Event: according to the company's semi-annual report on 2023, H1 Company realized revenue of 537 million yuan, year-on-year + 3.38%, net profit of 43 million yuan, + 8.09%, and deducted non-net profit of 42 million yuan, + 15.91% of the same period last year. From a quarterly point of view, the company's Q2 realized revenue of 276 million yuan in 2023, + 2.20% year-on-year and + 5.61% month-on-month; realized net profit of 20 million yuan, + 10.39% year-on-year,-8.25%; and deducted non-net profit of 21 million yuan, + 18.76% year-on-year and-3.68%.

H1 performance steady improvement, the overall profitability continues to improve: the company continues to promote the transformation and upgrading of core products, continue to open up new areas of the market, increase process technology and new product development efforts. In 2023, H1, the overall operating condition of the company has improved steadily, and the profit level has improved compared with the same period last year. In 2023, H1 company's gross profit margin was 25.13%, year-on-year + 0.41pcts; net profit rate was 7.39%, year-on-year + 0.18pcts, and the company's overall profitability continued to improve. In terms of expenses, the rates of sales, management, R & D and financial expenses of H1 company in 2023 were 3.13%, 7.35%, 4.21%, 0.35%, respectively, and the year-on-year changes were-0.07/-0.49/+0.99/+0.60pcts. Among them, the financial expense rate and absolute value have increased compared with the same period last year, mainly due to the increase in exchange gains caused by the appreciation of the US dollar in the same period last year.

The company's main business is the R & D, production and sales of thin film capacitors and their thin film materials. the products are widely used in household appliances, communications, power grid, rail transit, industrial control and new energy (photovoltaic, wind energy, automotive) and other industries. In 2021, the company issued a notice on investment and construction projects, intending to invest 41.5 million yuan in rebuilding the company's original production plant and supporting some domestic equipment and related public auxiliary works, and introducing the key equipment of the new energy vehicle capacitor production line to form an annual production capacity of 240000 new energy vehicle capacitors. The first phase of the project was successfully put into production at the end of August 2022, and the second phase is in progress as planned. After the implementation of the project, it will further optimize the product structure of the company's capacitors, consolidate the company's market position in the capacitor industry, and enhance the company's profitability. On August 30, 2022, the company issued a plan to raise funds for the construction of ultra-thin film materials for new energy, in order to introduce two ultra-thin film production lines, form a complete production system of ultra-thin film materials for new energy, expand product production capacity, and continue to promote the development of thin film products in the direction of ultra-thin, high temperature resistance and high voltage resistance, so as to meet the market opportunities brought about by the great development of the new energy industry. Further enhance the company's overall competitiveness and profitability.

Continue to benefit from the growth of emerging markets, thin film capacitor industry boom: new energy vehicles, photovoltaic, wind power and other new applications of thin film capacitors, is the company's future layout of the key market, but also the main incremental market of the company's products. According to the statistics of the Federation of passengers, in 2023, the penetration rate of retail sales of H1 new energy vehicles reached 32.4%, and the cumulative retail sales of new energy vehicles reached 3.086 million, an increase of 37.3% over the same period last year. According to the statistics of the National Energy Administration, the country's installed power generation capacity has reached 2.71 billion kilowatts, an increase of 10.8 percent over the same period last year, of which photovoltaic installed capacity is 470 million kilowatts. In the future, with the continuous increase in demand in the field of new energy, the company's thin film capacitor business is expected to further open up long-term space and inject more momentum into the company's profit growth.

Maintain "buy" rating: the company is mainly engaged in the R & D and sales of thin film capacitors and their thin film materials. Thin film capacitors have the characteristics of high rated voltage, long life cycle and non-polarity, its applications are rapidly expanding to new demand areas such as renewable energy (photovoltaic, wind power) and new energy vehicles. With the proposal of carbon standards and carbon neutralization targets, the demand for thin film capacitors in the field of photovoltaic and wind power generation will grow rapidly; new energy vehicles gradually replace traditional fuel vehicles are also being vigorously promoted by governments, and there is more market space in the future. Benefiting from the stable development of downstream traditional industries and the rapid growth of emerging industries, the scale of the thin film capacitor market will gradually expand. It is estimated that the return net profit of the company from 2023 to 2025 is 136 million yuan, 174 million yuan and 189 million yuan respectively, the EPS is 0.24,0.31,0.33 yuan respectively, and the PE is 27x, 21x and 19x respectively.

Risk hint: investment project implementation risk, exchange rate fluctuation risk, raw material price fluctuation risk, industry competition aggravating risk.