Incident: The company released its 2023 annual report. During the reporting period, it achieved revenue of 8.558 billion yuan, -2.33% year-on-year, net profit of 84 million yuan, -93.77%, net profit of non-attributable net profit of 28 million yuan, -97.94% year-on-year. Among them, 2023Q2 achieved revenue of 3,754 million yuan in a single quarter, -15.1% year-on-year, net profit of 0.07 billion yuan, or -98.96% year-on-year, net profit of non-attributable net profit of -23 million yuan, or -103.47% of the same period.
The current period's performance declined due to declining prices of rare earth and zirconium-titanium products and delays in changes in raw material costs. 2023H1 Company's rare earth oxide/rare earth salts/rare earth rare metal/zircon sand/titanite/concentrate production was 0.62/4.02/0.82/1.67/4.25/13,000 tons, respectively, +2.54%/+209.52%/+100.09%/+140.29%/+149.8%/+343.58%, sales volume was 0.47/0.78/0.63/1.27/3.48/23,400 tons, respectively, -5.77%/+162.24% /+ 53.93%/+59.23%/-15.32%/-28.08%, the unit sales price was 51.96/1.15/65.36/1.19/0.26/46,400 yuan per ton, respectively, +19.91%/-35.79%/-36.08%/-20.35%/+28.09%/-20.51%, and gross margin of -31.94/-31.77/-58/2.84/-5.17pct, respectively. Affected by factors such as declining market prices for rare earth and zirconium-titanium products and lagging changes in raw material costs, the average sales price and gross margin of the company's main products fell sharply compared to the same period last year, which led to a decline in the company's current profit compared to the same period last year.
Promote project construction and expand development space. The company continues to make efforts in increasing production capacity and process upgrading to accelerate project construction. The Dechangshenghe 2000 tons/year rare earth metal processing project is expected to be put into operation by the end of 2023. The second phase of the Chenguang Rare Earth 12,000 tons/year rare earth metals and alloys intelligent technical improvement project is expected to complete project acceptance and filing by the end of September. The 3,300 tons/year rare earth oxide project in Huichang, and the 6,000 ton rare earth metal alloy project in Baotou are progressing steadily. Further expansion The company's development space.
Investment suggestions: We expect the company's net profit to be 5.5, 15.53, and 1,875 billion yuan respectively in 2023-2025, and EPS at 0.31, 0.89, and 1.07 yuan respectively, and corresponding PE at 36.21, 12.83, and 10.63 times, respectively, maintaining the “recommended” rating.
Risk warning: the risk of a sharp drop in prices of major products; downstream demand falling short of expectations; project construction falling short of expectations, etc.