Event: the company's operating income in the first half of 2023 was 2.4 billion yuan, down 14.72% from the same period last year. The net profit attributed to shareholders of listed companies was-34 million yuan, down 116.42% from the same period last year. Shareholders belonging to listed companies deducted non-net profits of-46 million yuan, down 122.46% from the same period last year.

The risk of fluctuation in raw material prices and the increase in financial expenses lead to a decline in the company's profits. In the first half of the year, the continuous fluctuation of silicon material and wafer prices in the photovoltaic industry led to instability of module customer orders, continued competition in the film market segment, and a decline in gross profit margin. The price of EVA resin decreased greatly in the second quarter, and the provision for impairment of inventory was higher in the first half of the year.

At the same time, the company financing scale increases corresponding to the increase of financial costs. As a result of the superposition of comprehensive factors, the net profit belonging to shareholders of listed companies decreased by 116.42% in the first half of 23 compared with the same period last year, and the net profit belonging to shareholders of listed companies after deducting non-recurring gains and losses decreased by 122.46% compared with the same period last year. Comply with the development trend of photovoltaic technology and actively develop new products. In the first half of 2023, the company continued to conduct in-depth research on the performance of anti-PIDEVA film, white synergistic EVA film, synergistic co-extruded POE film and multi-product POE film, especially in the technical direction of TOPCON matching film. The company increased the category of single-layer POE film and focused on improving the defects such as easy skidding and bumping of POE film, and successfully developed EXP type and iterative EPE co-extruded POE film products, which can greatly reduce the amount of POE resin while ensuring the hydrolysis resistance of the film, and make a good technical reserve for the rapid development of TOPCON components in the future. At the same time, the company pays close attention to the development trend of new component technology in the industry, closely tracks and actively develops the film technology needed for HJT, perovskite and other new components, realizes the independent research and development and industrialization of HJT light conversion agent, and makes a good technology and product reserve for the development of HJT and other new components.

We will actively lay out the non-photovoltaic field and strive to continuously strengthen technological leadership. The company's active layout of electronic functional film for automotive intelligent glass, high-strength noise and temperature reduction PVE glass adhesive film and new environmental protection surface materials, based on the photovoltaic packaging film technology accumulated by the company, combined with the application technology of polymer films in many fields, through self-designed production equipment and self-groping processing technology and process, after years of research and development, good technical progress has been made. The successfully developed new products have comprehensive technical advantages and time first-mover advantages.

Investment suggestion: we estimate that the company's net profit from 2023 to 2025 will be RMB 436 million, corresponding to PE of 25 x/14x/10x. The overall concentration of the film industry is high, the competition pattern is stable, and the "buy" rating is maintained.

Risk tips: raw material price fluctuation risk; insufficient terminal demand risk; industry competition aggravating risk.