Event: the company released its Triple report for 2023. In the first three quarters of 2023, the company achieved operating income of 5.611 billion yuan, an increase of 10.05% over the same period last year, and a net profit of 549 million yuan, an increase of 6.89% over the same period last year, deducting 506 million yuan of non-return net profit, an increase of 4.63% over the same period last year. In a single quarter, 2023Q3, the company achieved operating income of 1.902 billion yuan, an increase of 3.71% from the previous month, an increase of 10.52% over the same period last year; realized net profit of 169 million yuan, a decrease of 30.83%, an increase of 10.27% over the same period last year; and realized net profit of 150 million yuan, a decrease of 33.11% from the previous month, and an increase of 7.54% over the same period last year.
Comments: the decline in domestic demand for titanium affects sales, and the export of titanium increases steadily. Quantity: 23Q3 titanium products sales decline month-on-month, mainly due to the decline in domestic demand for civilian and military titanium materials, the steady growth of the export titanium market. In the first three quarters of 2023, the company produced 24110 tons of titanium products, a decrease of 2.34 percent over the same period last year, and sales of 24221 tons, a decrease of 0.36 percent. The production of other metal products was 896 tons, an increase of 57.81 percent over the same period last year, and sales were 833 tons, an increase of 39.11 percent over the same period last year. 2023Q3, the company produced 7217 tons of titanium products, down 21.34 percent from the previous month, 14.59 percent from the same period last year, and sales of 7533 tons, 9.70 percent from the previous month and 8.31 percent from the same period last year. The production of other metal products increased by 27.11 percent, 246.99 percent from the same period last year, and sales increased by 56.87 percent and 154.88 percent from the same period last year.
Price: 23Q3's gross profit margin decreased month-on-month. In the first three quarters of 2023, the company's gross profit margin was 22.48%, a year-on-year decline of 0.02pct / 2023Q3 and 22.23%, a month-on-month decline in 4.54pct and an increase in 3.14pct. 2023Q3, the average price of titanium sponge is 54849 yuan / ton, down 21.80% from the previous month; the average price of titanium plate is 93 yuan / kg, down 11.90% from the previous month.
Core focus: high-end titanium production capacity, product structure is expected to be further optimized 1, high-end titanium project gradually put into production, titanium product structure continues to optimize. The company decided to invest in high-end titanium projects at the beginning of 2021: (1) the aerospace wide titanium alloy plate and foil project includes 1500 tons / year, titanium belt 5000 tons / year, foil 500t / year; (2) high-quality titanium ingot, pipe and profile projects include 10000 tons / year of titanium ingots, 290tons / year of tubes and 100tons / year of titanium alloy profiles. With the titanium project gradually put into production, the company's titanium product structure will be further optimized.
2. The company is the leader of domestic titanium materials, and plans to become a strong enterprise in the international titanium industry during the 14th five-year Plan. The company is one of the main suppliers of aerospace titanium materials at home and abroad, with an actual titanium processing capacity of 34214 tons in 2022.
The company's "14th five-year Plan" development strategic plan has a production capacity of 50,000 tons of titanium products and is expected to become a strong enterprise in the international titanium industry.
3. The production of titanium sponge is expanded, and the raw material self-sufficiency rate of the company is improved. Baoti Huashen annual output of 12000 tons of titanium sponge expansion project gradually put into production, the company's raw material self-sufficiency rate to ensure the company's raw material supply.
4Jing 3C application opens up new demand space for titanium materials, and the company is expected to continue to benefit. Apple Inc, Glory, XIAOMI and other smartphone manufacturers use titanium alloy to prepare parts to open the titanium 3C application market, the company as an upstream titanium supplier is expected to continue to benefit in the future.
Investment advice: benefiting from the development of aerospace, 3C and other fields, there is a broad space for titanium demand. With the high-end titanium project put into production, the company's performance is expected. We expect the company's 2023-2025 net profit to be 7.06 million, 892, 000, respectively, corresponding to the closing price on October 27, 2023-2025, PE is 22-18-14 times, maintaining the "recommended" rating.
Risk hint: project less than expected risk, raw material price fluctuation risk, market competition risk and so on.