What happened: Wharton Technology released its mid-2023 report and its results were in line with expectations. In the first half of the year, the company's revenue was 686 million yuan, yoy 9.88%, net profit 71.6531 million yuan, yoy 13.36%, non-net profit 70.189 million yuan, yoy 19.9%, of which the company's revenue in the second quarter was 360 million yuan, yoy15.7%; 's net profit in the second quarter was 43.154 million yuan, and yoy 0.67%.

Membrane products: promoted in many ways, revenue increased by 16.21% in the first half of the year. In terms of industrial membrane, relying on the advantages of integrated technology and service, the company continues to make efforts in the fields of industrial water use, zero-emission resource recovery, special concentration and separation, and seawater desalination, and the sales volume of industrial membrane shows good growth. In terms of household membranes, the concentration of its downstream brands has increased, and the company continues to promote the upgrading of high-end and high-throughput product consumption. At the same time, the company has strengthened the expansion of overseas markets and achieved good growth in overseas sales. To sum up, the revenue of the company's membrane products increased by 16.21% in the first half of the year compared with the same period last year, and the gross profit margin was relatively stable, maintaining the level of 39%.

Membrane products: some of the equipment of the fund-raising project has entered trial production and is expected to be released in the second half of the year. At present, the design capacity of the company's membrane products is 23.3 million tons. By the end of the first half of this year, the completion of the construction project of Phase III of Shawen Industrial Park and part of the equipment commissioning and trial production raised by the company will form a production capacity of 4.8 million tons of polyamide composite reverse osmosis membrane material, 40,000 pieces of seawater desalination reverse osmosis membrane modules and 1.45 million pieces of high-flux reverse osmosis membrane modules, which will provide further support for the company's growth.

Membrane separation: won the bid for lithium extraction from salt lakes and iron phosphate and other fields of orders, overseas salt lakes lithium extraction to achieve a breakthrough, the future is expected to grow at a high speed. In the first half of the year, the company won many project orders such as lithium extraction from salt lake and zero discharge of waste water from iron phosphate, and achieved a zero breakthrough in the order of overseas salt lake lithium extraction membrane separation project. according to the company's investor relations activity record table, in the first half of the year, the company received orders of 100 million yuan in project contracting. In addition, the revenue from membrane separation in the first half of the year was 8.97 million yuan, but the company has signed a contract but the amount of unconfirmed revenue reached 180 million yuan, including membrane separation orders, which is expected to be confirmed in the second half of the year. In the future, the company is optimistic about the recovery and utilization of water resources, zero-emission resources recovery, special concentration and separation, desalination and other directions. In addition, in the field of electronic ultra-pure water, the company is also actively establishing cooperative relations with important domestic customers, and is expected to accelerate localization in the future.

Plant fiber products: actively respond to the downward impact of the industry, the overall impact of the company is relatively small. The real estate industry declined in the first half of the year, and the mattress industry showed a trend of integration. The company continued to reduce costs and increase efficiency, expand distribution channels, strengthen the construction of e-commerce channels, cooperate with head anchors, and improve store management. In the first half of the year, the company's plant fiber product revenue fell 5.86% compared with the same period last year, but the gross profit margin increased from 35.28% to 38.57%.

Investment analysis opinion: the company's membrane product revenue is growing steadily, and the membrane separation business has entered a period of rapid development. We maintain our previous profit forecast that the net profit for 2023-25 is respectively 1.74x209x246m. The current stock price corresponds to PE, which is times as much as 26-22-19, maintaining a "buy" rating.

Risk hint: the progress of import substitution is not as expected; the release of orders from emerging markets such as Lithium extraction from Salt Lake is not as expected; and the company received the risk of supervision letter from Shenzhen Stock Exchange on March 8 (failure to perform review procedures and information disclosure obligations due to cash management).