Company announcement: the company released the mid-2023 report that in the first half of 2023, the company realized operating income of 1.66 billion yuan (YoY-5.08%), net profit of 97 million yuan (YoY-40.90%), and non-return net profit of 89 million yuan (YoY-43.22%). Among them, 2023Q2 realized operating income of 995 million yuan (YoY-3.70%,QoQ+49.46%), net profit of 57 million yuan (YoY-32.55%,QoQ+39.95%) and non-return net profit of 50 million yuan (YoY-39.19%,QoQ+26.16%). The performance was basically in line with expectations.

Q2 performance improved month-on-month, waiting for demand repair. According to the company announcement, in the first half of 2023, the downstream real estate demand is under pressure, and the company's production and sales of concrete admixtures have declined compared with the same period last year. 2023H1 admixture total production of 622500 tons (YoY-5.67 million tons), total sales volume of 618500 tons (YoY-4.10 million tons), of which 2023Q2 total production 383100 tons (YoY+11.43 10,000 tons, QoQ-2.73 10,000 tons), total sales volume 3746 million tons (YoY+11.85 10,000 tons, QoQ-2.88 10,000 tons). In terms of segment, the sales of 2023Q2 high performance superplasticizer, superplasticizer and functional materials were 29.65,1.49 and 63200 tons respectively, which were-6.29%, + 4.93% and-13.19% respectively compared with the same period last year, and + 57.46%, + 52.04% and + 37.99% respectively. The sales prices were 2010, 2172 and 1970 yuan per ton respectively,-3.22%, + 8.13% and + 3.80% respectively over the same period last year, and + 0.77%, + 3.57% and-7.11% respectively compared with the same period last year. The prices of major raw materials have fallen, the pressure on the cost side has eased, and the average purchase prices of ethylene oxide, formaldehyde and acrylic acid in 2023H1 have dropped by 18.11%, 10.73% and 55.57% respectively compared with the same period last year. 2023Q2 has a gross profit margin of 35.84%, year-on-year + 1.94pct, month-on-month-0.73pct, net sales margin of 7.66%, year-on-year-2.02pct, month-on-1.05pct.

Steadily expand and improve the national production base, overseas layout of "Belt and Road Initiative" to maintain rapid growth. According to the company announcement, in the first half of 2023, the company officially put into production at the South China production base in Jiangmen, Guangdong Province, providing a strong support for the company to better serve customers in the "Great Bay area" and open up the South China market. In July 2023, the new material production line of Guangxi Subot project with an annual output of 400000 tons jointly invested by the company and Guangxi Luqiao was officially put into production, which will further strengthen the supply coverage to the surrounding provinces and cities. the products will be widely used in highway, railway, hydropower and other national key projects and municipal civil projects in the southwest region. At present, the national production capacity layout has been basically improved, laying a good foundation for the company to deeply cultivate the regional market and enhance the national market share. at the same time, the company will further supplement and expand the compound base around the regional base and expand market coverage. Improve timely response and delivery capabilities. In terms of main business, the company continues to strengthen its business development in the field of infrastructure engineering. It has participated in the construction of a number of national and local key projects, such as the second Cross Harbour Tunnel in Jiaozhou Bay, Yebatan Hydropower Station, Lufeng Nuclear Power Plant, Xiamen New Convention and Exhibition Center, Pinglu Canal Hub, and so on. The company's overseas business has maintained a trend of rapid development, and has achieved significant growth in many "Belt and Road Initiative" countries and regions. At the same time, the product categories sold in overseas regions have also been continuously enriched.

Investment analysis opinion: maintain the company's 2023-2025 return net profit to 3.0,4.7 and 560 million yuan respectively, the current market value corresponding to PE is 17,11,9 times, maintain the "overweight" rating.

Risk tips: prices of major raw materials have risen sharply, new projects have been put into production less than expected, and downstream demand has fallen sharply.