same period last year, and the corresponding rate of the three expenses was 6.37%, down 0.77% from the same period last year. Itemized expenses show that the sales expenses are 692 million yuan, down 1.72% from the same period last year; the management expenses are 372 million yuan, down 2.36% from the same period last year; and the financial expenses are-3.95 million yuan, compared with 69.63 million yuan in the first half of 17 years, mainly benefiting from the exchange gain of 52.94 million yuan from the devaluation of the RMB.

The decline of the company's itemized expenses shows that the company's management level is sound, and the overall 18-year expense rate is expected to fall.

Maintain the company's "overweight" investment rating. It is predicted that the diluted EPS of the company in 2018-19 is 0.58 yuan and 0.59 yuan respectively, and the corresponding PE is 12.6 times and 12.3 times respectively according to the closing price of 5.71 yuan on August 23. At present, the valuation is relatively low relative to the lithium sector, but its trading business revenue accounts for a relatively high level, maintaining the "overweight" investment rating.

Risk hints: domestic and foreign economic downturn exceeded expectations; trade frictions intensified; progress of new energy vehicles was lower than expected; industry competition intensified; exchange losses.