The company issues semi-annual report. 2023H1's operating income is 236 million yuan (year-on-year-53.95%), and its net profit is 20 million yuan (year-on-year-90.24%). In a single quarter, 2023Q2 achieved revenue of 123 million yuan, year-on-year-23.63%, month-on-month + 8.57%; net profit 9 million yuan,-82.05% year-on-year, month-on-month-21.39%. The sharp drop in revenue is mainly due to the fact that the market for 23H1 additives is still in oversupply. Although sales of the company's main products, VC and FEC, increased by 48.39% year-on-year, net profit fell sharply due to a large year-on-year decline in product prices.

The new production capacity project is progressing smoothly and the negative pole project has obtained the land use right. The company's 9000-ton fund-raising project, including 6000 tons of new VC products, 3000 tons of FEC products production line and orderly construction of R & D center, is expected to be trial production in 2023. Projects with an annual output of 80000 tons of chloroethylene carbonate (including 40000 tons of the first phase) and 3000 tons of lithium difluorosulfonimide (including the first phase of 40000 tons) are in steady progress. In addition, the new "annual output of 200000 tons of low energy consumption and high performance lithium battery anode material project" built by the subsidiary Washington Union has obtained the land use right of the project construction land, is completing the examination and approval procedures of the government department, and the R & D samples have been sent to a number of downstream enterprises and passed the test.

Continue to carry out technical research and development to reduce production costs. The company found that a new reaction inhibition mechanism can inhibit the polymerization and decomposition in the synthesis of ethylene carbonate. At present, this method is being magnified and verified. At the same time, in the research of FEC, the company found that the new non-tower separation and purification technology can improve the production efficiency and reduce the energy consumption of preparation per unit output. In the field of special organosilicon, the company has successfully developed a high temperature dealcoholization process, which is a key production process in the non-phosgene preparation route of IPTS/TESPI, and has passed industrial verification in 2023H1.

It is proposed to buy back more than 15 million yuan of equity, demonstrating the company's long-term development confidence. According to the company's announcement on the plan to buy back the company's shares by means of centralized bidding, the company intends to use part of the over-raised funds to buy back the company's shares in the form of centralized bidding for employee stock ownership plans and or equity incentive plans. The repurchase price shall not exceed RMB 50 yuan per share (inclusive), and the total amount of funds to be repurchased this time shall not be less than RMB 15 million yuan (inclusive) and no more than RMB 30 million yuan (inclusive). This share buyback plan shows the company's confidence in the long-term development of the future and strengthens investors' confidence in the company.

Profit forecast and investment rating. We estimate that the return net profit of the company in 2023 to 2025 is 67 million yuan, 84 million yuan and 178 million yuan respectively, and the EPS is 0.42,0.53,1.11 yuan respectively. According to BPS 24.01,1.4-1.5 times PB in 2023, the reasonable value range is 33.61-36.02 yuan, maintaining the "better than the market" rating.

Risk hint: the prices of raw materials and products fluctuate greatly, the progress of project construction and production is not as expected, the downstream demand is not as expected, and the risk of production safety and environmental protection compliance.