Incidents:
The company released the 2023 report and the 2024 quarterly report. In 2023, the company achieved operating income of 26.765 billion yuan (+11.00% year over year) and net profit to mother of 3,226 billion yuan (-5.64% year over year), effectively achieving equity incentive targets. Among them, 2023Q4 achieved operating income of 6.503 billion yuan (+6.90% year over year) and net profit to mother of 1,084 billion yuan (+340.60% year over year). 2024Q1 achieved operating income of 7.288 billion yuan (+4.52% YoY) and net profit to mother of 951 million yuan (+64.15% YoY). 2024Q1's performance slightly exceeded our expectations.
Production and sales of titanium dioxide and titanium sponge all reached new highs, continuously consolidating their leading position. In terms of titanium dioxide, sales of titanium dioxide reached 1.1589 million tons in 2023, up 24.93% year on year, accounting for 56.47% of international sales, and 362,500 tons of chlorinated titanium dioxide in 2023, an increase of 31.48%; in terms of sponge titanium, the company actively explores the market, with annual sales volume of titanium sponge reaching 47,000 tons, an increase of 28.15% year on year. Affected by terminal demand, the company's sponge titanium profit business is under relative pressure. By the end of 2023, the company had a production capacity of 1.51 million tons/year of titanium dioxide and 50,000 tons/year of titanium sponge. After the Yunnan Guotai and Gansu Guotai projects are put into operation, the company's titanium sponge production capacity will reach 80,000 tons/year, making it the leading position in the world.
Pay attention to our own resource supply capacity, and continue to upgrade technology. The company attaches importance to the integrated layout of the industrial chain and continuously improves the supply capacity of raw materials and its own resources. In 2023, the company's titanium concentrate production was 1.474,500 tons, an increase of 26.14% over the previous year. At the same time, the company is actively promoting the two core projects of joint development of the two mines and the development of Xujiagou iron ore. In the future, the company will also plan to integrate and develop overseas mine resources in due course to support the company's continuous development in the future with long-term strategic reserves. In addition, the company is committed to technological upgrading to improve industrial efficiency. In September 2023, the company successfully completed its ultra-fine granular iron titanite enhanced recycling project, which greatly increased the comprehensive utilization rate of titanium resources to more than 42%.
2024Q1's titanium dioxide prices have risen three times in a row, and the company's overall gross margin has increased. 2024Q1 reprinted 2023Q3 and issued price adjustment letters for three consecutive months. The seasonal recovery of the titanium dioxide market is good.
According to Zhuochuang News data, the average price of titanium dioxide from January to January 2024 was 15,823 yuan/ton (+5.73% YoY, -1.77% YoY), 16076 yuan/ton (+7.01% YoY, +1.59%), and 16,783 yuan/ton (+8.51% YoY, +4.40% month-on-month), respectively. The company's profit level has improved. In 24Q1, the company's gross margin was 28.29%, +5.25pct year on year, and +0.75% month over month.
Adjust the profit forecast and maintain the “purchase” rating: According to the company's mine development pace, we adjusted the company's revenue for 2024-26 to be 296/313/33.9 billion yuan (previously 313.32.8 billion yuan, adding 33.9 billion yuan in 26 years), and net profit to mother was 36.0/40.6/5.82 billion yuan (previously 40.5/5.42 billion yuan, an increase of 5.82 billion yuan in '26), +11.44%/+43.37%, corresponding PE was maintained at 14X/12X/9X, respectively. “Buy” rating.
Risk warning: Project commissioning falls short of expectations, raw material prices fluctuate, and market demand falls short of expectations