The company publishes its 2023 semi-annual report. 2023H1, the company realized operating income of 1.268 billion yuan, down 18.96% from the same period last year, and the net profit returned to the mother was 29.72 million yuan, down 8.74% from the same period last year. The net profit from non-return to the mother was 18.14 million yuan, down 18.73% from the same period last year. 2023Q2, the company achieved operating income of 660 million yuan, down 17.92% from the same period last year, an increase of 8.63% from the previous month, and a net profit of 19.04 million yuan from the same period last year, an increase of 11.28% from the same period last year, an increase of 78.28% from the previous year. The net profit from the non-home company was 8.28 million yuan, down 39.56% from the same period last year and 16.02% from the previous year.

Comments: downstream demand is depressed, traditional business is under pressure, and 3D printing business is developing rapidly.

Quantity: in the field of copper-based powder materials, powder metallurgy and superhard tools, demand in the friction and electric carbon industries has benefited from the recovery of high-speed rail transport and power tools. At the same time, the company's new products such as new pre-alloy powder and iron-based powder have also formed mass sales, and the overall sales of 2023H1 have dropped by 2% compared with the same period last year. In the field of tin-based solder powder, downstream consumer electronics demand is relatively weak. The company stabilizes domestic sales through the development of small and medium-sized customers, develops foreign high-end customers to increase export volume, and steadily promotes the high value-added route. 2023H1 solder powder sales decline year-on-year but profits remain stable. In the field of 3D printing metal powder materials, the company seizes the opportunity of rapid development of the industry, continues to develop new customers, opens up new application fields, and achieves a year-on-year increase of 149% in sales of 3D printing products.

Price: the company's pricing model is the "metal price + processing fee" model. The average prices of 2023H1 copper and tin are 681,000 yuan / ton and 2078 million yuan / ton respectively, down 5.3% and 33.8% from the same period of 2022H1. The decline in metal prices leads to a decline in product prices, and the superimposed decline in sales volume leads to a decrease in revenue compared with the same period last year.

Business reorganization: to realize the independent operation of micro-nano electronic paste business. In 2023, the company reorganized the business of the former Beijing Youyan Powder New Materials Research Institute Co., Ltd. with the business of Compaxiwei, Youyan increasing materials and Youyan powder materials. this business reorganization mainly focuses on the future operation and development planning of micro-nano electronic paste plate and powder metallurgy plate. With the help of the independent legal personality of the Powder Research Institute, the Powder Research Institute changed its name to Youyan Micro New Materials (Beijing) Co., Ltd., completed the industrial and commercial change in April 2023, and realized the independent operation in the field of micro-nano electronic paste.

Core points: 1) Copper-based powder plate: after the Chongqing base and Thailand base are put into production in the second half of 23 years, the overall copper-based powder production capacity will reach 40,000 tons, and the company is expected to further increase its share by expanding overseas markets; the company also actively enriches product categories, the layout of electrolytic copper powder, atomized copper / alloy powder, electronic-grade copper oxide powder and other products to contribute to long-term growth. 2) Tin-based powder plate: after the fund-raising project is put into production, the total production capacity of the company's tin-based powder materials will reach 5000 tons; the company continues to upgrade its product structure, and at the same time, the company plans to expand downstream of tin powder, including tin paste, silver paste and other electronic paste links, profitability is expected to continue to improve in the future. 3) 3D printing powder material plate: the 500-ton production capacity of Youyan has been landed, and the company has introduced strategic investor Steel Research Investment Co., Ltd., to deepen the cooperative relationship between the company and the downstream. Benefit from the rapid development of 3D printing industry is expected to gradually open up new growth space.

Investment suggestion: the company is the leader of copper-based and tin-based powder materials in China. After reaching production, the production capacity of 3D printing powder materials will be further expanded. With the gradual release of market demand, the production capacity of 3D printing powder materials is expected to contribute to new increments. We adjusted the homing net profit from 2023 to 2025 to 0.82,1.07 and 142 million yuan respectively, and the PE corresponding to the closing price on August 21, 2023 was 46, 35 and 26 times respectively, maintaining the "recommended" rating.

Risk hint: downstream demand is lower than expected, raw material price fluctuation risk, R & D progress is not as expected.