Event: on August 7, the company released its semi-annual report of 2023. In the first half of 2023, the company realized revenue of 972 million yuan, an increase of 141.27% over the same period last year, and a net profit of 132 million yuan, an increase of 82.27% over the same period last year. The net profit of 120 million yuan was deducted, an increase of 72.58% over the same period last year. Thanks to the high profits of quartz crucibles and the company's continued cost reduction and efficiency improvement, the downside risk of traditional business and hot market market has been alleviated. In the second quarter, the gross profit margin / net profit margin was 36.35% and 15.68%, with a quarter-on-quarter change of + 0.09 pct compared with the first quarter.

The carbon-carbon thermal field and quartz crucible work together, and the photovoltaic plate grows stably. In 2023, the head carbon thermal field manufacturers still take the market share as the primary goal, the hot market price war continued in the first half of the year, the product price once fell below 300,000 yuan / ton, and the industry profit was close to the freezing point. During the reporting period, Tianyi Shangjia achieved complete self-made carbon fiber preform, and continued to expand the thermal field cost advantage by means of large-scale deposition equipment, continuous high-temperature equipment and intelligent key processes, superimposed the synergistic effect of quartz crucibles, and the company's shipments and market share achieved counter-trend growth. At the end of the second quarter, the price of a single crucible has exceeded 30,000 yuan, and the net profit of a single crucible has reached 6000-7000 yuan, becoming the main profit plate of the company. Thanks to the Group's years of experience and concept accumulation in the fields of technology, technology and equipment, the service life and per unit yield of quartz crucibles produced by Xin Lieyang, a subsidiary, have been ranked at the top level of the industry. during the reporting period, the construction of two production lines has been completed and fully put into production, and the construction of 20 quartz crucible production lines in Jiangyou has been steadily advanced, and it is expected that the shipment of quartz crucibles for the whole year will increase to 60,000. The current hot market price may reach the cost line of small and medium-sized manufacturers, superimposed by the start of silicon wafer construction and new production demand in the second half of the year, the hot market market is expected to hit bottom and stabilize and gradually pick up, quartz sand shortage is expected to continue this year, and the product is highly profitable for the whole year. the synergy advantage of the company's thermal field and crucible is obvious, and the photovoltaic plate is expected to fully benefit from shipments and profit performance throughout the year.

Railway passenger volume and high-speed rail operation volume rebounded, and powder metallurgy brake pad business gradually resumed. From January to June 2023, the national railway transport passenger volume was 1.77044 billion, an increase of 124.9% over the same period last year, close to the level of the same period in 2019, leading to the growth of powder metallurgy brake pad sales. As a leader in domestic replacement of high-speed rail brake plates, the company has significant advantages in technology and cost. During the reporting period, it won a large share in the joint procurement of powder metallurgy brake plates for high-speed rail EMU organized by the National Railway Group and the cooperative maintenance of enterprises affiliated to the United Railway Bureau; in the joint procurement of EMU brake plates held in 2023, the joint procurement ranked first in the number of winning bids, maintaining and maintaining the industry leading edge and market leading position. The resumption of railway travel is conducive to the smooth operation of the high-speed rail industry chain, and the company's product shipments and profits are expected to stabilize at a relatively reasonable level, waiting for the industrial upgrading opportunities brought by new high-speed rail models.

The new product research and development of carbon ceramic driving disc is smooth, and industrialization is just around the corner. With the obvious trend of lightweight demand for new energy vehicles, the company continues to innovate and make breakthroughs in the key processes of carbon ceramic brake disc. Progress has also been made in the most critical technology in the process of industrialization of carbon ceramic brake disc, and the development of new products of ceramic coated carbon ceramic brake disc has been completed. At the same time, the company makes every effort to promote the industrial application of carbon ceramic products and accelerates the layout of 150000 sets of carbon ceramic brake disc production lines in Sichuan Jiangyou Industrial Park. And with 19 automobile mainframe manufacturers and supply chain customers to establish carbon ceramic brake disc project cooperation, to obtain a new energy vehicle company key model carbon ceramic plate production project fixed point, has begun small batch, multi-batch sample supply.

Investment suggestion: the company is expected to achieve revenue of 2.249 billion yuan, 3.117 billion yuan and 3.886 billion yuan respectively from 2023 to 2025, and realize net profit of 448 million yuan, 754 million yuan and 9.33 yuan respectively, an increase of 150.3%, 68.3% and 23.6% over the same period last year. The corresponding EPS is 0.80,1.34 and 1.66 respectively, and the current share price corresponds to a PE multiple of 25X, 15X and 12X respectively, maintaining a "buy" rating.

Risk tips: capacity expansion is not as expected; industry competition is intensified; downstream demand is not as expected; raw material price fluctuation risk and so on.