Haishun New Materials announced its 2020 mid-year report: 2020H1 achieved revenue of 326 million yuan, YOY 7.2%; realized net profit of 47 million yuan, YOY 45.5%; realized net profit of 45.5%; realized net profit of 45 million yuan, and YOY 71.3%. Among them, revenue Q1/Q2 YOY was -4.9%/21.3%, respectively; net profit Q1/Q2 YOY was -17.7%/119.1%, respectively; net profit after deducting Q1/Q2 YOY was -15.5%/214.0%, respectively. Subsidiaries continue to be optimized, and production capacity construction is progressing steadily: the company expands horizontally and vertically into the industrial chain through acquisitions and joint ventures, expands business areas, and actively optimizes subsidiaries, expands market size through industrial collaboration and resource sharing, and saves costs through collaborative management, with remarkable results. In the first half of the year, the parent company achieved revenue of 49.32 million yuan, -29.1% yoy, net profit of 6.94 million yuan, +222.0%, net profit margin of 14.1%; Zhejiang Duoling achieved revenue of 35.87 million yuan, net profit of 660,000 yuan, net profit of 660,000 yuan, turning a loss into a profit, +210.8%, net profit ratio of 1.8%; Shijiazhuang Zhonghui achieved revenue of 5091 million yuan, -4.7%; net profit of 2.9 million yuan, +817.8%, net profit margin of 5.7%; Suzhou Haishun achieved revenue of 1.91 million yuan. + 24.0%, net profit of 35.44 million yuan, +23.6% year-on-year, net profit margin 18.5%; Suzhou Qingyi achieved revenue of 30.37 million yuan, -5.9%, net profit of 2.37 million yuan, +35.0%, net profit margin of 7.8%; Shanghai Jiucheng achieved revenue of 123 million yuan, net profit margin of 18.2%. At the beginning of the first half of the year, the company launched the first phase of the 118,000 square meter project in Haishun New Materials Industrial Park in Nanxun, Zhejiang. It is expected that the main construction will be completed by the end of the year. Part of production capacity will be formed in the first half of next year, which will effectively solve the company's tight production capacity problem and lay the foundation for the company's performance growth. Accelerate product research and development and tie in the steady growth of major customers: By product, the company's flexible packaging/rigid packaging achieved revenue of 241 million yuan/82 million yuan respectively in the first half of the year, +9.73%/-0.22% over the same period last year. In addition to the deep cultivation of traditional business, the company has made full use of its R&D capabilities, developed multi-layer co-extruded heat sealing films to support the company's products, improved the layout of the industrial chain, and enhanced personalized service capabilities. At the same time, the company actively connects with pharmaceutical R&D centers and pharmaceutical R&D outsourcing units, improves application data, helps customers pass consistency evaluations, reduces costs through measures such as centralized production and increases OEE effective start-up time, and actively embraces 4+7 centralized procurement with customers, and has doubled the performance of many customers. The company is a domestic pharmaceutical packaging leader. In recent years, it has expanded its business scope through vertical and horizontal mergers and acquisitions, and the synergy between subsidiaries and headquarters has continued to increase. At the same time, the pharmaceutical packaging industry has high technical barriers and low market concentration. The company has consolidated its core competitiveness through continuous R&D investment and maintained long-term strategic cooperation with core major customers. With the continuous advancement of the “4+7” volume procurement policy, the company's market share is expected to increase further. We maintain our profit forecast for the company. We expect net profit for 2020/2021/2022 to be about 110 million yuan/155 million yuan/197 million yuan respectively, up 64.57%/40.62%/27.31% year-on-year respectively, corresponding to PE 35x/25x/19x. Maintain a “buy” rating. Risk warning: Fund-raising projects fall short of expectations after implementation and expansion of production, industry policy adjustments, and the impact of the macro epidemic