The company released the mid-2023 report that 2023H1 realized 1.66 billion yuan in income, with a decrease of 5.08%; the net profit returned to its mother was 97 million yuan, with a decrease of 40.90% SPS 0.23 yuan, and a decrease of 41.03%. In the first half of the year, the layout of the company's industrial chain continued to be optimized, and business development in the field of infrastructure was intensified. Maintain the company's buy rating.

Support the main points of rating

The performance is under pressure, and the scale of net operating cash outflow is expanding. 2023Q2's revenue was 995 million yuan, same as a decrease of 3.70%; the net profit returned to its mother was 57 million yuan, a decrease of 32.55%. The net operating cash flow of 23H1 Company was-163 million yuan, and the net outflow scale increased by 4.63% compared with the same period last year. The net operating cash flow of the company was-285 million yuan, and the net outflow scale increased by 146.78% compared with the same period last year. The expansion of the net operating cash outflow of the company in the first half of the year was mainly due to the decrease in cash received from the sale of goods and services in the current period.

The homing net interest rate decreased compared with the same period last year, and the expense rate increased during the period. 23H1's gross profit margin is 36.13%, an increase of 0.05pct, and a net return of 5.84%, minus 3.54pct. 23Q2's gross profit margin is 35.84%, an increase of 1.93pct, and a net return of 5.69%, minus 2.43pct. In terms of period expenses, the 23H1 company's period expense rate was 26.21%, with an increase of 2.81pct, in which the sales / management / R & D / financial expense rate changed respectively 2.14/0.90/-0.09/-0.14pct compared with the same period last year, and the expense rate increased significantly during the first half of the year.

Demand is sluggish, and sales of 23H1's main products are down. 2023H1 sold 484800 tons of high-performance superplasticizer, down 5.75%, 24700 tons of superplasticizer, 6.79%, and functional materials of 109000 tons, down 8.09%. We estimate that the unit price of high-performance superplasticizer in the first half of the year is 2003.60 yuan / ton, with a decrease of 5.21%; the unit price of superplasticizer is 2141.85 yuan / ton, an increase of 9.07%; and the unit price of functional materials is 2033.51 yuan / ton, an increase of 3.46%.

The layout of the industrial chain has been continuously optimized, and business development in the field of infrastructure has been intensified. In March, the company's Jiangmen base in Guangdong was completed and put into production, which will help to further optimize the layout of the company's industrial chain and enhance the company's core competitiveness. In the first half of the year, the company continued to strengthen its business development in the field of infrastructure engineering, the overseas business maintained a trend of rapid development, and the product categories continued to be enriched. The company's testing sector continues to maintain steady growth.

Valuation

The company's performance in the first half of the year is under pressure, and we adjust our profit forecast accordingly. It is estimated that the income of the company from 2023 to 2025 is 37.3,42.7 and 4.87 billion yuan, the net profit of returning to the mother is 2.5,3.5 and 450 million yuan respectively, and the EPS is 0.58,0.84,1.08 yuan respectively. Maintain the company's buy rating.

Main risks faced by rating

Production capacity was lower than expected, downstream demand returned less than expected, and raw material prices rose more than expected.