Event: according to the company's semi-annual report for 2023, 23H1 achieved operating income of 3.709 billion yuan, + 9.81% year-on-year; net profit of 381 million yuan, + 5.46%; and deduction of non-net profit of 356 million yuan, + 3.91% over the same period last year. Basic earnings per share is 0.80 yuan.
Downstream demand structural adjustment, revenue and profit growth showed strong resilience. 23H1 achieved operating income of 3.709 billion yuan, + 9.81% year-on-year; net profit of 381 million yuan, + 5.46% year-on-year, with stable performance growth. Affected by the economic environment and investment cycle fluctuations in the chemical industry, the market demand for titanium materials has decreased, and the market competition for medium and low-end products has intensified, promoting the titanium industry to upgrade to high-end fields. in the future, the company will strive to enhance the market share of high-end titanium in aviation, aerospace, warships, weapons, deep-sea and other fields, helping the 10,000-meter manned submersible bowl alloy and other national key projects to break through. The company continues to improve management capacity and improve the level of cost control, 23H1 management expenses of 103 million yuan, year-on-year-11.88%; financial expenses of 27 million yuan, year-on-year-22.98%. On August 24, the company issued an announcement to renew the daily related party transactions totaling 40.74 million yuan.
The construction of the project has slowed down, the inventory has increased steadily, and the ability to recover money has been improved. The project under construction of 23H1 Company is 617 million yuan, 4.45% less than at the end of 22, and the fixed assets are 2.677 billion yuan, an increase of 5.92% over the end of 22. The construction of the company's project is gradually completed and the production capacity is about to be released. The inventory of 23H1 Company was 3.587 billion yuan, an increase of 0.62% over the end of 22 years, and maintained a steady growth. The notes receivable of 23H1 Company was 1.426 billion yuan, 38.02% lower than at the end of 22; notes payable was 482 million yuan, an increase of 75.53% over the end of 22 years; and accounts payable was 1.97 billion yuan, an increase of 51.29% over the end of 22 years. Benefiting from this, the company's 23H1 realized the net cash flow generated by operating activities of 417 million yuan, + 2447.74% compared with the same period last year.
The fund-raising project 23H2 has been put into production, and the titanium production capacity has been greatly increased. The company completed a private stock offering at the beginning of 2021, raising a net capital of 1.968 billion yuan. Among them, the construction project of high-quality titanium ingot, pipe and profile production line will increase the production capacity of titanium and titanium alloy ingots by 10000 tons / year, titanium alloy tubes by 290t / year, titanium alloy profiles by 100t / a; aerospace wide titanium alloy plate, strip and foil production line project will increase the production capacity of plate, strip and foil by 1500 tons / year, 5000 tons / year and 500t / year respectively. According to the company's June announcement, the above projects are expected to be available in October 2023, when the company's production capacity will be greatly increased with the completion and commissioning of the project.
Profit forecast and investment rating. We estimate that the eps from 2023 to 2025 will be 1.60 eps 2.02 soybean 2.58 yuan per share. Combined with the comparable company's PE valuation, we will give the company 20-25 times PE valuation in 2023, corresponding to a reasonable value range of 32-40 yuan, maintaining a "better than the market" rating.
Risk hints: industry competition aggravates risks; market or business risks; technology and product quality risks.