Production capacity at the Qinzhou factory was released, 23H1 revenue increased by 39.84%, maintaining the “increase in holdings” rating company 23H1 to achieve revenue of 1,093 million yuan (yoy +39.84%), net profit of 35.41 million yuan (yoy -14.03%), net profit of 35.41 million yuan (yoy -14.03%), after deducting non-net profit of 36.58 million yuan (yoy +2.72%). The profit growth rate in the first half of the year was mainly due to the decline in gross margin due to pressure on wood-based panel prices, etc. Among them, Q2 had revenue of 668 million yuan (yoy +64.84%) and net profit of 45.55 million yuan (yoy +387.44%). The high revenue increase was mainly due to the increase in orders after the Qinzhou factory was put into operation. The high profit growth rate for the Q2 quarter was mainly due to the dilution of management expense rates at a high revenue growth rate and a low base for the same period last year. Considering the release of production capacity at the Qinzhou factory, we raised the revenue forecast for wood-based panels. We expect net profit to be 150 million, 1.84 million yuan, and 219 million yuan respectively in 23-25 (previous value: 1.39/1.70/207 million yuan), corresponding EPS is 0.13/0.16/0.19 yuan, and BPS is 2.58/2.74/2.94 yuan. Referring to the company's average value of 1.35 times PB (LF) since 2018, we will give 1.35 times PB in 23 years, with a target price of 3.48 yuan (previous value of 3.55 yuan), and maintained” “Increase in holdings” rating.

Wood-based panel revenue is increasing, and the forestry business is under phased pressure

The division of business was split, not taking into account inter-branch offsets. 23H1 wood-based panel business revenue increased by 46.4% to 1,034 million yuan. Among them: 1) In terms of chipboard, the company's Qinzhou factory gradually formed a stable customer base, and the expansion of new customers around the Huizhou factory was progressing well. The sales volume of the F4 star board increased 78% year over year, and the share of sales volume increased significantly.

2) In terms of MDF, we continue to promote product differentiation and upgrading to gain market segmentation growth in traditional fields. In the first half of the year, 11 new formaldehyde-free cut-out board customers were developed, and the company's products were used in new fields such as wall panels and home appliances and electronics. In addition, 23H1 forestry business revenue also fell 48.50% to $24 million.

Gross sales margin fell 4.81 pct year on year, and the cost ratio for the period fell 3.23 pct23h1 gross sales margin fell 4.81 pct to 8.7%. We determined that it was mainly due to pressure on wood-based panel prices and a decline in the revenue share of the forest and wood business with high gross margin; during the 23H1 period, the cost rate also decreased by 3.23 pct to 6.3%, of which the sales expense ratio increased by 0.12 pct to 0.6%, mainly due to the company's development of the medium fiber board market and the additional sales expenses after the Qinzhou factory was put into operation; the management+R&D expenses rate fell by 2.81 pct to 8.7% 5.8% was mainly due to an increase in the dilution effect on expenses under revenue growth; the financial expense ratio also decreased by 0.54 pct to -0.1%, mainly due to an increase in the company's exchange earnings and a decrease in interest expenses.

The leader in the wood-based panel industry, with high quality and rich customer resources

On the manufacturing side, as a leading enterprise in the artificial board industry in China, the company has 3 fiberboard factories in Nanning, Baise, and Chizhou, Anhui, and 3 chipboard factories in Nanning, Guangxi, Qinzhou, and Huizhou, Guangdong, with a total production capacity of 1.8 million meters. At the same time, the level of fine management has been improved through intelligent manufacturing, and manufacturing advantages are leading. On the sales side, the company continues to be deeply involved in innovative R&D and product production of wood-based panels. Customers are widely distributed in various fields such as customized and finished furniture, wooden floors, wooden doors, curtain products, PCB circuit boards, washing machine covers, real estate, etc., and the customer resources are high quality and rich.

Risk warning: downstream demand falls short of expectations, raw material costs are rising, and customer expansion falls short of expectations.