Event: Xiao Song shares issued a half-year performance forecast for 2023. The company expects the net profit of 2023H1 to reach 28 million yuan to 33 million yuan, an increase of 618.21% to 746.46% over the same period last year, and is expected to deduct non-return net profit to reach 27.5 million yuan to 32.5 million yuan, an increase of 723.92% and 873.72% over the same period last year.

From a quarterly point of view, the net profit of 2023Q2 is expected to reach 25.68 million yuan to 30.68 million yuan, an increase of 1525% to 1842% over the same period last year, and the non-return net profit is expected to reach 25.56 million yuan to 30.56 million yuan, an increase of 1726% and 2083% over the same period last year.

The high increase in company revenue continued in the second quarter, and the exchange earnings thickened the company's profits. The company achieved high revenue growth in the first quarter, an increase of 32.27% over the same period last year, and is expected to continue high revenue growth in the second quarter. Since the second quarter, due to the continuous high temperature and the landing of new orders at the superimposed Canton Fair, the sales of the company's series of rechargeable fans have increased significantly. The company also continues to expand markets at home and abroad, carry out multi-channel business layout, and the sales of healthy household appliances and e-cigarettes have also increased. In terms of exchange gains and losses, although the company's overseas income accounts for a relatively low proportion of 32.81% in 2022, the company's revenue growth in the first half of this year mainly comes from overseas markets, and the company's dollar revenue is expected to increase. At the beginning and end of the 23H1 period, the exchange rate of the US dollar against RMB is 6.91,7.26 respectively. Due to the appreciation of the US dollar, the exchange earnings are expected to further increase the company's profits.

Construct the layout of the whole industry chain of e-cigarette. The company has invested 30% of Hong Kong China Biology in 2022 and opened up the upstream business of producing high-purity nicotine. Huzhou Jinqian Equity Investment Partnership (limited partnership), an industrial fund invested by the company in January 2023, acquired 20% of Zhenghe Bio. Once again increase the layout of e-cigarette business. By investing in Platinum, Zhenghe Biology and holding Hong Kong China Biology, the company can make full use of its R & D advantages of electronic atomized cigarette products, tobacco oil and high-purity nicotine R & D technology to form the synergy of the e-cigarette industry. At the same time, actively explore the electronic smoke atomization scheme. The company's business has achieved the coverage of core industries such as nicotine, atomization, e-cigarette products and so on. Guangdong Jinlaite Intelligent Technology Co., Ltd., a wholly owned subsidiary of the company, has also obtained the "Tobacco Monopoly production Enterprise license (Electronic cigarette processing Enterprise)" issued by the State Tobacco Monopoly Bureau. can legally carry out and engage in the production and operation of e-cigarettes.

Investment advice: the company actively expand the business of small household appliances, and the layout of e-cigarette track, the performance is expected to achieve high growth. It is estimated that the return net profit of the company from 2023 to 2025 is 0.48,0.64 and 76 million yuan respectively, and the corresponding EPS is 0.15,0.20,0.24 yuan respectively. Maintain the "cautious recommendation" rating.

Risk hints: the risk of a weaker-than-expected recovery in overseas markets; the risk of exchange rate fluctuations; the risk of intensified market competition.