[Incident: Company release] According to the 2023 semi-annual report, 23H1 expects to achieve net profit of 0.5 to 60 million yuan, +69% to 103% over the same period, deducting net profit of 0.4 to 0.5 billion yuan from non-returning mothers, +273% to 367% over the same period.

Net profit increased rapidly after deduction of Q2 results. Q2 The company expects net profit of 0.25 to 035 million yuan, -42 to -18% from the previous year, and expects to achieve net profit of 0.27 to 337 million yuan after deducting non-return parent net profit, +447 to 652% over the previous year. One of the main reasons for the decline in the company's 23Q2 net profit is that 22Q2 increased 22Q2's profit by generating investment income of about 43.03 million yuan due to the disposal of shares in Leng Wang Container Temperature Control (Suzhou) Co., Ltd.

The main business continues to strengthen, and Panasonic's assets are combined to improve the quality of operations. One of the reasons for the sharp increase in the company's net profit is that the company completed asset restructuring of Songyang compressors and Songyang chillers in November '22, contributing a lot of profit to the company. In terms of the original business, the company is also actively deepening market segmentation, improving manufacturing efficiency, and developing collaboratively with Panasonic assets.

The acquisition of Panasonic Refrigeration was completed, further enhancing the company's business strength. In June, the company's transfer of 100% of the shares of Panasonic Refrigeration (Dalian) Co., Ltd. was completed. We expect Panasonic Refrigeration to further improve the company's layout in the lithium bromide absorption chiller and gas heat pump air conditioning business, and is expected to develop collaboratively with the company's original business.

Investment advice: We are optimistic about the steady development of the industrial and commercial refrigeration industry. Through the integration of the company's assets with Panasonic, the competitiveness and influence of the industry have improved markedly. It is expected to benefit from an increase in leading share and achieve rapid growth in revenue and profit. We expect the company to achieve revenue of 45.21/56.30/6.794 billion yuan in 2023-2025, +56.3%/24.5%/20.7% year-on-year, and expected net profit of 1.12/2.44/396 billion yuan, +515.8%/116.7%/62.6% year-on-year. Maintain a “buy” rating.

Risk factors: The company's engineering projects did not meet expectations, high-bid projects did not meet expectations, cold chain logistics policy promotion did not meet expectations, Panasonic refrigeration assets integration fell short of expectations, raw material costs fluctuated greatly, etc.