Event: the company releases its 2023 half-yearly report. In the first half of 2023, the company achieved revenue of 1.88 billion yuan, an increase of 18.49% over the same period last year, a net profit of 273 million yuan, a decrease of 26.23%, and a net profit of 274 million yuan, a decrease of 26.27% over the same period last year. 2023Q2, the company achieved revenue of 882 million yuan in a single quarter, down 9.87% from the same period last year and 11.70% from the previous year; the net profit returned to the mother was 115 million yuan, down 56.84% from the same period last year and 27.39% from the previous year.

Phosphorus chemical products prices fell, 23H1 performance under pressure. 2023H1, due to the decline in the prices of phosphorus chemical products such as calcium dihydrogen phosphate, monoammonium phosphate and phosphoric acid, the gross profit margin of the company's phosphorus chemical business fell 6.35pct compared with the same period last year, putting pressure on the company's performance. Among them, the gross profit margin of calcium dihydrogen phosphate, monoammonium phosphate and phosphoric acid fell respectively 6.55pct, 2.50pct and 8.03pct compared with the same period last year. Phosphorus chemical revenue, thanks to calcium dihydrogen phosphate, iron phosphate and other new production capacity, the company's overall phosphorus chemical products sales increased, phosphorus chemical business revenue increased 25.22% compared with the same period last year. Phosphate rock mining business, 23H1 domestic phosphate rock prices remain at an all-time high level, the company's phosphate rock mining business gross profit margin increased 14.18pct. However, due to the improvement of the phosphate production capacity of the company, the self-consumption of phosphate ore increased and the export volume decreased, and the revenue of phosphate mining business of 23H1 company decreased by 30.95% compared with the same period last year. In terms of expense rate, 23H1's sales / management / R & D / financial expense rate increased year-on-year by 0.32pct, 0.90pct, 0.48pct and 0.89pct, respectively.

It is planned to raise an additional 2.5 billion yuan to expand the production capacity of purifying phosphoric acid with a capacity of 220,000 tons per year. The company plans to raise an additional 2.51 billion yuan to be used for the construction, replenishment of working capital and repayment of loans for projects such as "120,000 t / a food grade phosphoric acid purification project by comprehensive utilization of medium and low grade phosphate rock" and "100000 t / a food grade phosphoric acid purification project". The application for fixed increase was approved by the CSRC at the end of June. The construction of this additional investment project will further increase the company's capacity scale and competitiveness in the field of wet phosphoric acid purification, and at the same time improve the industrial chain layout of the company's fine phosphorus chemical business. In addition, some of the production capacity of the company's iron phosphate project and Guangxi Pengyue project have been completed one after another, and the landing of these new production capacity has further increased the production capacity and variety of the company's end products, laying a solid foundation for the company's medium-and long-term performance growth.

Profit forecast, valuation and rating: 23H1, due to the decline in the price of calcium dihydrogen phosphate, monoammonium phosphate and other major phosphorus chemical products, the company's gross profit margin declined year-on-year, the performance is under pressure. Considering that the price of related phosphorus chemical products is still in a low position, we lower our profit forecast for 23-25 years. It is estimated that the 23-25 year net profit of the company will be 7.04 (down 43.5%) / 9.34 (down 42.7%) / 12.89 (down 366%) respectively.

The company has a complete layout of upstream phosphorus, fluorine and lithium resources, and the capacity layout of new energy materials and fine phosphorus chemical products is relatively large. With the landing and climbing of new projects, the performance will still show rapid growth and maintain the "buy" rating.

Risk tips: product and raw material price fluctuations, lower-than-expected demand, capacity construction risk, environmental protection and production safety risk.