Introduction to this report:
The company's 2022 Q4 performance is in line with expectations. The company's titanium concentrate and iron ore shipments are stable, and the overall operation is steady. With the implementation of the company's iron phosphate and titanium material projects, the company's development space will be opened up.
Key points of investment:
Maintain an “increase in holdings” rating. The company achieved revenue of 1,996 million yuan in 2022, down 13.35% from the previous year, and achieved net profit of 1,095 million yuan, down 23.72% from the previous year; Q4 achieved revenue of 486 million, up 6.29% from the previous year, and achieved net profit of 224 million yuan, down 8.82% from the previous year. The company's fourth quarter results were in line with expectations. Considering the increase brought about by the new project, the company's 2023-24 EPS forecast was raised to 3.56/4.28 yuan (previously 3.56/3.9 yuan), the new 25-year EPS forecast was 5.54 yuan, and the corresponding net profit attributable to the mother was 1,427/17.17/2.22 billion yuan respectively. Maintain the target price of 48.17 yuan and maintain the “increase in holdings” rating.
The operation is steady, and the sales volume of titanium concentrate is stable. The company sold 513,000 tons of titanium concentrate in '22, down 24,500 tons from '21; vanadium-titanium-iron concentrate sold 1.38 million tons, down 31,000 tons from '21, and the company is operating steadily. The average sales prices of titanium concentrate and iron concentrate in '22 were 2,406 and 539 yuan/ton respectively, up 42 from the previous year and down 181 yuan/ton respectively. The gross profit per ton was 1940 and 296 yuan/ton respectively, up 7 and down 178 yuan/ton respectively from the previous year. Steel demand recovered in '23, and the company's iron ore profits are expected to gradually recover.
The energy titanium material project is progressing steadily. The company continues to promote energy titanium material projects and extend its own industrial chain. Products from the company's energy titanium project can be used in hydrogen fuel cells, electricity, aerospace, oil and gas extraction and development, consumer goods, etc., and downstream demand is growing rapidly. We believe that the launch of the Energy Titanium Project will open up new growth space for the company.
The iron phosphate project is expected to contribute incrementally. The company's iron phosphate project makes full use of ferrous sulfate by-products of Dongfang Titanium, a participating company. Combining the advantages of green power resources in the Panxi region, it has a competitive advantage on the cost side. According to the company's investor relations record sheet, the company's iron phosphate project has already entered the construction stage of the main plant, and the iron phosphate project is expected to gradually contribute to the company's increased performance.
Risk warning: The progress of new construction projects fell short of expectations, and demand for real estate declined sharply.