Event: according to the company's semi-annual report for 2023, 2023H1 realized revenue of 520 million yuan (year-on-year + 41.8%), net profit of 80 million yuan (year-on-year + 41.6%) and non-net profit of 90 million yuan (year-on-year + 56.5%). In Q2 alone, the income was 270 million yuan (+ 41.0% compared with the same period last year), the net profit was 50 million yuan (+ 38.3%), and the non-net profit was 50 million yuan.

The performance is in line with expectations, and "multi-speed, good-saving" lays the driving force for the company's long-term growth: under the pressure of 2022 external environment and market competition, the company's sales revenue at home and abroad has achieved rapid growth (domestic: + 38.4%, foreign: + 45.2%). It is mainly due to the core competitiveness of "multi-speed and good economy". (1) more: the company is rich in molecular block products, with 103000 product categories, and its customer base continues to expand, with a cumulative supply of more than 10,000 customers in the past 12 months, an increase of about 18% compared with 2022; (2) Fast:

The company has three overseas regional centers in the United States, Germany and India, and has set up warehouses in Shanghai, Shenzhen, Tianjin, Chengdu and Wuhan. Rely on the efficient linkage between the Shanghai headquarters and the global regional centers, greatly shorten the radius of customer service at home and abroad, at the same time greatly improve the operational efficiency through the global regional linkage, and greatly shorten the customer's new drug research and development cycle. (3) good: the company has products with good product quality and high customer recognition, focusing on the layout of boric acid and borate esters and fluorine-containing block product lines, and the layout is forward-looking; (4) Province: the company reduces costs and increases efficiency through R & D and supplier management. on the one hand, the company improves quality and yield through intensive research and development and transformation of process routes, on the other hand, the overall price of raw materials is controllable and low through supplier management.

Research and development continues to increase, overseas market growth can be expected: (1) in terms of research and development, the cost of 2023H1 research and development reaches 26.776 million yuan (+ 45.0%). The scale of the product line of boric acid, borate esters and fluorine-containing blocks that the company focuses on building is constantly increasing, and the company's R & D department focuses on designing a synthesis scheme of boron-containing molecular blocks without the participation of transition metals. The scheme shows excellent compatibility with other polyfluorinated or fluorine-containing groups, such as trifluoromethyl, difluoromethyl, etc., which are common in drug screening. In order to avoid the use of sulfur tetrafluoride, hydrogen fluoride, hydrogen chloride and other gases, the company has developed and designed more than 20 kinds of self-developed fluorine reagents, which have been applied to the small R & D and scale-up production of more than 1000 kinds of trifluoromethylated molecular blocks. Up to now, 23H1 has established a cooperative relationship with 90% of the top 20 pharmaceutical companies in the world, demonstrating the company's technical advantages and R & D strength in the field of boric acid and borate esters and fluorine-containing block products. (2) the company's sales in overseas markets have achieved rapid growth. 2023H1's overseas revenue reached 270 million yuan (+ 45.2% compared with the same period last year), accounting for 50.8% of the revenue, exceeding domestic income and expanding much faster than the average of its competitors. At the same time, the scale of the company's overseas terminal customers has expanded rapidly, the proportion of dealers has continued to decline, and the market share of the company's brand in the terminal has increased significantly.

Profit forecast and investment advice. The company is the leading enterprise in the domestic molecular block industry, the company has the advantage of "multi-speed, good saving", and the company continues to make breakthroughs in overseas markets, we expect the company to achieve a net profit of 2.02.7 / 360 million yuan in 2023-2025, corresponding to the previous share price PE in 33-24-18, we are optimistic about the company's business growth and maintain the "buy" rating.

Risk tips: the company's high inventory balance and inventory management internal control-related risks; overseas sales are not as expected risk; market competition intensified risk; business development is not as expected risk.