Event: the company released its semi-annual report of 2023 and realized operating income of 1.157 billion yuan in the first half of 2023, a decrease of 32.93%, and a net profit of 25 million yuan, a year-on-year return to profit (2022H1 is-175 million yuan). 2023Q2 realized an operating income of 573 million yuan, a decrease of 45.20%, and a net profit of 9 million yuan, turning a loss into a profit over the same period last year (2022Q2 is-117 million yuan).

Focus on the main business led to a decline in revenue but a stable gross profit margin, debt resolution results in profit reversal. 2023H1 achieved a revenue of 1.157 billion yuan, with a decrease of 32.93%, a gross profit margin of 18.92%, and an increase in 1.88pct, mainly because the company took the initiative to shrink its supply chain business, while the gross profit margin of the new energy business increased 0.90pct to 19.97%. 2023H1's net profit turned from deficit to profit, mainly due to the success of the company's debt resolution, a substantial reduction in interest expenses, 2023H1 interest expenses of 75 million yuan, with a decrease of 72.95%. At the same time, the company achieved preliminary results in accounts receivable clean-up and project settlement, corresponding to the deduction of impairment losses in the previous period, with an impairment loss of 24 million yuan for 2023H1 and-48 million yuan for 2022H1 in the same period.

2023H1 photovoltaic power station is in stable operation, and the project expansion continues to develop. 2023H1's new energy revenue totaled 999 million yuan, down 10.98%, accounting for 86.33% of revenue. In the first half of 2023, the company's photovoltaic power station was in stable operation, with a generating capacity of 580 million kilowatts, a utilization hour of about 626 hours, a new installed capacity of 19540 kilowatts, an electricity income of 408 million yuan, and received a state subsidy of 79 million yuan, providing a basic guarantee for good business performance. At the same time, the company continues to make efforts in project development, achieves complementary advantages in photovoltaic, wind power and other new energy projects, obtains investment opportunities for existing industrial collaboration business, and obtains project development indicators in cooperation with Haixi Guotou and Changchun Guotou; at the same time, the company obtains 207MW wind power project indicators in Huaihua, Hunan Province, and after the related business is successfully landed, it will effectively promote new energy business revenue and enhance sustainable profitability.

The proportion of revenue of ecological and environmental protection business will be increased, and the brand of tea oil will be built to open up new growth points. 2023H1's ecological and environmental protection income was 104 million yuan, a decrease of 16.50%, accounting for 9.01% of revenue. The revenue share of ecological and environmental protection business increased in the first half of 2023, and the original projects were steadily implemented. while strengthening risk management, some progress was made in the development of new projects, focusing on strengthening the expansion of high-quality project resources under the EPC model. At the same time, according to the interactive and innovative development model of "leading enterprise + base + cooperative + peasant household", the company cultivates superior characteristic Camellia oleifera cluster, enriches tea oil product line, and creates blue sky Jinzhaishan tea oil high quality brand. Strive to open up new profit growth points.

Profit forecast: considering the company's initiative to shrink its supply chain business, we downgrade our profit forecast accordingly. It is estimated that in 2023-2025, the company will achieve a revenue of 2.778 million yuan, 3.601 billion yuan, and a net profit of 1.46 billion yuan, 2.97 billion yuan, corresponding to PE40.58x/19.92x/14.46x. Maintain the "overweight" rating.

Risk hint: the macro situation at home and abroad has changed more than expected, the growth rate of new energy scale is lower than expected, the growth rate of related subsidies is lower than expected, accounts receivable and prepayments are higher, and profit forecasts and valuation models are lower than expected.