The company released its three-quarter report for 2024. The performance is in line with expectations, and plans to pay 10 yuan. In the first three quarters of 24, the company achieved operating income of 1.83 billion yuan (yoy +59%), net profit of 0.25 billion yuan (yoy +2%), net profit after deducting 0.251 billion yuan (yoy +2%), gross profit margin of 25.02% (yoy-17.40 pct), net interest rate of 14.54% (yoy-8.91 pct). Net investment income increased 0.06 billion yuan to 0.072 billion yuan year-on-year. The performance was in line with expectations . Among them, 24Q3 achieved operating income of 0.711 billion yuan (yoy +19%, QoQ +6%), net profit of 0.083 billion yuan (yoy -31%, QoQ -23%), net profit after deduction of 0.082 billion yuan (yoy -32%, QoQ -24%), gross profit margin 22.64% (yoy-14.50 pct, QoQ-7.84 pct), net profit margin of 12.69% (yoy-10.57 pct, yoy-10.57 pct, QoQ-4.24 pct). The main reasons for the month-on-month decline in 24Q3's performance are: 1) during the 24Q3 downstream off-season, some of the company's own mines carried out small-scale rectification and technological transformation to improve quality and efficiency, and the price of a single mineral fell month-on-month; 2) the month-on-month decline in hydrofluoric acid prices. In addition, the company plans to distribute a cash dividend of 1.00 yuan (tax included) to all shareholders for every 10 shares, a total cash dividend of about 0.06 billion yuan, accounting for 23.96% of net profit attributable to mother in the first three quarters of 24.

The company's single mine sales declined month-on-month during the safety control period, and the fourth quarter is expected to usher in a sharp rise in volume and price. Affected by the fluorite mine production safety measures since March of this year, supply-side shocks to the industry gradually became apparent. Changshan Jinshi, a subsidiary of the company, also temporarily stopped production and inspection in May. Since the third quarter, downstream demand has been low, and some of the company's own mines have carried out small-scale quality, efficiency, and technological transformation. 24Q3's fluorite concentrate production was about 0.0969 million tons and sales volume was about 0.0907 million tons, which decreased by 0.0302 million tons and 14,600 tons, respectively. According to Baichuan Yingfu data, the average price of 97 domestic fluorite wet powder increased 14%/-2% month-on-month to 3,573 yuan/ton. The month-on-month decline in single mineral prices reduced the company's performance month-on-month The main reason. Looking ahead to the fourth quarter, on the one hand, the Changshan Jinshiyanqian fluorite mine resumed production on August 8, and production and sales of the company's single fluorite ore business are expected to increase; on the other hand, with the arrival of the peak downstream season in October, compounded by the decline in winter construction in the north, fluorite prices are likely to rise further month-on-month, and the company's single mine stock price is expected to rise sharply in the fourth quarter. Furthermore, as the special rectification work nears its end, some companies that do not meet the standards will be shut down and withdrawn. The medium- to long-term industry supply contraction is more certain, and I am optimistic that the fluorite price center will continue to rise.

The associated mining project was gradually scaled up, the sulfuric acid and aluminum fluoride projects were successfully commissioned, and costs were optimized and accelerated. The 24Q3 Baotou “selection and integration” project produced about 0.1472 million tons of fluorite powder and sold about 0.0561 million tons. Sales increased 0.0136 million tons month-on-month; 0.0324 million tons of anhydrous hydrogen fluoride were produced, 0.0335 million tons were sold, and sales increased 0.0085 million tons month-on-month. According to Baichuan Yingfu data, the average price of hydrofluoric acid fell 4% month-on-month to 10,359 yuan/ton. As an intermediate in the fluorochemical industry, the price changes gradually converged with fluorite, and price increases were expected in the fourth quarter. According to the company's three quarterly reports, Jin'e Bofluorine Chemical's aluminum fluoride project was successfully tested, and the sulfuric acid project was successfully commissioned. 24Q4 is expected to produce 0.05 million tons of anhydrous hydrogen fluoride (including anhydrous hydrogen fluoride required to produce aluminum fluoride), produce 0.01 million tons of aluminum fluoride. The profit of the “integration” project is gradually Cash out.

The construction of the pretreatment plant for the Mongolian project was completed, opening the way to integrate scarce resources overseas. In July, the company obtained a fluorite mining license from Outer Mongolia through a transfer. According to the company's three-quarter report, the Mongolian project carried out mine divestment during construction, and has now completed the construction of the pretreatment plant and commenced commissioning.

Investment analysis: Due to increasingly stringent domestic production safety requirements, fluorite prices are expected to continue to rise. Through technological transformation, the company has entered the field of associated fluorite resources and lithium extraction from lithium mica fine mud, invested in the development of Mongolian fluorite resources, further promoted the “resource+technology” two-pronged strategy, and at the same time expanded the field of fluorine chemicals downstream to open up new upstream and downstream growth space. Due to the decline in the company's single mine sales volume, the hydrofluoric acid production line has not reached an ideal state. We lowered the company's net profit forecast for 2024 to 0.383 billion yuan (previous value was 0.43 billion yuan), and maintained the 2025-2026 net profit forecast of 0.646 and 0.864 billion yuan. The corresponding EPS was 0.63, 1.07, and 1.43 yuan respectively. The PE corresponding to the current stock price is 42X, 25X, and 19X. We are still optimistic about the central rise in fluorite prices. The new project gradually capitalized on profits and maintained an increase in holdings rating.

Risk warning: 1. Fluorite prices continue to fall; 2. Environmental protection enforcement is not in place, and the resumption of production has exceeded expectations; 3. Production and sales of downstream air conditioners, automobiles, etc. continue to decline; 4. The progress of new projects has fallen short of expectations.