Event: the company publishes its 2023 semi-annual report. 2023H1 achieved revenue of 1.307 billion yuan, + 41.89% year-on-year, and net profit of 55.2 million yuan, + 156.54% compared with the same period last year. Among them, the revenue of single Q2 was 800 million yuan, + 34.32% compared with the same period last year, and the net profit returned to the mother was 20.83 million yuan, + 61.11% compared with the same period last year.

The development of distribution channels will be accelerated and the revenue side will be gradually repaired. From a product point of view, the revenue of 23H1 waterproof roll materials reached 832 million yuan, an increase of 36.13% over the same period last year, and the revenue of waterproof coatings was 317 million yuan, an increase of 39.17% over the same period last year. The company actively promotes the optimization of channel structure, continues to vigorously develop the dealer model, sinks through channels, increases regional sales resources, and vigorously expands the broad market of industrial buildings, municipal buildings and civil buildings.

The gross profit margin of waterproof paint has been significantly repaired, and the investment in research and development has continued to increase. From a product point of view, the gross profit margin of 23H1 waterproof roll material is 26.50%, year-on-year change-1.54pctscape 23H1 waterproof paint gross profit margin 31.85%, year-on-year change + 12.38pct. In terms of the period expense rate, the 23H1 sales / management / R & D / financial expense rate is respectively year-on-year change + 1.35/-5.12/+0.23/+1.93pct, in which the decrease in the management expense rate is mainly due to equity incentive share payment in the same period last year; the increase in the financial expense rate is mainly due to the increase in interest expenses and the decrease in interest income in 23H1. 23H1 continues to increase investment in research and development, improve the performance and quality of existing products, expand the category, and expand the application scene of polymer waterproof materials. In addition, 23H1 Company set aside a credit impairment loss of 30.87 million yuan.

Operating cash flow improved significantly compared with the same period last year. The net cash flow generated by 23H1's operating activities was-77.61 million yuan, an increase of 76.39% over the same period last year, mainly due to the increase in the collection of receivables from 23H1. 1) cash-to-cash ratio: the cash-to-cash ratio of 23H1 Company is 97.91%, and the balance of accounts and notes receivable at the end of the company's accounts receivable and notes receivable is 2.119 billion yuan, up 3.75% from the same period last year, much lower than the income growth rate. 2) pay-to-cash ratio: 23H1's cash-to-cash ratio is 112.74%, year-on-year change-23.74pct.

At the end of 23H1, the company's inventory balance was 206 million yuan, down 28.04% from the same period last year; the balance of accounts payable and notes payable was 886 million yuan, an increase of 9.65% over the same period last year.

Profit forecast and investment rating: the company has differentiated competition in polymer waterproof roll materials, constantly increasing R & D investment to enhance technical strength, with the improvement of waterproofing standards, polymer waterproof roll materials continue to infiltrate, and there is much room for improvement in the proportion of product demand. Taking into account the pick-up of downstream demand and the strength of the company's distribution channel development, we maintain the forecast of the company's 2023-2025 net profit forecast of 143x239,349 million yuan, corresponding to 2023-2025 EPS is 0.37pm 0.62 PE 0.91 yuan, the current market capitalization corresponds to 2023-2025 PE is 36X/22X/15X respectively, maintaining the "overweight" rating.

Risk hints: the risk of fluctuations in the real estate industry; the risk of sharp fluctuations in raw material prices; the risk of intensified competition in the industry; the risk of accounts receivable; equity pledge risk.