23H1's homing net profit declined compared with the same period last year, maintaining the "overweight" rating.

Chenghua shares released semi-annual report on August 18. H1 revenue is 460 million yuan, yoy-22%, net profit is 23 million yuan (deducting 10 million yuan after deducting non-yoy-88%), yoy-75% (deducting non-post-yoy-88%); Q2 revenue is 228 million yuan, month-on-month ratio-29% amp 3%, return to mother net profit 8 million yuan, month-on-month ratio-84% amp 49%. We estimate that the company's 23-25 year net profit will be 0.81 32xPE 1.44 billion, corresponding to EPS 0.38; 0.67; 0.79; combined with the average 25xPE valuation of comparable company's 23-year Wind consensus expectation, taking into account the expected recovery of polyetheramine demand from the bottom and the company's future new project growth, we give the company 23-year 32xPE with a target price of 12.16 yuan, and maintain an "overweight" rating.

Polyetheramine prices and price spreads have narrowed, dragging down the company's revenue and gross profit margin 23H1 polyetheramine prices are low, according to Baichuan Yingfu, 23H1 East China market D230 average price-48% to 20,000 yuan / ton, raw material propylene oxide East China market average price-14% to 0.98000 yuan / ton, the price gap continues to narrow, the company's surfactant sector revenue is-17% to 364 million yuan, gross profit margin yoy-16.1pct to 16%. The flame retardant business 23H1 achieved revenue of-41% to 59 million yuan and gross profit margin of yoy+0.1pct to 13%. The silicone rubber business achieved revenue of-29% to 39 million yuan and gross profit margin of yoy+9.0pct to 21%. Huaian Chenghua, a subsidiary, realized a net profit of-125% to-11 million yuan compared with the same period last year. The company's comprehensive gross profit margin is from-11.5pct to 16% year-on-year, and the sales / management / R & D / financial expense rates are year-on-year-0.3/+2.0/+0.3/-0.0pct to 2.6%, respectively.

The lack of periodic demand has led to the weakening of polyetheramine, and the contribution of new projects is expected to increase in the future. due to the lack of significant recovery in demand for polyetheramine and flame retardants, competition for superimposed polyetheramine has intensified. According to Baichuan Yingfu, East China polyetheramine D230 quoted 185,000 yuan / ton on August 18, down 8% from the beginning of the quarter, and the price and price spread of polyetheramine are still at their lowest level since 2020. Considering that the demand in the wind power sector is expected to pick up in the second half of the year, the boom of polyetheramine products is expected to improve. According to the semi-annual report, many projects and cooperation of the company are progressing smoothly, and the "R & D building project" has reached the expected state of usability. The company plans to increase 200 million yuan to the wholly-owned subsidiary Huaian Chenghua "annual output of 40,000 tons of polyetheramine (42000 tons polyether) project". The subsidiary Fuzhou Chenghua plans to provide support to Dalian Xinjiang University in the new production process and catalyst technology of carbonate solvents for electrolyte. It is expected that it will contribute to the increment of the company in the future.

Risk hint: the risk of a continuous downturn in downstream demand and the risk that the progress of the new project falls short of the expected risk.