Event: the company issues a half-year performance forecast for 2023. In the first half of 2023, the company is expected to achieve a net profit of 63.4% to 7.75 million yuan, down 91.6% to 93.1% compared with the same period last year, and an estimated net profit of 3.48% to 4.25 million yuan, a decrease of 95.1% to 96.0% over the same period last year. Among them, 2023Q2 is expected to achieve a net profit of 21.06 million yuan per quarter, down 139%, 142%, and 172%, respectively, compared with the same period last year.

Weak demand for pesticide intermediates and declining profits, increased R & D investment and project depreciation affected costs. In the first half of 2023, the global macro-economy was relatively weak, domestic demand was in a state of weak recovery, the prices of some chemical products of the company declined to a large extent, and the profitability weakened. Among them, the company's pesticide intermediate business is greatly affected. In the first half of 2023, due to the influence of high global inventory of pesticides, the downstream demand for pesticide intermediates was weak, and product prices and sales declined. At the same time, due to the small decline in the price of raw materials, the gross profit of the company's pesticide intermediate products declined significantly. In addition, due to the decline in the prices of products and raw materials, the company also made corresponding provisions for inventory price decline, which in turn had an impact on the company's profits. In terms of expenses, due to the lack of sales of fluorobenzene, DFBP and other projects built by the company, it has begun to provide for relevant depreciation and amortization expenses, and at the same time, due to the increase in overall energy consumption and labor costs of the trial production company of related projects, it also has a negative impact on the company's profits. In addition, the company also distributes new energy sodium electrolytes, adsorbents, fourth-generation refrigerants, photovoltaic grade hydrofluoric acid, new polymer materials and other new materials and new products, and the company's R & D investment and market development efforts are increased synchronously. Sales, management, R & D expenses have increased compared with the same period last year.

Fluorobenzene, fourth-generation refrigerants and other projects have been completed, and the volume of new projects and the stabilization of product prices are expected to be improved. In the first half of 2023, the company's 5000 t / a fluorobenzene project and 5000 t / a DFBP project have been completed and trial production; 5000 t / a R1234ze refrigerant project was completed and trial production in July 2023; DEX project and 2pr 4pr 5-Trifluorophenylacetic acid and other projects will gradually achieve sales in 2023H2. In addition, the company's 5000 tons / year sodium hexafluorophosphate project and 10000 tons / year R1233zd refrigerant project are in the process of orderly construction. With the gradual completion and volume of the above projects, the company's revenue is expected to meet significant growth, and then thicken the company's performance. At the same time, since late June, the price of the company's main products has stopped falling and stabilized, the sales volume of related products has also recovered, and the company's relevant business data have gradually improved.

Earnings forecast, valuation and rating: in the first half of 2023, due to weak macroeconomic demand, prices and sales of major products such as pesticide intermediates declined, and corresponding profits weakened, resulting in a significant decline in the company's performance compared with the same period last year. Considering that the price of the company's main products is still relatively low, and the production and sales of newly built projects need to climb, we downgrade the company's 23-24 profit forecast and the new company's 25-year profit forecast. It is estimated that the company's return net profit for 23-25 years will be 0.54 (down 76.8%) / 1.24 (down 54.4%) / 183 million yuan respectively. At present, the price of the company's main products has gradually stabilized, and the profit situation is expected to be improved. In addition, the company's new projects such as fluorobenzene and fourth-generation refrigerants have been completed and entered the state of trial production. with the volume of new projects, the company's performance is expected to increase and maintain the company's "overweight" rating.

Risk tips: product and raw material price fluctuation risk, downstream demand is not as expected, capacity construction is not as expected, new product market development risk, product research and development risk.