On August 18, the company released its 2023 semi-annual report: the company's 2023H1 realized operating income of 1.27 billion yuan, year-on-year-19.0%, net profit of 30 million yuan, year-on-year-8.7%, and non-return net profit of 18 million yuan, year-on-year. 2023Q2 realized operating income of 660 million yuan, year-on-year / month-on-month ratio of-17.9% / month-on-month, net profit of 19 million yuan, + 11.3% / month-on-month of 78.2%, non-return net profit of 8 million yuan, and year-on-year / month-on-month net profit of-39.6% and 16.1%, respectively.

In the field of copper-based powder materials: the demand for traditional products of diamond tools and powder metallurgy remains low, while the friction and electric carbon industries benefit from the recovery of high-speed rail transportation and power tools, and the product demand structure continues to improve. The overall sales volume of 23H1 is-2% compared with the same period last year, and new products such as new pre-alloy powder and iron-based powder have been sold in bulk.

The field of microelectronic interconnection: achieve profit stability by improving product structure. Consumer electronics industry demand continues to be depressed, 23H1 solder powder sales decline compared with the same period last year, but profits remain stable, the company through the development of small and medium-sized customers to increase orders, stabilize domestic sales at the same time, through the development of foreign high-end customers, give play to product competitive advantage, increase export volume, increase the development of high value-added products.

Adding materials to manufacture metal powder materials: the company seizes the opportunity of rapid development of the industry, continues to develop new customers and open up new application fields. The sales volume of 3D printing products realized by 23H1 was + 149% compared with the same period last year, and the subsidiary company realized main business income, main business profit and net profit of 3485 yuan, 646 yuan and 5.19 million yuan respectively.

The construction projects of bases in Chongqing and Thailand are progressing smoothly. The Chongqing base completed the construction and pre-acceptance of the project at the end of 22, and completed the installation of the main equipment. The Thai base accounted for 93% of the overall progress of the 2023Q1 project construction, and is expected to be put into production by the end of September. The company's copper-based and tin-based powder production capacity is expected to reach more than 40,000 tons and 4000 tons respectively, an increase of more than 30% compared with the current production capacity.

Maintain the "highly recommended" investment rating. Taking into account the factors that demand recovery in traditional industries is less than expected, we downgrade our profit forecast, and estimate that the 2023-25 net return profit will be 0.77 billion yuan, corresponding to the price-to-earnings ratio of 54-38-26. We are optimistic about the long-term high growth trend of the company's material-increasing business and maintain the "highly recommended" investment rating.

Risk tips: raw material price fluctuation risk, unclear technical route, project construction schedule is not as expected, policy and safety and environmental protection risks.