This report is read as follows:
The company's results in the third quarter of 2022 were lower than expected. The downstream demand for titanium dioxide is weak but the decline slows down, while the demand for vanadium pentoxide increases with the peak season of steel, and we expect the company's profits to pick up gradually.
Main points of investment:
Maintain the "increase in holdings" rating. The company achieved revenue of 11.387 billion in the first three quarters of 2022, up 4.39% from the same period last year, and realized net profit of 1.227 billion, up 10.3% from the same period last year, and the company's performance was lower than expected.
Considering the decline of the price of titanium dioxide, the EPS of the company in 2022-24 is estimated to be 0.18Unix 0.24 yuan (the original 0.24max 0.29max 0.33 yuan), corresponding to the net profit of 15.16,823,000,000 yuan. With reference to similar companies, the company was valued at 35 times PE in 2022, lowering the company's target price to 6.3yuan (formerly 8.4yuan) and maintaining the "overweight" rating.
Product prices fell, and the company's profits fell slightly. The average price of 22Q3 domestic titanium dioxide (East China, rutile type) was 1710,000 yuan / ton, which was 0.25,000 yuan / ton lower than that in the second quarter; the average price of vanadium pentoxide (Sichuan, sheet vanadium) in the third quarter was 1097,000 yuan / ton, which was 1.91 million yuan / ton lower than that in the second quarter. We have observed that the decline in the demand for titanium dioxide downstream coatings has slowed down, while the demand for vanadium pentoxide will pick up with the peak season of iron and steel, and the company's profitability is expected to improve gradually.
Deeply ploughing the field of vanadium battery, non-public offering promotes the rapid development of the company. The company has signed strategic cooperation agreements with Dalian Rongke and the State Investment Corporation, and the three parties will strengthen cooperation in the vanadium battery industry. In addition, the company recently announced that it intends to issue shares in a non-public offering and raise no more than 2.28 billion of funds for projects such as titanium dioxide by molten salt chlorination process and vanadium battery electrolytes. we expect that after the non-public offering, the expansion of the company's new business will be accelerated.
The commercialization of vanadium battery continues to advance, and the demand for vanadium increases steadily. The recent national policy to increase the safety requirements of energy storage may make vanadium batteries become an important way of large and medium-sized energy storage. And we have observed that the number of vanadium battery projects in various places continues to rise. We expect the demand for vanadium battery to continue to rise, and the company, as the leader of vanadium industry, will fully benefit from the growth of vanadium demand.
Risk hint: the progress of vanadium battery technology is slow.