The company is a global manufacturer of new functional coating materials through "interactive" independent research and development and "customized flexible manufacturing" mode to provide customers with systematic solutions such as coatings, inks, adhesives and so on. In the early stage, the company took the 3C field as the main market, and in 2019 it became the fourth and the first domestic leading enterprise in the 3C field in the world. Subsequently, the company expanded its passenger car paint business, currently targeting the field of high-end consumer electronics and passenger cars.

The 23Q2 operation of the company is getting better. 23H1 achieved a revenue / return net profit of 2.46 trillion yuan, a decrease of 1.22 percent over the same period last year. In the first quarter of 23, consumer electronics business orders were under short-term pressure, and the growth rate of the new energy vehicle market slowed down, resulting in a significant decline in the company's performance. However, the downstream market recovered weakly in the second quarter, the high-end consumer electronics business stabilized and rebounded, and the superimposed cooperation projects with automobile terminals were successively landed and delivered. In the second quarter, the operating income reached 152 million yuan, an increase of 15.00% over the same period last year and 60.98% over the same period last year. The net profit returned to the home was 23.6833 million yuan, an increase of 26.58% over the same period last year and 680.42% over the previous year.

In the field of consumer electronics, the company's market share continues to grow. The company not only maintains a high level of market share in customers such as XIAOMI, Huawei, Glory and Logitech, but also steadily increases its market share in North American consumer electronics customers, such as Google, VIVO, OPPO and other customers. On the other hand, the boundary of business cooperation with customers continues to be broadened. Companies in the field of passenger cars continue to open up the market. In the field of passenger cars, during the reporting period, especially since the second quarter, with the cooperation with BYD, NIO Inc., Geely, North American T Company, Guangzhou Automobile, Great Wall, ideal, XPeng Inc. and other terminals, many new models have been put into mass production.

Major breakthroughs were made in the part of special equipment. The first phase of the aircraft interior coating project has been successfully concluded, and all the performance indicators of the products meet the requirements of downstream customer standards, and a series of supplier qualification certification and audit are under way. With the gradual promotion of the company's major innovative projects and the small batch landing of some of its commercial achievements, 23H1 achieved a total operating income of 2.2492 million yuan, an increase of 1594.95% over the same period last year.

The company has a stable and high investment in research and development, power battery coating has made progress, and the follow-up transformation of the results can be expected. The insulation coating of power battery now has the basis of large-scale application, and the first generation insulation coating materials can be supplied in small quantities in important strategic customers. The company is actively working with a number of new energy battery head enterprises around insulation coating materials, digital intelligent painting technology and other close cooperation to promote the construction of the industry's first standard demonstration line.

Maintain the company's "overweight" rating and adjust the profit forecast according to the semi-annual report. It is estimated that the company's net profit from 2023 to 2025 will reach 0.83,1.37 and 202 million yuan respectively, an increase of 0.47%, 66% and 48% over the same period last year, with a corresponding valuation of 75, 45 and 31 times.

Risk hint: downstream demand is lower than expected; valuation and profit forecast are not as expected.