Events:

Hai Sida, a subsidiary of Pulitt, recently reached cooperation with the people's Government of Doumen District, Zhuhai. After friendly and equal consultation, Hai Sida signed the New Energy Industry Investment Framework Agreement on the investment and development of new energy projects and shared energy storage power station projects in Doumen District, Zhuhai.

The growth of modified plastics is steady, the capacity of lithium battery is abundant, and sodium ion battery occupies the first-mover advantage.

(1) Pulit achieved operating income of 4.05 billion yuan in the first half of 2023, + 68.59% compared with the same period last year, mainly due to the company's acquisition and merger of Haishida in September 2022, bringing its financial statements into the scope of the merger. The net profit of returning to the mother was 200 million yuan, + 332.64% compared with the same period last year.

(2) the company's modified plastics business 2023H1 achieved an operating income of 2.65 billion yuan, a year-on-year increase of + 10.37%, with a relatively steady growth. The modified plastics business 2023H1 achieved a gross profit margin of 16.92%, a year-on-year + 4.92pct, mainly due to a decline in the price of major raw materials compared with the same period last year.

(3) the company's new energy battery 2023H1 realized operating income of 1.4 billion yuan, corresponding to a gross profit margin of 12.81%. At the lithium-ion battery end, the subsidiary Haisida currently has 3Gwh ternary cylindrical battery capacity, 1Gwh square iron lithium capacity, 7.3Gwh square battery capacity under construction, 18Gwh battery capacity to be built (Liuyang Phase I and Zhuhai plants), and planned 18Gwh battery capacity (Liuyang Phase II and Phase III). On the sodium-ion battery side, Hisida began to implement the construction of an intelligent automatic production line for 1.3Gwh compatible sodium-ion battery and lithium-ion battery in December 2022. By the end of the first half of 2023, the project has basically reached the production standard; in addition, the company has invested in the construction of an annual production base for 30GWh sodium-ion and lithium-ion battery and system in Liuyang.

The prospect of LCP thin film in 5.5g era is broad, and the supply chain and technical barriers of Pulit card are expected to benefit from the core. (1) in the field of 5G/6G high frequency, the loss of traditional communication equipment material MPI will increase exponentially, especially in the frequency range above 15GHz, the dielectric performance of LCP is better than that of MPI. With the acceleration of domestic 5.5G base station construction, LCP permeability is expected to increase. (2) LCP thin film was once monopolized by foreign manufacturers, and there is a wide space for domestic substitution. (3) LCP film technical barrier lies in film-grade resin procurement and film preparation process, Pulit is the domestic first layout LCP manufacturers, the company layout LCP industry in 2007, with 3 million square meters of LCP film production capacity. At present, the company is the only manufacturer in the world to open the industrial chain, the film has been tested and recognized by downstream customers, has a small batch supply, and has both industrial chain barriers and process barriers.

Profit forecast: sodium ion battery and LCP film are expected to be released. It is estimated that the operating income of the company from 2023 to 2025 is 114.1 / 164.9 / 20.87 billion yuan, the net profit from 2023 to 2025 is 6.13 / 9.43 / 1.374 billion yuan, and the corresponding PE is 24.5 / 15.9 / 10.9 times. Give 2023E earnings 30 times PE valuation, corresponding to the target price of 16.50 yuan, for the first time to cover the "buy" rating.

Risk hint: 5.5G base station construction is not as expected