Event: the company releases its 2023 half-yearly report. During the reporting period, the company achieved revenue of 321 million yuan, an increase of 14.75% over the same period last year; net profit of 6 million yuan, an increase of 389.19% over the same period last year; and basic earnings per share of 0.03 yuan per share. Among them, the company's revenue in the second quarter reached 166 million yuan, an increase of 19.47% over the same period last year, and the net profit returned to its mother was 2 million yuan, turning a loss into a profit over the same period last year.

The gross profit margin improved & the expense rate was flat and the net profit rate increased. In terms of gross profit margin, during the reporting period, the company's comprehensive gross profit margin was 19.68%, an increase of 3.55 pct over the same period last year. Among them, 23Q2's single-quarter gross profit margin was 18.74%, an increase of 2.94 pct over the same period last year, while a month-on-month decrease of 1.96 pct. In terms of expense rate, in the first half of 2023, the company's expense rate was 18.34%, which was the same as the same period last year. Among them, the sales / management / R & D / financial expense rates are 2.69% / 8.24% / 4.54% / 2.88% respectively, which are + 0.41 pct /-0.51 pct / + 0.48 pct /-0.37 pct respectively compared with the same period last year. In terms of net interest rate, during the reporting period, the company's net interest rate was 3.62%, an increase of 2.93 pct;23Q2 per quarter net interest rate to 3.14%, a year-on-year increase of 3.39 pct, and a month-on-month decrease of 1.01 pct.

The business of inner packing materials and cosmetics is growing prominently. Based on the accumulation of outsourcing business, the company invests in R & D and epitaxial acquisition to achieve full coverage of internal packaging and content business, the main customers include The Estee Lauder Companies Inc, Unilever, ELF and other daily chemical leaders, and establish stable long-term cooperation. In terms of internal materials, the holding subsidiary Jiusu Technology 2023H1 achieved revenue of 135 million yuan, an increase of 64.09% over the same period last year, and a net profit of 19 million, an increase of 683.35% over the same period last year. In terms of cosmetics OEM, the company has long invested in mastering the core technology of cosmetics production, and its products have passed the mainstream system assessment. Customers include well-known brands such as The Estee Lauder Companies Inc, Bettany, Ben and other well-known brands. 2023H1 Cosmetics Division achieved a revenue of 50 million yuan and a net profit loss of 3.25 million yuan.

Steadily promote the expansion of cigarette packets, business to achieve a rapid breakthrough. The company actively seize external opportunities, rely on its own technology and product advantages to further expand to the field of tobacco packaging, and continue to increase investment in the design and development of new tobacco products and bidding of old products. At present, the company's cigarette bag business has achieved breakthroughs in Yunnan, Jiangsu, Fujian, Anhui, Shanghai, Jiangxi, Guangxi, Jilin, Shaanxi, Henan and other regions, and is expected to expand rapidly in the future.

In 2022, the revenue of cigarette packets reached 35 million yuan, an increase of 124.85% over the same period last year.

Investment suggestion: the company's traditional daily chemical packaging is developing steadily, and the business of cigarette packets, packaging containers and cosmetics foundry has a broad growth space. The company is expected to achieve basic earnings per share of 0.11 / 0.16 / 0.24 yuan per share in 2023 / 24 / 25, corresponding to PE of 89X / 59X / 40X, maintaining a "cautious recommendation" rating.

Risk hint: the risk of business expansion falling short of expectations and a sharp rise in raw material prices.