A description of the event. On August 28, 2023, the company released its semi-annual report for 2023. In '23, H1 achieved revenue of 21.558 billion yuan, an increase of 25.14%, net profit of 1,092 million yuan, an increase of 45.21%, net profit of 908 million yuan after deducting net profit of 908 million yuan, an increase of 79.92%.

Q2 split. Revenue and net profit: The company's revenue in 2023Q2 was 10.806 billion yuan, an increase of 24.09%, an annual increase of 0.51%, net profit of 475 million yuan, an increase of 51.12%, a decrease of 23.14%, net profit after deduction of 376 million yuan, an increase of 121.15%, and a decrease of 29.28%. Gross profit margin: 2023Q2 gross margin was 18.76%, an increase of 1.77 pcts, and a decrease of 0.39 pcts. Net interest rate: 2023Q2 net interest rate was 4.12%, an increase of 0.60 pct, and a decrease of 1.42 pct.

Lead-acid batteries have a stable leading position, and the lead and carbon field is progressing steadily. In 2023, H1, lead-acid batteries achieved revenue of 20.046 billion yuan, a year-on-year increase of 36.28%. Since 2023, with the continuous optimization and improvement of the company's manufacturing capacity, product competitiveness, and channel expansion capability, lead-acid battery revenue has increased year-on-year. At the same time, the company is also accelerating the market expansion of lead-carbon energy storage batteries. In 2023, H1 lead-carbon energy storage batteries achieved revenue of 237 million yuan, an increase of 208.94%. In terms of production capacity layout, the company accelerated the construction of a lead-carbon energy storage production line in Ma'anshan, with a planned production capacity of about 30 GWh for lead-carbon batteries until 2025. In March of this year, the “peaceful co-storage” project of the Huzhou Integrated Smart Zero-Carbon Power Plant was officially put into operation. It is currently the largest lead-coal energy storage power station in the world.

The lithium battery business is moving forward steadily, and the sodium power business is being implemented at an accelerated pace. In 2023, H1, the company's lithium battery business achieved revenue of 371 million yuan. At present, the company has successfully launched 100Ah-305Ah energy storage battery products and various energy storage boxes such as air-cooled and liquid-cooled, etc., and is steadily advancing the production capacity of the Huzhou Lithium Battery and South Taihu Lithium Battery Project. The planned production capacity of lithium battery energy storage batteries is 15 GWh by the end of 2023, and 30 GWh by 2025. At the same time, the company attaches importance to technical reserves and industrialization promotion of sodium-ion batteries, and released the next-generation sodium-ion battery Tiansa T1, which includes three series modules of 48V, 60V, and 72V, as well as 26700 cylindrical batteries, square batteries, etc. Currently, the company has a dedicated production and supply capacity of 300 MWH of sodium-ion battery cells and module products.

The hydrogen power business has made breakthroughs and innovations, and market customers continue to expand. In 2023, H1, hydrogen fuel cells achieved a breakthrough in technology. The company completed the development and trial production of 100 kilowatt graphite plate high-power electric stack A samples. The Tianji-80/Tianji-160 fuel cell engine system successively passed the third-party inspection test of the Shanghai Automobile Inspection. The company signed a hydrogen fuel loader procurement framework agreement with Shanxi Gerun Shidai Construction Machinery Co., Ltd., and the loader equipped with the Tianji-80 hydrogen fuel cell engine system officially went offline, laying a good foundation for the next step of expanding order sales.

Investment suggestions: We expect the company to achieve revenue of 499.60, 589.04, and 68.295 billion yuan in 2023-2025, with year-on-year growth rates of 19.3%, 17.9%, and 15.9%, respectively, and net profit of 2,475, 30.69, and 3,768 billion yuan in that order. The year-on-year growth rates are 29.7%, 24.0%, and 22.8%, respectively. The current closing price corresponds to 2023-2025 PE, 14/11/9 times. Considering the company's leading position in lead-acid batteries, and the lithium, sodium, and hydrogen power businesses continue to advance, the multi-curve growth curve is clear, and the “recommended” rating is maintained.

Risk warning: New product technology substitution risk, raw material price fluctuation risk, industry policy adjustment risk, risk of increased market competition, risk of macroeconomic fluctuation, etc.