Event: the company releases its 2023 half-yearly report. In the first half of 2023, the company realized operating income of 243 million yuan, a decrease of 15.85%, and a net profit of 20 million yuan, an increase of 227.57%.
Product structure optimization has greatly increased the gross profit margin of PCB photoresist business: in the first half of 2023, the company took the initiative to optimize product structure and shrank some of its low gross margin business, resulting in a slight decline in revenue scale of PCB photoresist business, which decreased by 4.45% to 150 million yuan compared with the same period last year, but at the same time gross profit margin increased significantly by 15.02 percentage points to 33.95%. It is expected that when the new base raised by the company reaches production, the self-supplied resin will further improve the company's profitability.
The pressure on the paint business is a drag on the overall revenue, and Huawei may return or lead the demand to pick up: the main reason for the company's revenue decline in recent years is that the paint business shrinks as a result of the slump in consumer electronics demand, especially the sharp decline in demand from Huawei after 2019. In the first half of 2023, the company's paint business, especially consumer electronics paint business, was further under pressure, resulting in a 31.13% year-on-year decrease in paint business revenue to 69 million yuan. A few days ago, the Mate 60 series of mobile phones released by Huawei caused great concern in the market, or stimulated other manufacturers to strengthen competition, which in turn led to a pick-up in industry demand, superimposed on the gradual release of other consumer electronic products such as MR glasses, and the company's paint business is expected to usher in improvement.
Photovoltaic material products are expected to enter the volume stage: the photovoltaic insulating glue products developed by the company for IBC cells have achieved sales and rapid growth in downstream solar photovoltaic module enterprises, and have achieved monthly sales of several million yuan in the first half of 2023 and become a major supplier, which is expected to establish a new and important growth point for the company. At the same time, in addition to the photovoltaic photovoltaic adhesive used for copper plating process, the company developed photovoltaic packaging adhesive for 0BB dispensing, UV series bonding and battery protection, and photovoltaic anti-electroplating adhesive for electroplating protection after HF engraving process has also entered the downstream testing stage, while anti-HF etching protective adhesive is about to enter the batch use verification stage, the company's photovoltaic material products are expected to usher in the volume stage.
Investment suggestion: the company's product sales are expected to bottom out within this year, and it is expected that the volume node will appear next year, so we expect the company's 2023-2025 operating income to be 5.24,7.88 and 1.039 billion yuan respectively, the return net profit to be 0.44,1.07 and 179 million yuan respectively, and the EPS to be 0.23,0.55,0.93 yuan respectively. Maintain a "buy" rating.
Risk tips: the macro environment is not as expected, the product application is not as expected, and the market competition is intensified.