Event: The company released its 2023 three-quarter report. In 2023Q1-Q3, the company achieved revenue of 29.528 billion yuan, -20.01% year-on-year; net profit of 1,161 billion yuan, -11.11% year-on-year; net profit of 1,064 million yuan after deducting non-attributable net profit, -8.51% year-on-year.
On a quarterly basis, in 2023Q3, the company achieved revenue of 10.798 billion yuan, -15.36% year-on-month, +6.19%; net profit of 370 million yuan, -7.05%, +5.29% month-on-month; net profit after deduction of 343 million yuan, -2.19% year-on-month, and +4.15% month-on-month.
Tungsten and molybdenum sector: The volume of photovoltaic tungsten wire continues to be released. The Q3 tungsten and molybdenum sector achieved total profit of +70.06% year-on-year and +5.97% month-on-month. 1) 23Q1-Q3, the company's tungsten and molybdenum business achieved a total profit of 1,670 billion yuan, an increase of 43.40% over the previous year.
It is estimated that the 23Q3 tungsten and molybdenum sector achieved a total profit of 568 million yuan, a year-on-year increase of 70.06% and a month-on-month increase of 5.97%. 2) Photovoltaic tungsten wire: Continued release of photovoltaic tungsten wire: We expect Q3 photovoltaic tungsten wire sales to be 18 billion meters. With the release of the third phase of the project, it is expected that Q4 photovoltaic tungsten wire sales will continue to grow. 3) Tungsten ore: Strong tungsten prices, Q3 tungsten concentrate prices +0.35% month-on-month and +4.94% year-on-year, increasing tungsten ore end profit. 4) Cutting tools: 2023Q1-Q3, sales volume was basically the same year over year, and sales revenue increased 8% year over year. 5) Progress of tungsten and molybdenum sector projects: cutting tools, Yumapo tungsten mine in Bobai County, etc. are progressing in an orderly manner.
New energy materials sector: Q3 earnings rebounded month-on-month. 1) Affected by the sharp drop in raw material prices, 2023Q1-Q3's new energy materials business achieved a total profit of 448 million yuan, a year-on-year decrease of 54.87%. The total profit for 23Q3 is estimated at 174 million yuan, a year-on-year decrease of 54.81%, and a year-on-month increase of 12.99%. 2) The sales volume of 2023Q1-Q3 and lithium cobalate products was 24,728 tons, down 3% year on year, but the company actively stabilized and increased its market share. Lithium cobalate sales increased sequentially in the third quarter; ternary material products were affected by the slowdown in downstream demand, with sales volume of 23,386 tons in the first three quarters, down 37% year on year. 3) New energy materials sector project progress: The production capacity construction of the Haijing base, Ningde base, and Ya'an base is progressing in an orderly manner.
Rare earth sector: Weak performance in Q3, shifting from profit to loss. 1) The market is weak, raw material prices are falling, and the volume of rare earth metal products has been reduced. The rare earth business of 2023Q1-Q3 achieved a total profit of 111 million yuan, a year-on-year decrease of 53.77%.
It is estimated that 23Q3 achieved a total profit of -42 million yuan, changing from profit to loss. 2) The sales volume of 23Q1-Q3 magnetic materials was 5488 tons, an increase of 30% over the previous year. It is estimated that the sales volume of Q3 magnetic materials was 1998 tons, up 26.38% year on year and down 5% month on month. 3) Rare Earth sector project progress: 5,000 tons of high-performance magnetic materials production capacity, expected to be completed in the second half of '24. The rare earth secondary resource recovery project (phase I), which processes 15,000 tons of rare earth waste annually, is expected to be completed in 24 years.
Real estate sector: Slightly reduced losses. The total profit of 2023Q1-Q3's real estate business was -106 million yuan, a year-on-year decrease of 28.35 million yuan. Profit for 23Q3 is estimated at -26 million yuan, a year-on-year decrease of 21.95 million yuan. The company is actively divesting the real estate business, and the drag on the company's performance is expected to ease.
Investment suggestions: The company has projects under construction to expand production in all three business sectors, and future growth can be expected. We expect net profit from 2023-2025 to be 15.51/19.82/2,429 billion yuan respectively, corresponding to current prices. In 2023-2025, PE will be 15/12/10 times in that order, maintaining the “recommended” rating.
Risk warning: risk of economic fluctuations affecting demand and prices, risk of raw materials, risk of key industrial projects falling short of expectations, etc.