Achieved net profit of 936 million yuan to mother in '23, maintaining the “increase in holdings” rating
On April 15, Anning Co., Ltd. released its annual report for the year 23 and the quarterly report for '24. It achieved revenue of 1,856 million yuan, yoy -7%; net profit to mother of 936 million yuan (minus 933 million yuan), yoy -14.5% (after deducting non-yoy -14.6%), of which 23Q4 contributed 225 million yuan to mother net profit, yoy +0.4% /qoq-16%. Net profit for 24Q1 was 230 million yuan, YOY -0.6% /qoq +2%. The company plans to distribute a cash dividend of 5 yuan (tax included) for every 10 shares. We expect the company to have a net profit of 11.7/13.5/1.51 billion yuan for 24-26 years, corresponding to an EPS of 2.91/3.37/3.78 yuan. Comparable to the company's 24-year Wind consensus average valuation of 13xPE, the target price of 37.83 yuan will be given to the company for 24 years, maintaining an “increase in holdings” rating.
The titanium ore boom was under pressure in '23. The year-on-year profit decline was affected by downstream titanium dioxide demand and weak business climate, etc., and the titanium ore boom in '23 was under pressure (23H2 improved slightly). The company's annual sales volume of titanium concentrate yoy -4% to 493,000 tons, revenue yoy -7% to 1.15 billion yuan. At the same time, due to rising manufacturing costs, etc., the gross margin of the sector was yoy-4.1pct to 76.5%; the demand side of vanadium-titanium-iron concentrate was also under pressure, with annual sales volume yoy -20% to 1.1 million tons of revenue YOY -7% to 696 million Yuan, the gross margin of the sector yoy-4.2pct reached 50.6%. The company's annual comprehensive gross margin yoy-4.2pct to 66.6%, and the period expense ratio yoy+0.6pct to 5.9%, of which 23Q4 single-quarter gross margin yoy-0.9pct/qoq-1.5pct was 66.5%.
The 24Q1 titanium boom rebounded slightly, with profit improving month-on-month in the single quarter. According to Baichuan Yingfu, the average market price of titanium concentrate (Pan46) was 2,272 yuan/ton, yoy +4.0% /qoq +3.8%, and the titanium ore boom rebounded. The company's 24Q1 gross margin for the single quarter was +1.1 pct/+0.2 pct to 66.7%, respectively. At the end of 24Q1, the company's balance ratio was only 15.7%, with a monetary capital of 2.6 billion yuan.
Demand and prosperity for titanium ore have improved. Relying on resource endowment advantages, the industrial chain continues to expand. According to Baichuan Yingfu, the price of iron concentrate (Pan 46) was 2,300 yuan/ton on April 17, +6% compared to the beginning of the year. Along with the release of new production capacity such as downstream titanium dioxide and titanium materials and the recovery in demand for titanium ore, the titanium ore boom improved; in the long run, due to factors such as falling global exploration capital expenditure and declining high-grade ore, the titanium ore supply pattern is good, and the boom cycle may be long. According to the annual report and quarterly report, the company will actively expand downstream businesses such as titanium sponge and titanium materials. By the end of 24Q1, the company's balance of projects under construction was 495 million yuan, and the company's 60,000 tons of energy-grade titanium (alloy) materials and 50,000 tons of iron phosphate projects are progressing steadily. Overall, based on resource endowment conditions, the company's extension to the downstream sector is expected to have supporting advantages and cost advantages in the industrial chain, and the successive implementation of new projects in the future is also expected to bring new profit growth points.
Risk warning: There is a risk that downstream demand will continue to be sluggish, and the production progress of new projects will fall short of expectations.