Event: the company recently released its semi-annual report for 2023. In the first half of 2023, the company realized total operating income of 649 million yuan, an increase of 20.02% over the same period last year, a net profit of 88 million yuan, an increase of 86.16% over the same period last year, and a net profit of 82 million yuan, an increase of 81.32% over the same period last year.

Comments:

The company's main products to improve profitability, Q2 performance to maintain high growth. 2023Q2 achieved revenue of 345 million yuan, an increase of 17.93% over the same period last year, a net profit of 49 million yuan, an increase of 87.41% over the same period last year, and a net profit of 46 million yuan, an increase of 89.08% over the same period last year. In the first half of the year, the company's photovoltaic junction box revenue reached 544 million yuan, an increase of 26.57% over the same period last year, with a gross profit margin of 20.07%, an increase in 4.09pct compared with the same period last year. The income of photovoltaic connectors, accessories and other products was 93 million yuan and 12 million yuan respectively, which was-8.90% and + 36.05% respectively compared with the same period last year, and the gross profit margin was 24.81% and 44.19% respectively compared with the same period last year. The profitability of the company's main products in the first half of the year was significantly improved compared with the same period last year.

Further expansion of production capacity, continuous R & D and innovation to launch new products. In 2022, the company has a production capacity of 70 million sets of junction boxes and 100 million sets of connectors. through the expansion plan in the existing plant, leased plant or re-leased plant, the production capacity of junction box and connector is expected to increase to 100 million sets and 120 million sets respectively in 2023. At present, among the large domestic photovoltaic connector manufacturers, the company's market share is in the forefront. The energy storage connector products launched by the company have entered the stage of mass production and are expected to be used in power plant energy storage and household energy storage and other scenarios. The company continues to optimize circuits and upgrade control modules, and the performance of intelligent junction boxes is gradually improved. at present, a new generation of intelligent junction boxes with efficiency optimization has been launched. in the future, with the expansion of the household roof photovoltaic market, the intelligent development of photovoltaic systems and the reduction of production costs. The company's smart junction box in roof photovoltaic power generation, BIPV and other scenarios with high requirements for safety and power generation efficiency are expected to improve the permeability.

Business in overseas markets is developing rapidly. The company ploughs deeply into the domestic market, and its sales network has covered many provinces, municipalities and autonomous regions such as North China, East China, South China and Northwest China. at the same time, the company continues to expand overseas markets. the products are widely used in photovoltaic power stations in South Korea, India, Vietnam, Germany, Spain, Egypt, the United States and other countries and regions. In the first half of this year, the company's export revenue reached 261 million yuan, an increase of 104.06% over the same period last year. Accounting for 40.21% of revenue, an increase in 16.56pct compared with the same period last year, the company's export revenue has grown rapidly, the proportion of revenue has increased significantly, and remarkable results have been achieved in expanding overseas markets.

Investment suggestion: the company's photovoltaic junction box, photovoltaic connector capacity continues to expand, continue R & D and innovation to launch new products, and make efforts to expand overseas markets, the company is expected to further enhance its competitiveness. It is estimated that the company's EPS from 2023 to 2025 will be 2.64,3.58,4.90 yuan respectively, corresponding to 19 times, 14 times and 10 times of PE respectively, maintaining a "buy" rating on the company.

Risk hints: downstream demand is lower than expected risk; capacity expansion is less than expected risk; technological R & D progress is less than expected risk.