On August 15, 2023, the company released its semi-annual report of 2023. 2023H1, the company achieved revenue of 10.246 billion yuan, an increase of 9.4% over the same period last year, a net profit of 1.212 billion yuan, an increase of 52%, and a non-return net profit of 1.249 billion yuan, an increase of 88.4% over the same period last year. 2023Q2, the company achieved revenue of 5.614 billion yuan, an increase of 12.9% over the same period last year, an increase of 21.2% over the same period last year, a net profit of 629 million yuan, an increase of 45.8% over the same period last year, an increase of 7.9% over the same period last year, and a net profit of 687 million yuan, an increase of 83.1% over the same period last year and 22% over the previous year. The performance is in line with the performance forecast.

Photovoltaic takes the lead, with a big increase in performance compared with the same period last year. 2023H1's net profit increased 52% to 1.212 billion yuan compared with the same period last year, mainly due to a year-on-year increase in gross profit of 790 million yuan to 2.35 billion yuan, of which the gross profit of photovoltaic, magnetic materials and lithium products was 1.65 billion yuan, 41.1 billion yuan respectively, and the gross profit of photovoltaic and magnetic materials was + 877 million yuan respectively. Photovoltaic plate gross margin growth accounted for 111% of the company's gross margin increment. Photovoltaic plate: gross profit growth is mainly due to the photovoltaic boom in the first half of the year, the volume and price of the company's products rose. ① quantity: the company's 2023H1 achieves battery export of about 1.2GW, component shipments exceed 3.3GW, and component shipments increase by 50% compared with the same period last year. This is mainly due to the good performance of the European market in the first half of the year, while Japanese and domestic shipments have more than doubled compared with the same period last year. ② cost:

Through the technical transformation of the production line, the company continues to optimize the product structure, and continue to promote cost reduction and efficiency. The average price of silicon material 2023H1 is 172 yuan / kg, down 32% from the same period last year. The average price of 2023Q2 is 132 yuan / kg, which is 49% less than the same period last year. ③ gross profit margin: due to the increase in the proportion of photovoltaic business, while photovoltaic business gross profit margin increased 11.09pct to 24.32% year-on-year, so the company's comprehensive gross profit margin rose 6.32pct to 22.98% year-on-year.

Revenue from magnetic materials declined slightly, while lithium electricity maintained its growth trend. Magnetic material industry: 2023H1, the company achieved an income of 1.82 billion yuan, a decrease of 15% over the same period last year, and shipped 92000 tons, which was basically the same as the same period last year, and its gross profit margin increased by 3.22pct to 26.61% over the same period last year. Lithium plate: 2023H1, the company achieved an income of 940 million yuan, an increase of 15.45% over the same period last year, and shipped 140 million lithium batteries, an increase of 36% over the same period last year. With the release of the capacity of the 6GWh high-performance lithium battery project, the output of lithium battery products may further increase.

Core focus: with the gradual commissioning of various projects of the company's layout in the two major industries of magnetic materials + devices and photovoltaic + lithium power, the company has gradually opened up the growth space. The company has many incremental projects on hand, including the ① annual 6GWh lithium battery project was completed and put into production in June this year, and is currently in the capacity climbing stage; ② 2023H1, the company also made the investment decision on the subsidiary Sichuan East Magnetic Investment 12GWTOPCon high efficiency battery project in two phases; and ③ subsidiary Lianyungang East Magnetic invested in the annual production of 5GW new high efficiency components project. With the gradual launch of the new capacity, the company is expected to reach 14GW battery capacity and 12GW module capacity by the end of the year.

Investment suggestion: as the projects of the company layout in the two major industries of magnetic materials + devices and photovoltaic + lithium electricity are gradually put into production, the company gradually opens up the growth space. We expect the company to achieve a net profit of 2.343 billion yuan, 2.74 billion yuan and 3.189 billion yuan in 2023-2025, with an EPS of 1.44,1.68 and 1.96 yuan respectively, and a PE of 11,10 and 8 times the closing price on August 18, respectively, maintaining a "recommended" rating.

Risk tips: rising raw material prices, capacity release less than expected, downstream demand less than expected, and so on.