Event: the company issues semi-annual report performance notice. In the first half of 2023, the company expects to achieve a net profit of 9.585 million yuan to 11.715 million yuan belonging to shareholders of listed companies, down from 58.85% to 66.34% compared with the same period last year. The net profit after deducting non-recurring profits and losses is expected to be 7.8397 million yuan to 9.9697 million yuan, down 57.95% and 66.93% compared with the same period last year.

The decline in the company's performance compared with the same period last year is mainly due to the decline in product profits and the increase in various expenses. 2023H1, the company's performance declined year-on-year mainly due to: (1) macroeconomic fluctuations and other factors, the overall demand of the polypropylene fiber industry is still weak, the profit of major products declined compared with the same period last year. (1) the expenses such as evaluation, consultation and travel arising from the company's foreign investment and acquisition of subsidiaries increased compared with the same period last year. (3) the company continues to carry out R & D and technological innovation around R & D projects, and the corresponding expenses such as R & D materials are increased compared with the same period last year. (4) the interest of the company's convertible bonds is amortized, and the corresponding financial expenses increase compared with the same period last year. (5) the company sets aside the provision for impairment of relevant assets, and the loss of credit impairment increases compared with the same period last year.

Award restricted stock to show confidence in the future. In July 2023, the company issued a notice on granting reserved restricted shares to incentive targets, granting 242500 restricted shares to 10 eligible incentive targets at the grant price of 15.04 yuan per share. The first / second / third attribution period can be unlocked by 40%, 30% and 30% respectively, and the assessment requirements are that the operating income is not less than 500 million yuan in 2023 / not less than 1.15 billion yuan in 2023-2024 and not less than 2 billion yuan in 2023-2025. We believe that the granting of restricted stock to the company's core employees will help to improve the enthusiasm of the employees and demonstrate the company's confidence in the future.

Profit forecast. We estimate that the company's EPS in 2023-2025 will be 0.59,0.97 and 1.74yuan respectively. Combined with the company's technological breakthroughs in the field of lithium diaphragm and carbon fiber, we will give a certain valuation premium according to BPS 9.67yuan and 3.03.5times PB in 2023, corresponding to the reasonable value range of 29.0033.84yuan, maintaining the "better than the market" investment rating.

Risk hint. The price of raw materials has risen sharply, the progress of projects under construction is not as expected, and the growth of downstream demand is not as expected.