Event: according to the company's semi-annual report for 2023, H1 achieved an operating income of 560 million yuan in 2023, an increase of 15.5% over the same period last year, and its net profit was 53 million yuan, an increase of 1.03% over the same period last year. The non-net profit deducted was 40 million yuan, down 54.92% from the same period last year. Q2 realized operating income of 308 million yuan, an increase of 25.48 percent over the same period last year, an increase of 22.68 percent over the same period last year, and a net profit of 31 million yuan, up 48.7 percent from the same period last year and 43.2 percent from the previous year. The non-net profit deducted was 21 million yuan, an increase of 50% over the same period last year and 10.5% month-on-month.

Product structure optimization, performance improvement is significant: 1) the company H1 business performance improved significantly, mainly due to business growth in various sectors, product sales structure continues to optimize the company performance growth. On the one hand, the increase in net profit from home benefits from the increase in gross profit over the same period last year (H1 reached 114 million yuan in 2023, an increase of 28% over the same period last year). On the other hand, the scale of debt financing decreased, resulting in a corresponding reduction in financing costs. the rise in the exchange rate of the US dollar and the euro led to an increase in exchange gains (the H1 exchange earnings increased by 4.04 million yuan in 2023 compared with the same period). 2) the company's Q2 performance improved significantly month-on-month in 2023, on the one hand, due to the increase in gross profit brought about by product structure adjustment, on the other hand, the increase in exchange earnings, as well as the impact of related subsidies and special funds (Q2 other income increased by 8 million yuan compared with the previous year).

With more blossoms of products, new areas are expected to contribute more growth points: (1) High-strength and high-conductivity copper alloy materials and products: the company's 143,000t / a Cr-Zr-Cu material fund-raising project construction is making steady progress, we expect that with the fund-raising project reaching production, the plate business will significantly benefit from the rapid development of new energy vehicles, liquid rocket engine thrust chamber inner wall and other new areas of continuous development. (2) High-performance metal chromium powder: the company announced on August 30 that the company intends to expand the production capacity of chromium raw materials production line and operate independently, and increase the implementation of the new "annual output of 2000 tons of high-purity metal chromium material project" to meet internal and external demands. with the two machines special and ultra-supercritical demand for high-end superalloy increases, high-performance metal chromium powder business is expected to usher in rapid development. (3) CT and DR tube components: the company has formulated a two-year doubling plan. With the large high temperature vacuum brazing furnace and high precision processing equipment put into operation, the company can achieve an annual production capacity of 6000-8000 sets of CT and DR tube components. The company has completed the annual production capacity of 20,000 to 30,000 sets of CT and DR tube components research and development and manufacturing base construction planning demonstration, is expected to start construction in 2023. (4) Optical module chip pedestal: with the increasing demand of cloud computing and AI for high-speed and high-bandwidth optical communication equipment, optical module chip pedestal products will grow rapidly. The company's tungsten-copper optical module chip base can meet the new scene requirements of optical modules, and the company is developing a low-cost mass production process of diamond copper to reserve capacity for mass applications of optical modules above 1.6T to support the rapid development of higher-performance GPU in the future.

Earnings forecast: we expect diluted earnings per share from 2023 to 2025 to be 0.31,0.46,0.61 yuan respectively, and the PE corresponding to the current stock price is 36x, 24x, 18x respectively.

Risk factors: the project production is not as expected, and the demand of the fund-raising project is not as expected.