Incident: The company released the 2023 semi-annual report. The company achieved revenue of 150 million yuan in H1 in 2023, -43% year-on-year, net profit of 180 million yuan, -27% of the same period, net profit of non-attributable income of 120 million yuan, -101% of the same period. 2Q23 The company achieved revenue of 110 million yuan, -39%/+117% of the same period, net profit of 40 million yuan, -3%/+2% of the same period, net profit of non-return net profit of -0.8 billion yuan, -124%/-88% of the same period.

High R&D investment has led to a decline in H1 performance, and the model urban agglomeration has accelerated the singularity of industrialization. The company insists on R&D drive, focuses on core indicators such as environmental adaptability, durability, and reliability of fuel cell systems to further improve product performance and consistency. 1H23 added 153 new authorized patents, invested 77 million yuan in R&D, -3% year on year, accounted for 50% of revenue, +20.7 pcts year on year, of which capitalization accounted for 27.9%, +4.6 pcts year on year. According to data from the China Automobile Association, domestic fuel cell vehicle sales in January-July were 2,679 units, +64% year-on-year, continuing to grow rapidly. Currently, the company's product range covers 30-240 kW, and has in-depth cooperation with leading commercial vehicle companies such as Yutong Bus and Beiqi Foton. It has been launched and operated in demonstration urban agglomerations such as Beijing and Shanghai, achieving full coverage of land transportation application scenarios. According to statistics from the Ministry of Industry and Information Technology, as of June 2023, the company's fuel cell system has successfully assembled 133 models, accounting for 15%.

National hydrogen energy standards have been implemented, and an independent industrial chain has been built with an upward layout. In August, various departments jointly issued the “Guidelines for Establishing a Standard System for the Hydrogen Energy Industry Chain (2023 Edition)”, which regulates the standard system for the entire hydrogen energy industry chain at the national level for the first time. In the same month, the company and Goldwind Technology reached a cooperation to build wind-hydrogen integration around hydrogen production and energy storage, and accelerate upstream expansion. Furthermore, as a leading domestic fuel cell system manufacturer, the company has 100% localized core components such as membrane electrodes, bipolar plates, electric stacks, and BOP, and has established a complete testing system for fuel cell systems and key valves to accelerate the independence and control of the entire industry chain.

Investment advice: Leading fuel cell system manufacturer, leading the acceleration of localization & commercialization. The company's revenue for 2023-2025 is estimated to be 99/15.1/2.52 billion yuan, and net profit to parent is -1.1/0.2/90 million yuan, giving it a “buy” rating.

Risk warning: fuel cell policies fall short of expectations; technology implementation falls short of expectations; market competition intensifies.