Event: Feikai released its semi-annual report for 2021. During the reporting period, the company realized operating income of 1.203 billion yuan, an increase of 45.01% over the same period last year. It realized net profit of 168 million yuan, an increase of 52.25% over the same period last year. According to the latest total share capital, it realized diluted earnings per share of 0.33 yuan and operating net cash flow of 0.30 yuan per share.

Of this total, 2021Q2 achieved an operating income of 640 million yuan in the single quarter, an increase of 38.73 percent over the same period last year, an increase of 13.63 percent over the previous quarter, and a net profit of 100 million yuan, an increase of 72.15 percent and 46.37 percent over the same period last year.

Maintain the investment rating of "prudent overweight". Benefiting from the increase in domestic panel production capacity and the improvement of the localization rate, the superposition company shows the release of new production capacity of photoresist, driving the company to improve the sales of display materials. In addition, the downstream demand for products such as semiconductor materials, optical fiber and cable coating materials and organic synthetic pharmaceutical intermediates is improving, the company's 2021Q2 performance continues to grow at a high rate since Q1, and revenue and net profit continue to improve compared with the same period.

Feikai material is the leading electronic chemical platform in China, which is committed to creating a new material platform. At present, the business of UV-curable optical fiber coating materials is developing steadily, benefiting from localization to promote the continuous growth of mixed crystal materials and packaging materials. Through endogenous and epitaxial development, the company has gradually formed a parallel layout of electronic chemical materials and organic synthetic materials. in the future, with the continuous integration of resources among subsidiaries, it is expected to give full play to synergy and create new growth points. We are optimistic about the growth potential of the company's display and semiconductor materials, pharmaceutical intermediates and other new materials business, maintaining the company's EPS forecast of 0.60,0.73,0.81 yuan respectively in 2021-2023, and maintaining the investment rating of "prudent overholdings".

Risk tips: falling product prices; less-than-expected new product expansion; risk of goodwill impairment