2023Q2 company's performance is slightly under pressure, optimistic about the industrial chain extension strategy, maintain the "buy" rating company to release the 2023 semi-annual report, achieving operating income of 845 million yuan, down 21.45% from the same period last year, and home net profit of 444 million yuan, down 32.34% from the same period last year. Of this total, 2023Q2 achieved revenue of 400 million yuan, down 10.24% from the previous month, and realized a net profit of 212 million yuan from the previous month, down 8.25% from the previous month. Considering that the prices of titanium concentrate and sponge titanium are lower than expected, we downgrade the company's profit forecast for 2023-2025. it is estimated that the net profit from 2023 to 2025 will be 9.84,10.63,14.75 (- 5.62) million yuan, respectively, and the EPS will be 2.45,2.65,3.68 (- 1.40) yuan respectively. The current stock price corresponds to PE of 14.0,13.0,9.4 times respectively. We are optimistic about the company's industrial chain extension strategy, the future titanium project is expected to contribute to the company's important performance increment, maintain the "buy" rating.

The price of 2023H1 titanium concentrate remains stable, and the price of iron concentrate is expected to go up in terms of titanium concentrate. According to the company announcement, the titanium concentrate plate of 2023H1 achieved a revenue of 547 million yuan, a gross profit margin of 77.09% and a gross profit of 422 million yuan. In terms of price, according to Baichuan Yingfu data, from January to June 2023, the average price of domestic titanium concentrate (the average price of high-grade and low-grade titanium concentrate) reached 2015 yuan / ton, of which Q1 and Q2 were 2014 yuan / ton and 2016 yuan / ton, respectively. the price of titanium concentrate remains stable as a whole. In terms of iron concentrate, according to the company announcement, the vanadium titanium iron concentrate plate of 2023H1 achieved a revenue of 292 million yuan, a gross profit margin of 45.37% and a gross profit of 133 million yuan. 2023H1 is affected by the weak downstream demand, the price of vanadium titanium iron concentrate is basically at the bottom of the cycle. At present, the company's vanadium-titanium concentrate products are sold directly to downstream customers, and the sales quotation does not fully reflect the value of vanadium contained in vanadium-iron-titanium concentrate. While the downstream customers use vanadium-iron-titanium concentrate as raw material and use vanadium slag to extract vanadium in the steelmaking process, additional benefits can be obtained. Looking to the future, we think that with the rise of vanadium price, the company's vanadium titanium iron concentrate products may also be revalued.

Optimistic about the company's industrial chain extension strategy, the titanium project is expected to contribute important performance increments to the company. According to the company announcement, the company plans to invest in the construction of the "annual production capacity of 60,000 tons of energy-grade titanium (alloy) material industry chain project", with a total investment of 7.2 billion yuan. The project covers the whole industry chain of vanadium titanium magnetite-sponge titanium ingot, titanium plate-energy grade titanium (alloy) material. The company's titanium project, electricity, raw materials and other cost advantages are significant, with the gradual landing of the project in the future, the company's performance is expected to usher in a centralized release.

Risk tips: economic recovery is not as expected, product prices have fallen sharply, the project production process is not as expected, and so on.