Main points of investment

Event: on August 7, Dale Xincai issued the announcement on Foreign Investment and related Party transactions, which intends to transfer 15% of the equity held by Shanghai reshaping Energy Group Co., Ltd., and 20% of Shanghai Yidai Shangxin Energy Technology Co., Ltd., held by Shanghai Sound tax Trading Co., Ltd. After the completion of the transfer, the company holds a total of 35% of the shares in Yuishang New Energy.

Participate in the target of hydrogen energy, the layout of "light, hydrogen, storage integration": the company's current development planning focus is around "light, hydrogen, storage integration" to develop new energy, new materials industry projects. The company's target company for this transaction is New Energy, and its wholly-owned subsidiary Hunan Gengchi New Energy Technology has the production capacity of graphite composite bipolar plates. this acquisition is an extension of the company in the new energy industry and will help the company to further improve its industrial layout.

The production capacity of the diamond line is expanding rapidly, and there is much room for unit cost reduction. Since the end of 2022, the company's capacity expansion plan has landed steadily, although Q1 has had a periodic adverse impact on the demand of downstream silicon wafer enterprises due to the superimposed effects of many factors, such as the Spring Festival holiday, the epidemic situation and the sharp fluctuation of silicon prices. in turn, it affects the underutilization of the company's capacity, but since February, the company's operating rate began to increase rapidly, entering full production in the second half of March, and shipments reached more than 2.5 million kilometers in April. It has reached an all-time high, with full orders in May. In July, the production capacity is expected to reach more than 4 million km, and after all the equipment has been debugged, it is expected to reach 6 million km / month. In the future, the company will re-plan the next stage of production expansion according to the market development trend and space, and the total production capacity is expected to reach 1000 +. According to our May 30 company depth report, the company's diamond line unit cost has decreased from 60.58 yuan / km in 21 years to 27.92 yuan / km in 22 years, but there is still a large cost reduction space away from the leading enterprises in the industry. with the gradual launch of the company's production capacity, coupled with the comprehensive promotion and application of "20-line machine" equipment to improve man-machine efficiency and production efficiency, scale effect will gradually appear and profitability will be greatly improved.

Investment advice: considering the rapid release of the company's production capacity and the continued high demand in the downstream photovoltaic industry, the company has more reserves in future trends such as tungsten wire and diamond line. We maintain the profit forecast that the company's operating income from 2023 to 2025 is expected to be 16.27,23.89 and 2.883 billion yuan, respectively, with year-on-year growth rates of 153.1%, 46.9% and 20.7%, respectively. The net profit of the homing mother is 415 million yuan, and the EPS is 1.25,1.85,2.14 yuan respectively. Corresponding to the stock price on August 7, the corresponding PE valuation is 16.2, 11.0 and 9.5 times, respectively. Maintain the buy-B recommendation.

Risk tips: increased competition in the industry; tungsten wire R & D and production is not as expected; raw material prices fluctuate sharply; the prosperity of the photovoltaic industry is declining.