Performance summary: In the first half of 2023, the company achieved operating income of 7.63 billion yuan (-7.5% 6), net profit of 603 million yuan (-43.8%), corresponding basic EPS of 0.07 yuan, minus non-attributable net profit of 606 million yuan (-41.59); of these, 2023Q2 achieved operating income of 3.68 billion yuan (10.6% YoY, 6.899% YoY), achieving net profit of 270 million yuan (-54.6% YoY, -17.0%), net profit of non-attributable net profit of RMB 280 million (-53.6% YoY, -53.6% YoY, -53.6%, YoY, (12.7% month-on-month); Industry demand was weak, and prices fell year on year: In the first half of 2023, prices of vanadium products and vanadium products maintained a bottom-bound fluctuation trend. The supply of vanadium products increased slightly in the first half of the year, while profit losses and alloy substitution for rebar used in major downstream applications led to an overall decrease in demand for vanadium in the steel sector. The amount of vanadium used in aviation all-vanadium flow batteries in the non-steel sector rebounded, but its contribution to overall demand was limited. Prices fell 8.4% year on year due to oversupply. In terms of titanium products, titanium dioxide was affected by insufficient downstream real estate and large production capacity (1.52 million tons of titanium dioxide was added in 2023). Prices fell about 22% year on year. At the same time, prices on the raw material side were high, and industry profitability declined sharply; titanium slag was affected by slag conversion I technology, demand was drastically reduced, and prices fell about 20% year on year; however, although downstream titanium sponge production increased dramatically and demand increased, overall oversupply, prices fell about 4% year on year; revenue increased steadily, profits were under pressure: The company completed a total of vanadium products in the first half of the year (with According to V2Oj), 24,000 tons (+3.2%), achieved revenue of 2.84 billion yuan (11.59%) after volume increase and price reduction, and gross profit margin of vanadium products was 31.8% (4.6 pcts), mainly due to stable product costs and price declines. In the titanium industry, in the first half of the year, the company achieved a titanium dioxide output of 132,000 tons (+1.03%), titanium slag production of 106,000 tons (-7.4% 6), and a titanium concentrate business volume of 892,000 tons (including personal use). In the first half of the year, the company's titanium products achieved revenue of 3.42 billion yuan (-2.7%). In addition to the increase in titanium dioxide and titanium slag revenue of 1.19 billion yuan (+46.6%) due to volume factors, revenue declined (-16.7%, -20.5%); -5.2% 6.2 pcts), It is mainly influenced by factors such as falling prices and maintaining high raw material prices. The company's gross profit margin and period expense ratio in the second quarter were the same as in the first quarter (+0.4pcts.+0.2pcts), while net interest rate decreased compared to the first quarter (-0.9 pcts), mainly due to a high increase in asset impairment losses;.

Financial data: Financial expenses were drastically reduced by 154%, mainly due to an increase in bank deposit interest income this year; large changes in cash flow from fund-raising activities (+1534%), mainly due to the receipt of funds raised; large changes in cash flow from operating activities (-127%), mainly due to a decrease in net profit in the first half of the year, an increase in revenue notes, and a decrease in contract liabilities; large changes in cash flow from investment activities (-285%), mainly due to land disposal in the same period in 2022; the company is ready to go: the company completed a targeted increase in shares and a fixed increase in listing in July The price is 3.29 yuan The shares raised a total of 2.27 billion yuan for the construction of a chlorinated titanium dioxide project with an annual output of 60,000 tons, a vanadium pentoxide upgrade project, and other automated upgrades and R&D projects. This fixed issuance effectively enhances the company's product competitiveness in the vanadium and titanium business and enhances the company's technical strength in vanadium flow battery electrolytes; holds Yangrun Technology to accelerate the layout of the vanadium industry: The company announced that it plans to acquire 51% of Yangrun Technology's shares with its own capital of 54.825 million. The main process of Yangrun Technology's vanadium production line is a sodified vanadium extraction method. It was completed in 2019, and officially produced in June 2021. The design capacity utilization rate has continued to rise in the past two years. 376.51 tons, exceeding the design production capacity. Vanadium and Titanium Co., Ltd. uses mergers and acquisitions to integrate production capacity to reduce production costs, shorten production capacity increase time, and expand its market share, thus forming links with group resources to prepare for the promotion of vanadium flow batteries; new energy storage has accelerated, and the company has fully benefited: According to data from the National Energy Administration and the Bureau of Statistics, intermittent renewable energy (wind power, photovoltaic) power generation accounts for about 11.1% in January-July, and according to the China Chemical and Physical Power Industry Association, intermittent performance sources account for more than 15%, and the safety and stability of the power grid will be greatly impacted, so the importance of energy storage is becoming more and more prominent. New types of energy storage, such as all-vanadium liquid flow batteries, have the advantages of high safety, capacity and power decoupling, and high recovery rate. They are particularly suitable for applications such as deployment around cities and long-term energy storage. At a time when safety and energy storage time requirements are getting higher and higher, they will usher in rapid development. The company seized the period of historical opportunity for the commercial development of liquid flow batteries. The company established a subsidiary, Vanadium Touch Technology, to build a 2,000 m3/year electrolyte production line. On May 25, 2023, equipment installation and heat load test run commissioning were carried out, and trial production work was carried out to provide technical support for the subsequent 60,000 cubic meter production line. Furthermore, according to the framework agreement signed between the company and Rongke Energy Storage, it is expected that about 8,000 tons of vanadium products will be used for energy storage in 2023, accounting for 20% of the company's vanadium products; Investment suggestion: In the first half of 2023, the company's product prices were fluctuated by low demand in traditional fields As the core raw material supplier for upstream vanadium flow batteries, the company has deeply laid out the vanadium flow battery racetrack and will fully enjoy the dividends of the strategic opportunity period for the commercialization of new energy storage. We expect the company to achieve operating income of 15.19 billion yuan, 17.03 billion yuan, and 19.11 billion yuan in 2025, an increase of 0.68%, 12.1%, and 12.2% over the previous year, and net profit of 1.25 billion yuan, 1.59 billion yuan, and 1.99 billion yuan, a year-on-year increase of 7.0%, 27.5%, and 24.7%, corresponding to PE29X and 23X.18X, maintaining a “buy” rating.

Risk warning: Risk of large fluctuations in product prices, risk of falling short of expectations of production capacity investment, risk of downstream demand falling short of expectations