This report is read as follows:

The company's 2023Q2 performance was lower than expected, mainly due to the lower-than-expected recovery of the downstream silicone industry. Adjust to "prudent overweight" rating, downgrade the target price to 16.80 yuan.

Main points of investment:

Adjust to "cautiously overweight" rating. The downstream of the silane coupling agent is in a weak recovery stage. We lowered the EPS in 2023-24 to 0.38max 0.56 yuan respectively (the original 23max 24-year EPS was 3.30max 4.56 yuan), the new EPS in 2025 was 0.67 yuan, the growth rate was-81% shock 48% shock 19%, and the target price was reduced to 16.80yuan (as the company's products are at the bottom of the boom and the industrial chain layout is complete, aerogel, silicon-based and cobalt-based new materials products are gradually promoted. Strong competitiveness, give 2024 30 times PE).

23Q2's performance was lower than expected. In the first half of 2023, the company realized revenue of 565 million yuan,-48.38% compared with the same period last year, and realized net profit of 71 million yuan and-82.60% compared with the same period last year. Among them, 23Q2 realized revenue of 282 million yuan, which was unchanged from the previous month, and realized net profit of 31 million yuan and-24.39% compared with the previous year.

The lower-than-expected 23Q2 performance is due to the gradual bottoming out of the silane industry chain and the decline in product prices.

Penetration is growing against the trend, and sales hit a single-quarter high. 23Q2's main product output is 9500 tons, sales volume is 10400 tons, month-on-month ratio + 17.42%, main product price is 19046 yuan / ton, month-to-month ratio-14%, aminosilane product sales volume is 2100 tons, price is 24392 yuan / ton, month-on-month ratio-16%; epoxy silane sales volume is 1500 tons, price is 30996 yuan / ton, month-on-month ratio-13%; sales volume of sulfur-containing silane is 1600 tons, price is 19297 yuan / ton, month-on-month ratio-6% Vinyl silane 2600 tons, the price is 16075 yuan / ton, the month ratio is-12%; the original silicate ester sales volume is 2600 tons, the price is 10896 yuan / ton, the month ratio is-28%. The company has further increased its market share by reducing prices.

The property recovery is expected to boost demand for functional silane. The Ministry of Housing and Construction said that it will implement policies such as tax and fee reduction for the purchase of improved housing and individual housing loans, so as to promote the healthy development of the real estate market, and then the recovery of real estate demand and the recovery of organosilicon and silane products.

Risk hint: the construction progress of the project is not as expected and the product demand is not as expected.