Event: on August 25, the company released its semi-annual report of 2023. 23H1 achieved an income of 1.034 billion yuan, + 40.48% compared with the same period last year; realized a net profit of 38.5173 million yuan, + 18.91% over the same period last year; and deducted 34.9954 million yuan in net profit from non-return, + 17.71% over the same period last year. From a quarterly point of view, 23Q2 achieved an income of 604 million yuan, + 48.30% year-on-year, + 40.20% month-on-month; realized net profit of 25.2321 million yuan, + 43.82%, + 89.93%; and deducted non-return net profit of 24.6663 million yuan, + 41.67%, and + 138.81%. Overall, the performance is in line with expectations, and the improvement of the company's performance compared with the previous month is mainly due to the steady improvement of the business scale of high and low voltage busbars and photovoltaic welding strips.

Photovoltaic: revenue scale has increased significantly and is expected to benefit from N-type iterations. As an important part of photovoltaic module, the quality of welding strip directly affects the power of photovoltaic module. At present, photovoltaic is in the stage of rapid development, and the market space of welding strip is very broad. The company seized the opportunity to increase the photovoltaic new materials business. 23H1 realized revenue of 458 million yuan, + 54.36% compared with the same period last year, of which welding strip income was 413 million yuan. The proportion of SMBB welding strip suitable for N-type TOPCon increased from less than 5% in 2022 to 30% +. The company is rich in photovoltaic welding tape product matrix, in addition to the traditional photovoltaic welding strip, low-temperature welding strip, SMBB welding strip, black welding strip and so on have achieved mass production and sales. The product develops synchronously with the battery technology. In the short term, with the advantages of lower silver paste unit consumption and smaller shading area, SMBB welding strip is highly in line with the cost reduction and efficiency needs of TOPCon battery technology, which is expected to increase the company's profit while expanding market share. In the medium term, the low temperature welding strip technology can realize the low temperature combination of the battery sheet and the welding strip, effectively reduce the battery fragmentation rate, and is suitable for HJT battery technology. With the acceleration of HJT industrialization, the low temperature welding strip will usher in a period of rapid development.

Energy storage: full product line layout, energy storage business is ready to start. The company ploughs high and low voltage bus and medium and low voltage complete sets of equipment for many years, and applies rich transmission and distribution and control related technologies to the energy storage system to create one-stop energy storage solutions for customers. At present, the company adopts the development strategy of network source testing, industrial and commercial energy storage, household storage and portable energy storage to build a full range of energy storage product matrix. The company is gradually expanding the production capacity of key components of energy storage systems such as PCS and BMS. Except for the high-power PCS, fire fighting equipment, wires and cables needed by the power core and grid source side energy storage system, other components can be produced by themselves. Establish the coverage of the whole industry chain from component production to system integration, and create the cost and quality advantage of the layout of the whole industry chain. At present, the company has sufficient energy storage orders on hand, capacity construction continues to advance, and the second half of the year is expected to usher in a volume period.

Investment suggestion: the company's 23-25 revenue is expected to be 5.685 billion yuan, and the return net profit is 1.37 million 2.20 trillion yuan respectively, corresponding to PE in 18-11-8, the company's busbar business is developing steadily, and the volume of new energy businesses such as welding strip and energy storage is expected to increase the company's profits and maintain the "recommended" rating.

Risk tips: downstream demand is not as expected, capacity construction is not as expected, market competition is intensified, and so on.