The net profit of the first three quarters was-18% year-on-year, Q3 year-on-year +25%/month-on-month +26%, maintaining the "overweight" rating. The company released its third quarterly report on October 25, with revenue of 1.38 billion yuan, yoy-9%, net profit of 710 million yuan, yoy-18%;Q3 revenue of 530 million yuan, yoy+23%, net profit of 270 million yuan, yoy+25%/qoq+26%. We estimate that the net profit of the company from 23 to 25 years is RMB 10.0/11.7/13.2 billion yuan, corresponding EPS is RMB 2.50/2.92/3.29 yuan, combined with the consistent expectation of 10xPE in 24 years of comparable company Wind, considering the growth of new projects and future new materials to improve product competitiveness, 12xPE will be given for 24 years, and the target price will be RMB 35.04 yuan, so as to maintain the rating of "overweight".

Q3 titanium boom picked up, single-quarter gross profit rate month-on-month improvement

According to Baichuan Yingfu, the average price of titanium concentrate market in the first three quarters was about 2186 yuan/ton,-3% year-on-year, but the average price of Q3 was 2193 yuan/ton, yoy+1.4%/qoq+0.1%, and the price gradually improved. In the first three quarters, the company's comprehensive gross profit margin yoy-5.2pct to 66.6%(Q3: 68.0%, yoy-0.9pct/qoq2.0pct), and expense ratio yoy+1.8pct to 5.9%(Q3: 7.4%, yoy+2.3pct/qoq+0.7pct) during the first three quarters. At the end of Q3, the asset-liability ratio was only 16%, and the monetary fund was 2.4 billion yuan.

Titanium ore demand and boom continued to improve, long-term supply pattern optimization support profitability According to Baichuan Yingfu, as of October 26 titanium concentrate (Pan 46) quoted 2213 yuan/ton,+5% compared with the beginning of the year.

In the short term, with the recovery of domestic economy, the terminal demand for titanium dioxide and other downstream products is expected to gradually improve, and the demand for titanium ore and prosperity are expected to gradually improve due to the release of new production capacity in titanium dioxide industry and the expansion of application in emerging fields such as titanium materials.

Relying on the advantages of resource endowment, the company actively extended titanium materials and new energy materials with a balance of 380 million yuan at the end of 23Q3. The company will actively extend the sponge titanium and titanium materials business, steadily promote the fixed-increase project (proposed to raise no more than 5 billion yuan for 60,000 tons of energy-grade titanium (alloy) materials), and plan to invest 500 million yuan to build 50,000 tons/year iron phosphate project. On the whole, based on the resource endowment conditions, the company is expected to have supporting advantages and cost advantages in the extended downstream fields, and the sixth consecutive implementation of new projects in the future is also expected to bring new profit growth points.

Risk hint: the risk of a continuous downturn in downstream demand, and the risk that the production schedule of the new project is not as expected.