Event: the company released its semi-annual report for 2010. during the reporting period, the revenue reached 573 million yuan, down 7.5% from the same period last year, and the net profit returned to its mother was 91.33 million yuan, down 4.5% from the same period last year, deducting 89.79 million yuan from non-net profit, an increase of 3.8% over the same period last year. Of this total, 2020Q2 realized income of 320 million yuan, down 0.37% from the same period last year, up 26.5% from the previous year, and its net profit was 47.89 million yuan, up 5.53% from the same period last year, and 10.3% from the previous year.

The license plate film and semi-finished products keep growing rapidly, and the reflective materials of microprisms are greatly affected by the epidemic. Affected by the epidemic in the first half of the year, logistics and upstream and downstream industrial chains were delayed in resuming work, the company actively adjusted its strategy, and the overall business situation was stable. The income of vehicle safety protection materials and products of 2020H1 Company reached 126 million yuan, an increase of 17.1% over the same period last year, and a gross profit margin of 49.8%, a decrease of 3.9 pct over the same period last year, mainly due to the late opening of the license plate center in the first quarter and the downturn of the car market. as the epidemic was brought under control, automobile production and sales gradually recovered, and the sales of license plate film and semi-finished products increased rapidly. The revenue of micro-prism reflective materials and products reached 112 million yuan, down 15.7% from the same period last year, and the gross profit margin was 55.1%, down 2.4 pct from the same period last year, mainly because the processing signage customers in some provinces were almost at a standstill in the first quarter. With the gradual recovery of domestic infrastructure in May, the company's demand for micro-prism reflective materials is expected to accelerate.

The business of brightening film and aluminum-plastic film has declined, and the PC/PMMA material production line has been gradually put into production. The income of 2020H1 liquid crystal display with backlight materials and die-cutting components was 117 million yuan, down 15.8% from the same period last year, with a gross profit margin of 17.7% and a decrease of 4.1 pct over the same period last year, mainly because the brightening film business was affected by the epidemic, and the composite film is expected to release part of its production capacity in the second half of the year. The income of materials for lithium-ion battery packaging was 22.17 million yuan, down 4.9% from the same period last year, and the gross profit margin was 22.8%, an increase of 13.5 pct over the same period last year. This is mainly due to the poor operation of small and medium-sized power battery manufacturers affected by the subsidy policy, and the company's power aluminum-plastic film has not been sold on a large scale. Two production lines of PC/PMMA composite film have been installed and debugged, one of which provides raw materials for reflective materials, and small batch orders have been realized in the field of automobile interior decoration and 5G mobile phone rear cover.

The leading position of reflective materials industry is stable, and there is much room for the growth of aluminum-plastic film and 5G materials in the future. The company's glass bead reflective materials account for nearly 30% of the license plate film and semi-finished products market, and still maintain steady growth; the company is the only enterprise in China to break through the technical barriers of microprism reflective materials, and the current market share is only about 10%. The domestic market is mainly monopolized by 3M Company, with large import substitution space. At present, the global aluminum film market has been occupied by a small number of Japanese and Korean companies for a long time, with a localization rate of less than 20%. The company is actively expanding production capacity and expanding the middle and high-end market. Under the background of the comprehensive popularization of 5G communication, wireless charging and NFC technology, the market puts forward new requirements for mobile phone backplane materials. PC/PMMA composite plate backplane processing technology is mature, low cost, become the best choice for middle and low-end mass mobile phone backplane materials, the market space is broad.

Maintain the "prudent recommendation-A" investment rating. It is estimated that the company's net profit from 2020 to 2022 is 251 million / 332 million / 425 million yuan, and the EPS is 0.40, 0.53 and 0.68 yuan, respectively. The current share price corresponds to PE, which is multiple of 22-17-13, maintaining the "prudent recommendation-A" rating.

Risk tips: product volume is lower than expected, raw material prices fluctuate, new projects are not as expected, etc.