event: the company released the 2023 mid-year report, 2023H1 company to achieve revenue of 0.172 billion yuan, +0.31% YoY, to achieve the return of net profit -0.044 billion yuan, -35.69% YoY, non-net profit -0.052 billion yuan, +37.80% YoY, gross margin of 25.62%, YoY -0.66pcts. In the single quarter of 23Q2, the company realized revenue of 0.096 billion yuan, year-on-year +27.16%/month-on-month +25.46%, net profit attributable to the parent -0.022 billion yuan, year-on-year +11.77%/month-on-month +0.31%, net profit deducted -0.025 billion yuan, year-on-year +13.62%/month-on-month -8.91%, gross profit margin 25.05, year-on-year -3.22pcts/month-month-month-month-month.

copper foil + shielding film business affected by downstream demand pressure: 23H1 company affected by the overall supply and demand of the electronic copper foil industry, the price of standard electronic copper foil products (mainly refers to processing fees) further decreased, superimposed on the company's copper foil production costs are higher, resulting in a year-on-year decline in copper foil business profits. Shielding film is affected by the decline in demand for smart phones. Although the sales volume of high-end products has increased significantly, the overall sales volume has decreased year on year, the selling price of ordinary shielding film has decreased, and the gross profit of shielding film business has decreased by 18.96 million yuan year on year. With the company's headquarters production and research and development base and Zhuhai Dachuang production and research and development base put into use, fixed asset depreciation increased year-on-year, also a drag on profits. The current industry demand is at the bottom, the company's performance is under pressure, looking forward to the follow-up, with the overall macroeconomic trend to good, shielding film, copper foil and other downstream demand is expected to improve, the company's revenue, profitability is expected to continue to repair.

downstream demand for shielding film is broad: 23H1 shielding film business realized revenue of 85.06 million yuan, year-on-year -13.33, gross profit margin of 51.35, year-on-year -11.06pct, and overall sales and profitability declined year-on-year due to sluggish demand for smart phones. At present, the company's products have been widely used in Huawei, Xiaomi, OPPO, vivo, Samsung and other well-known terminal brands, the future with consumer electronics products "light and short", high-frequency high-speed demand increasingly prominent, new energy vehicles intelligent trend is increasingly popular, electromagnetic shielding film market space is expected to further open. The company's high-performance, customized electromagnetic shielding film has entered the mass production stage, and continue to iterate and upgrade, is expected to grasp the industry trend with downstream demand growth.

strippable copper foil has obtained small orders: the company's current copper foil products are mainly standard electronic copper foil (transitional products),23H1 revenue of 86.63 million yuan, +22.07% YoY, gross profit margin of 0.36%, year-on-year to achieve positive. In the field of high-end strippable ultra-thin copper foil for chip packaging, it is still Japan's Mitsui Metal monopoly, and the problem of card neck is serious. The company can peel ultra-thin copper foil is currently undergoing customer certification, sample quality is stable, a wide-width product has passed part of the carrier board manufacturers of physical properties, process testing, and through the first round of verification of some terminals, and has obtained small orders, is expected to help achieve China's chip packaging materials domestic substitution.

FCCL: the preparation of flexible circuit board (FPC) substrate, is currently in the process of small batch production work, conventional FCCL in the reporting period to implement small orders. The very thin FCCL is currently still in the customer test certification phase.

PET copper foil: samples have been sent to some downstream customers.

resistance film: used in smart phone acoustic components, is currently in the customer certification stage, some products have passed the relevant customer's basic physical properties and process testing, batch stability testing, terminal certification is underway.

investment advice: As a high-end electronic materials platform company, the company is currently affected by its own transformation + industry demand downturn performance pressure, the future with the improvement of consumer electronics demand, the company's high-end new materials bulk shipments, the overall profit is expected to improve. We expect the company's 23/24/25 net profit to be -0.66/0.54/0.103 billion yuan, EPS to be -0.82/0.67/1.29 yuan/share, corresponding to PE multiple of-/65.16/34.07 times, maintaining the "overweight" rating.

Risk Warning: The risk of further decline in demand for shielding film; The industrialization of high-end materials such as peelable copper is less than expected; The risk of rising raw material prices.