The company released 2023 mid-year report: during the reporting period, the company achieved revenue of 978 million yuan (YoY-5%), net profit of 65 million yuan (YoY-29%) and non-return net profit of 51 million yuan (YoY-37%). 23H1's gross profit margin of sales was 27.27%, up 0.08pct from the same period last year, and the net profit rate was 6.60%, down 2.13pct from the same period last year. Among them, 23Q2 achieved revenue of 495 million yuan (YoY-10%,QoQ+3%) in a single quarter, net profit of 44 million yuan (YoY-39%,QoQ+119%), and non-return net profit of 36 million yuan (YoY-47%,QoQ+137%). The performance was lower than expected. At the same time, the company announced that Mr. Jin Chuang, the company's controlling shareholder, actual controller, chairman and general manager, proposed on August 23, 2023 that the company should use its own funds to buy back some of the RMB common shares (A) shares issued by the company through the trading system of the Shenzhen Stock Exchange, and that the price of the repurchased shares should not exceed 150% of the average trading price of the company's shares in the 30 trading days prior to the adoption of the resolution by the board of directors. The total amount of repurchase funds shall not be less than 30 million yuan (inclusive) and not more than 50 million yuan (inclusive).

The demand for electronic terminal products is weak, the company's depreciation and amortization expenses are growing, and multiple factors are a drag on 23H1's performance. The demand for 23H1 electronic terminal products was weak, and the recovery rate of the panel industry was lower than expected, resulting in the company's short-term performance still under pressure. during the reporting period, the company's main business segment, electronic-grade adhesive materials, achieved revenue of 427 million yuan (YoY-4%) and gross profit margin of 44.17%, up 2.66 pct from the same period last year. Functional film materials achieved revenue of 266 million yuan (YoY+3%) and gross profit margin of 21.27%, down 1.69pct from the same period last year. The revenue of thin film packaging materials was 199 million yuan (YoY-22%), and the gross profit margin was 3.32%, down 6.33pct from the same period last year. From a regional point of view, the company achieved revenue of 857 million yuan (YoY+0%) in Chinese mainland in the first half of the year, with a gross profit margin of 29.15%, down 0.30 pct from the same period last year; overseas (including Hong Kong, Macao and Taiwan) achieved revenue of 121 million yuan (YoY-31%) and gross profit margin of 13.96%, down 2.25pct from the same period last year. At the same time, as the company's projects under construction have been put into production and consolidation, as of 2.127 billion yuan in fixed assets of 23H1 Company, an increase of 352 million yuan over the end of 2022, depreciation and amortization expenses have increased, which has dragged down the company's performance. In addition, during the reporting period, the company lost 13.22 million yuan in asset impairment and 5.33 million yuan in credit impairment, mainly due to the provision for inventory depreciation, accounts receivable and other accounts receivable.

Upward layout of PET base film production capacity, downward expansion of high-end product production capacity, optimistic about the company's OCA optical film, new energy materials and other accelerated production. The company is a leading functional coating composite platform enterprise in China, planning three PET optical substrate film production lines upstream. At the same time, the company's middle and high-end products have made breakthroughs one after another, and successively built a number of OCA optical film, MLCC release film, polarizer functional film and other production lines.

In terms of OCA film, the company has achieved breakthroughs in some terminal brands and actively cut into the repair market and the white market, and the verification work of the panel factory is also advancing in an orderly manner, laying the foundation for the next step, and is expected to take the lead in sharing the vast domestic alternative market. In addition, new energy materials are also an important direction of the company's development. at present, the company has carried out business cooperation with some new energy vehicles and battery manufacturers to supply them with related insulation materials.

Investment analysis opinion: the company's performance is under short-term pressure, slightly reducing the company's 2023-2025 net profit forecast for 2.18,3.92, 613 million yuan (the original value is 2.65,4.30,637 million yuan), the current market value corresponds to PE for 36,20,13x, the company's integrated layout has advantages, it is expected that OCA film is about to enter the volume period, the future growth space is large, to maintain the "increase" rating.

Risk tips: 1) terminal demand for consumer electronics is lower than expected; 2) the introduction of new products such as OCA film and MLCC release film is not as expected; 3) the supply of raw materials and prices fluctuate greatly; 4) the company received a regulatory letter from Shenzhen Stock Exchange on March 27, 2023, which drew special attention.