The company made a net profit of 128 million yuan in the first half of 2023, which was + 40.86% compared with the same period last year. As the decline in silicon prices led to the improvement of downstream prosperity, the improvement of component-end scheduling, the company's orders and shipments increased significantly compared with the previous month, and the overall capacity utilization and profitability increased significantly. At the same time, the construction pace of the company's production expansion project is accelerated, and the gradual release of new production capacity is expected to bring economies of scale and further improve the profitability and comprehensive competitiveness of the company's products. We maintain the company's annual homing net profit forecast of $389 million in 2023-24-25, corresponding to the EPS forecast of $2.64 million. With reference to the comparable company's valuation level, we give the company 17xPE in 2023, lowering the target price to 45 yuan (the original target price is 46 yuan) and maintaining the "buy" rating.

2023H1's homing net profit was + 40.86% compared with the same period last year, and the performance was in line with expectations. In the first half of 2023, the company realized operating income of 2.82 billion yuan, year-on-year + 37.61%; net profit of 128 million yuan, + 40.86%; and non-return net profit of 107 million yuan, + 47.34% of the same period last year. Due to the mismatch of phased demand brought about by the concentrated release of silicon production capacity in the upper reaches, silicon prices fell significantly in the first half of the year, stimulating the gradual release of downstream demand and driving component-end production upward compared with the previous year. Benefiting from the rapid development of the new energy photovoltaic industry and the release of the production capacity of the company's investment projects, the production and sales of new energy photovoltaic aluminum profiles and aluminum components continue to grow.

The improvement of capacity utilization led to a rebound in the company's profitability, and economies of scale further increased product profits. The company's gross profit margin in the first half of 2023 was 12.60%, up 1.00pctCompact 0.78pcts, respectively, year-on-year / month-on-month; net profit was 4.54%, up 0.11pcts/2.43pcts year-on-year / month-on-month. According to the June investor survey summary released by the company on July 3, the company maintained steady growth in orders in the first half of the year, gradually completed the capacity climbing of new projects in the second quarter, and steadily improved capacity utilization, leading to a sharp rebound in the company's profitability. At the same time, with the release of the company's new production capacity, the economies of scale brought by mass production will help to reduce production costs, improve the company's operational efficiency, and further improve the profitability and comprehensive competitiveness of the company's products.

The first phase of the new energy vehicle aluminum parts project has achieved mass production, and the second phase is expected to be put into production in the fourth quarter. In May last year, the company announced the planning of the aluminum parts project for new energy vehicles with an annual capacity of 100000 tons. The main products are mainly aluminum parts of new energy vehicles, such as battery trays, front and rear bumpers, threshold beams, and so on. It mainly serves new energy vehicle manufacturers and power battery customers. According to the June investor survey summary released by the company on July 3, the project is planned to be built in two phases, with a production capacity of about 50,000 tons. Trial production has been started in mid-June and mass production and sales have been realized in July. The equipment order for the second phase of the project has been issued and is expected to be installed and debugged in the third quarter and put into production in the fourth quarter. Up to now, the company has signed confidentiality agreements and product development plans with some vehicle factories and power battery factories, and actively promoted the sample delivery verification, factory review and other related work of related products, and is expected to achieve batch supply after the project reaches production. Enrich the company's product line.

The layout of the Southeast Asian production expansion project is planned for 120000 tons of aluminum frame and 120000 tons of recycled aluminum capacity. According to the summary of the June investor survey released by the company on July 3, the company plans to build plants in Vietnam and Malaysia after comprehensively considering the investment environment and costs in Southeast Asian countries. layout of 120000 tons of aluminum frame and 120000 tons of recycled aluminum production capacity, mainly close to the overseas factories of the main customers of the supporting company. At present, the company has completed the relevant filing procedures and started to build factories overseas, which is expected to be put into production in the second half of 2024. The company's establishment of factories overseas will help to enhance global competitiveness and expand overseas market share, which is a necessary means to reduce market risk and an important measure to better serve downstream component customers.

Risk factors: the progress of the new layout recycled aluminum project is slow; the release of new capacity is not as expected; downstream photovoltaic installation is not as expected; raw material price fluctuations; international geopolitical risks.

Profit forecast, valuation and rating: due to the decline in silicon prices, the company's order volume and shipments increased significantly with the uptrend of downstream prosperity, and the improvement of capacity utilization led to the rebound of the company's profitability. Operating performance maintained rapid growth. At the same time, the construction pace of the company's production expansion project is accelerated, and the gradual release of new production capacity is expected to bring economies of scale and further improve the profitability and comprehensive competitiveness of the company's products. We maintain the company's annual homing net profit forecast of $389 million for 2023-24-25 and $2.64 for EPS, based on the average valuation level of comparable companies (selecting photovoltaic auxiliary materials Foster and Haiyou Xinliao as comparable companies, the current Wind consensus estimate of the average PE for 2023 is 17 times), lowering the target price to 45 yuan (the original target price is 46 yuan), and maintaining the "buy" rating.