Introduction to this report:

The company's 23H1 performance was in line with expectations. The company is deeply involved in thin film capacitors, and the expansion of production capacity has helped increase its share. It is actively expanding downstream applications of photovoltaics and new energy.

Key points of investment:

Maintain the holdings increase rating and lower the target price to $166.25. Considering downstream demand and the impact of R&D investment, its 2023-2024 EPS was lowered to 5.03/6.65 yuan (previous value was 6.39/8.42 yuan), and the 2025 EPS is expected to be 8.31 yuan. Referring to the industry valuation level and considering the company's leading position in the industry, the company was given PE25X in 2024, lowered the target price to 166.25 yuan, and maintained the rating increase.

The company's 23H1 performance was in line with expectations. The company's 23H1 revenue of 1,972 million yuan increased 11.83% year on year, and net profit reached 491 million yuan, up 13.67% year on year. Q2's quarterly revenue of 1,042 million yuan was +12.92%; net profit for the first quarter was 260 million yuan +14.17%. The company's outstanding performance mainly benefited from the strong demand for thin-film capacitors for downstream new energy vehicles and solar storage.

We are deeply involved in thin-film capacitors, and the expansion of production capacity has helped increase our share. The company is deeply involved in high-end film capacitors. Its products cover a full range of PCB film capacitors, AC film capacitors, and power electronics film capacitors, and is actively expanding high-end customers in the fields of new energy vehicles, photovoltaics, wind power, and industrial control.

As the construction of the fourth phase of the film capacitor technical improvement project for new energy use in the company's Dongfu plant progresses, it is expected that the company's share will expand further along with the increase in production capacity in the future.

Actively expand downstream applications of photovoltaics and new energy. The company's share of the global NEV market has reached more than 35%, and has accumulated many high-quality customers at home and abroad, including BYD. In the field of global photovoltaic power generation, the company's market share exceeds 65%, and its main customers include Huawei, Sunshine Power, Goodway, etc. As voltage platforms for new energy vehicles are upgraded in the future, the amount of thin-film capacitors used for bicycles will increase; and as demand in fields such as photovoltaics, wind power, and energy storage increases, its thin-film capacitor business will usher in growth.

Risk warning. Raw material prices fluctuated sharply; new product development progress fell short of expectations