Event: the company released the 2023 mid-term report, the first half of the income achieved 120 million yuan, year-on-year-24.8%, to achieve a net profit of 8 million yuan,-129.3%; of which a single Q2 income of 77 million yuan,-5.0% year-on-year, to achieve a net profit of-329000 yuan, year-on-year-102.2%.

The company has been ploughing PI film for more than ten years and has a wide range of products. Over the past 18 years, the company has persisted in independent research and development and innovation, expanded its production capacity, mastered the complete core technology of high-performance PI film preparation, such as formula, technology and equipment, and completed 9 highly automated production lines in Shenzhen, and has become one of the richest suppliers of high-performance PI film products in the world. The company's current mass production and sales of products are mainly thermal control PI film, electronic PI film and electrical PI film three series; in addition, there are small batch sales of aerospace MAM products, sample sales of flexible display CPI film and so on.

Downstream demand continues to improve, and the company's performance is expected to improve gradually. The main products include thermal control PI film, electronic PI film, electrical PI film, etc., which are widely used in flexible circuit boards, consumer electronics, high-speed rail transit, wind power generation, 5G communications, flexible display, aerospace and other fields. According to wind data, smartphone production in China was + 5.7% month-on-month in June and 164.7% month-on-month in the second quarter. Downstream consumer electronics demand growth, and continued to improve the trend, the demand for the company's products is expected to continue to increase.

Jiaxing base will be put into production soon, and the new products can be expected in the future. The company has an annual production capacity of 1050 tons, and the construction progress of the 1600-ton investment project of Ruihuatai in Jiaxing has been implemented according to the plan. at present, the construction of the factory building has been basically completed, and the installation of four main production lines and plant systems has been completed. and equipment debugging has been carried out, and the product commissioning has begun. In the follow-up, it will speed up the process stability of the production line and the operation verification of various public auxiliary systems, and promote the continuous batch trial production of the production line. The other two main production lines are under installation. The products mainly include thermal control PI film, electronic PI film, electrical PI film, special function PI film and so on. The new production capacity is expected to be 400,800t in 2023.

Profit forecast and investment advice. It is estimated that the EPS from 2023 to 2025 will be 0.16,0.51,0.82 yuan respectively, and the corresponding dynamic PE will be 135,43 and 27 times respectively. The company's 23-year new production line has been gradually put into production, the production capacity has been gradually released, and the company's products have excellent performance and are in a leading position in the industry. The company has given a 60-fold valuation in 2024, corresponding to the target price of 30.6 yuan, and a "buy" rating for the first time.

Risk tips: downstream demand may be lower than expected, new product verification process may not be as expected, and production capacity may be lower than expected.