Event: the company issued a semi-annual performance forecast, the company is expected to achieve a net profit of about 88 million yuan in the first half of 2023, and about 58 million yuan is expected to be deducted.

The income side is sound, and the air energy business is gradually expanding. In the first half of the year, the company is expected to achieve operating income of 2.05 billion yuan, an increase of about 18% over the same period last year, and Q2 is expected to achieve revenue of 1.178 billion yuan, + 7.61% of the same period last year.

We expect the company's kitchen and electricity business to be basically flat in the first half of the year, with a slight increase in solar energy business. From January to May 23, China's heat pump exports were + 40% compared with the same period last year, and we expect the company's air energy business to benefit from the growth of demand at home and abroad.

The net profit of Q2 home has increased, and the profitability has been significantly improved. Q2 company is expected to achieve a net profit of 99 million yuan, + 157% compared with the same period last year, and is expected to achieve a net profit of 79 million yuan after deducting non-return, which is + 179% compared with the same period last year. According to the data disclosed by the company, we expect the company's Q2 return net profit margin to be about 8.4%, about 4.9pct year-on-year improvement, and deduction non-return net profit margin to about 6.7%, about 4.1pct year-on-year improvement. We believe that the main reason for the significant improvement in 23Q2's profitability is:

1) the production and operation of 22Q2 Company is affected by external factors, and the base is low; 2) the cost of 23Q2 raw materials decreased significantly compared with the same period last year, and the average prices of copper, aluminum, plastic, steel and other raw materials all decreased by more than 10% compared with the same period last year.

3) after the gradual expansion of the company's air energy heat pump scale, the production scale effect may lead to the improvement of profitability.

Profit forecast: we are optimistic about the development trend of the global heat pump industry. As an important company in domestic heat pump exports, the company is expected to benefit from the high demand for overseas heat pumps. At the same time, the company's photovoltaic EPC and energy storage business is also expected to provide a new business growth point for the company. We estimate that in 2023-2025, the company will achieve an operating income of 45.38 million yuan, 54.37 billion yuan, 15.9%, 3.51 million yuan, 419 million yuan, and 16.5%, respectively, corresponding to PE13.22/11.06/9.49x.

Risk factors: lower-than-expected heat pump exports, rising raw material costs, real estate affecting the demand for water heaters, water purifiers and other products