The company issued a performance forecast for the first half of 2023, which is expected to achieve a net profit of 3.1 million yuan to 4 million yuan belonging to the owner of the parent company in the first half of 2023, an increase of about 108.42% Mu 110.86% over the same period last year. The company provides comprehensive solutions in the areas of thermal management, electromagnetic shielding and lightweight, with in-depth layout in consumer electronics, communications, new energy and other fields. In the future, the company's products may be used in liquid-cooled servers, robots and other fields. The improvement of the company's capacity utilization brings profitability repair, and the performance is expected to usher in significant growth. Maintain the "buy" rating and continue to recommend.

Event: the company issued a performance forecast for the first half of 2023. It is expected that the revenue in the first half of 2023 is about 1.773 billion yuan, + 3% compared with the same period last year. Among them, the operating income in the first quarter was 773 million yuan, corresponding to about 1 billion yuan in the second quarter, an increase of about 29.37% over the previous quarter. The company expects the 2023 half-year net profit to be 3.1 million yuan to 4 million yuan, compared with the same period last year, + 108.42% RMB110.86%. Among them, the first quarter net profit is-25.124 million yuan, corresponding to the second quarter net profit of about 28.224 million yuan to 29.124 million yuan, an increase of about 212.34% and 215.92% compared with the previous year. In this regard, the comments are as follows:

23Q2 profit repair, the second half of the year is expected to improve month-on-month. The company expects 2023Q2 revenue to be about 1 billion yuan, with a median net profit of 28.67 million yuan and a net interest rate of about 2.9%. In 2023, due to the weak demand for new energy vehicles and consumer electronics in Q1, the company's profitability is low. As demand for Q2 improves, gross profit margin and net profit margin are strongly repaired. we expect that in the second half of the year, the company's revenue and profitability are expected to further improve under the background of continuous increase in demand for new energy vehicles, consumer electronics and other industries.

The rapid growth of the automobile + energy storage + photovoltaic industry helps the company take off for the second time. New energy vehicles, photovoltaic, energy storage and other industries have put forward high demand for electromagnetic shielding materials, thermal management materials and lightweight parts. The company has increased its investment and accumulated customers such as Ningde Times, Guangzhou Automobile Group and Sunshine Power in the fields of new energy vehicles and energy storage. In 2022, the revenue from new energy business accounted for 29%. It has achieved mass production and delivery on core products such as liquid cooled plates, composite materials (HP-RTM lightweight materials) covers, connecting sheets, integrated die castings and thermal conductive adhesives. In the future, with the rapid development of the new energy industry, it has achieved mass production and delivery. The company is expected to achieve rapid growth in the field of new energy.

The inflection point of gross profit margin has arrived and profitability is expected to pick up gradually. Over the past two years, the company has invested heavily, demand in the areas of superimposed communications and consumer electronics has been lower than expected, and corporate profitability has declined. In 2022, with the gradual mass production of products in the new energy industry, the company's capacity utilization increased, leading to an improvement in gross profit margin compared with the previous year. The gross profit margin of 2022Q1-4 was 11.91%, 13.76%, 17.66% and 22.70%, respectively. According to the company's performance announcement, we estimate that the net interest rate of Q2 will reach 2.9% in 2023. In the second half of the year, as the product structure continues to be adjusted and the revenue scale increases, the company's expense rate is expected to decline, and the overall profit level may gradually pick up.

The company's products are widely used, and potential fields include liquid-cooled data centers, robots and so on. The company's main products include electromagnetic shielding, heat dissipation, lightweight and so on, which are widely used in consumer electronics, new energy, communications and other fields. Due to the demand for electromagnetic shielding and heat dissipation, we think that it may be used in liquid-cooled data centers, robots and other fields in the future to open up space for the company's continued growth.

Risk factors: the risk of declining gross profit margin caused by intensified market competition; the lower-than-expected growth of the new energy industry; the price fluctuation of major raw materials; the loss of technical secrets and core technical personnel; and the management risks brought about by the continuous expansion of business scale.

Earnings Forecast, valuation and rating: we maintain the company's annual revenue forecast of 5.3000 trillion yuan in 2023-24-25, and the net profit forecast of 25650,000,000 yuan in 2023-24-25. Considering that the company's profitability in 2023 is still being repaired gradually and has not yet reached a steady state, the 2024 valuation is adopted. At the same time, considering that the company's products are expected to be used in potential new fields, we will adjust the comparable company to Zhongshi Science and Technology, Wen can shares, Silverwheel shares, Invik, its 2024 wind is expected to be 23 times PE, and the company's potential applications (such as liquid-cooled data centers and robots) will have a larger market space in the future, giving the company 25 times PE in 2024, corresponding to the target price of 20 yuan, maintaining the "buy" rating and continuing to recommend.