The company released its 2023 mid-year report, and its performance grew rapidly. In 2023, H1 achieved revenue of 2.15 billion yuan, up 79.61% from the same period last year; realized net profit attributable to owners of the parent company was 185 million yuan, up 95.91% from the same period last year. Among them, the company's power battery business inspection projects increased year on year, achieving revenue of 1,804 billion yuan, an increase of 109.98% over the same period last year. In the first half of 2023, the company's on-hand order scale continued to grow. From January to June 2023, the company signed new orders of about 2.7 billion yuan (tax included). As of June 30, 2023, the cumulative amount of orders in hand was about 8.5 billion yuan (tax included). As of the disclosure date in the 2023 interim report, the company's TopCon laser doping equipment had signed a contract for 350 GW+.

Profitability is stable, and the company's expense ratio continues to be optimized. In H1 in 2023, the company's gross sales margin and net sales margin were 30.48% and 8.56% respectively, which remained stable compared to the same period of the previous year. In terms of cost ratio, the company's sales expense ratio, management expense ratio, and R&D expense ratio were 4.68%, 5.76%, and 11.21%, respectively. The decrease was significant compared to the same period last year, indicating that the company's cost control capacity continued to be optimized. In terms of absolute amounts, the company's management expenses were 120 million yuan, up 54.22% year on year; R&D expenses were 240 million yuan, up 72.71% year on year; sales expenses were 100 million yuan, year on year, year on year An increase of 14.16%; due to the company's implementation of a restricted stock incentive plan in 2021, the additional share payment fee in the first half of 2023 was 28.81 million yuan.

Entering the photovoltaic race track, the company has created two growth poles: power battery+photovoltaics. In the photovoltaic field, the company has laid a solid foundation for the company to develop laser and automation equipment that enhances customers' own efficiency requirements through years of laser application technology and the accumulation of laser and automation mass production capabilities and technical capabilities in existing application fields. The company launched TopCon one-time doping equipment in 2022. The first batch of such equipment was delivered within the year, and mass production was achieved before the Spring Festival in 2023. Currently, the company's photovoltaic business has received orders from well-known customers such as Jingke Energy, Tianhe Solar, Tongwei Co., Ltd., Hongyuan Green Energy, Jetai, Zhengtai, Artes, Hesheng Silicon, and GCL. Furthermore, the company's fund-raising project has been completed, and the completion of the initial fund-raising project has further enhanced the company's production capacity. The project products are mainly composed of non-standardized equipment. After such equipment is sent to the customer site, further installation, commissioning and acceptance must be completed, so the project still needs to be accepted to achieve the intended benefits. As of June 30, 2023, the initial fund-raising project formed 940 million yuan in products and achieved revenue of 290 million yuan. In the long run, the company created two profit growth points for the power battery+photovoltaic industry, and broadened the room for growth.

Investment advice: We expect the company to achieve revenue of 688/86.61/9989 billion yuan in 2023-2025, net profit of 707/9.54/1,157 million yuan, corresponding PE of 12.4/9.2/7.6x, and maintain a “buy” rating.

Risk warning: industry sentiment declines, industry competition intensifies, new product promotion falls short of expectations.