I am optimistic about the boom in the chromium salt industry and the continued increase in the company's chromium salt market share. Maintaining the “buy” rating company's 2024 three-quarter report, achieved revenue of 2.994 billion yuan in the first three quarters, +8.75% year over year, and achieved net profit of 0.364 billion yuan, or +25.97% year over year. Among them, 2024Q3 achieved revenue of 1.006 billion yuan, -3.96% year over month, -3.23% month on month, and realized net profit of 0.123 billion yuan to mother, +28.88% year on year, and -20.98% month on month.

Considering that Q3's chromium salt sales fell short of expectations, we lowered the company's 2024 and maintained the 2025-2026 profit forecast. We expect net profit to be 5.10 (-0.36), 0.613, and 0.647 billion yuan for 2024-2026, and 1.00 (-0.07), 1.20, and 1.27 billion yuan for EPS, respectively. The current stock price corresponds to PE 12.3, 10.3, and 9.7 times, respectively. We are optimistic about the boom in the chromium salt industry and the continued increase in the company's chromium salt market share, maintaining a “buy” rating.

Q3 The volume and price of the company's chromium salt products decreased and the technical reform at the Chongqing base had an impact on the company's short-term performance. According to the company's announcement, the sales price of 2024Q3's main chromium salt products increased, and the purchase price of various raw materials remained basically flat compared to Q2 after being converted to a single ton product, which led to a slight widening of the product price gap. However, due to technical reforms at Q3's Chongqing base, production capacity was not fully utilized. As a result, Q3's overall net sales volume of chromium chemicals (minus sodium dichromate) was about 0.0603 million tons, down about 9.87% from Q2. The contraction in sales revenue affected the release of the company's economies of scale to a certain extent, causing the manufacturing cost per ton of chromium salt products to rise, which in turn caused the company's Q3 performance to decline month-on-month. Since September, the capacity utilization rate of the company's Chongqing base has fully recovered, and the company's chromium salt products are expected to enter a normal production rhythm in the future.

The relocation of the Chongqing base has officially started. The company's market share of chromium salt is expected to continue to increase in the future. According to the company's announcement, Minfeng Chemical, a subsidiary of the company's Chongqing base, currently has a production capacity of 0.1 million tons/year of chromium salt, 1000 tons/year of vanadium pentoxide, 1500 tons/year of vitamin K0.03, and 0.3 million tons/year of sulfuric acid. In order to fully respond to and implement the environmental technology reform and relocation decisions of chemical enterprises made by the Chongqing Municipal Committee, Municipal Government and Tongnan District Committee and District Government, Minfeng Chemical plans to relocate the “Chromium-Titanium New Material Green Intelligent Manufacturing Environmental Relocation Project” in the East District of Tongnan District Industrial Park through land replacement. The main construction contents are: 0.2 million tons/year chromium salt production plant, 1500 tons/year vanadium pentoxide production plant, 5,000 tons/year vitamin K3 production plant, 0.05 million tons/year ultra-fine aluminum hydroxide raw material production plant, 0.5 Million tons/year sulfuric acid and cogeneration equipment, 0.02 million tons/year special titanium dioxide production plant, and auxiliary, public storage, transportation and environmental protection facilities compatible with the above devices. In the future, along with the implementation of new projects, the company's chromium salt production capacity is expected to expand, and the market share of chromium salt products is also expected to continue to increase.

Risk warning: Raw material prices fluctuate greatly, downstream demand falls short of expectations, project commissioning process falls short of expectations, etc.